The two industry leaders, Kalshi and Polymarket, are based in Manhattan. And they have won their battle over even defining their activity. “Traditional betting sites are closely monitored, and in some cases, strictly regulated by law. Prediction markets, on the other hand, are different,” notes The Guardian. These platforms have managed to be regulated by the federal authority for regulating derivative financial products, the Commodity Futures Trading Commission (CFTC). “They are regulated as financial products, despite the fact that they are essentially betting sites,” summarizes the British newspaper.
This does not prevent Polymarket (which relies on cryptocurrency) from theoretically remaining closed to the United States, France, and the United Kingdom, among others, to this day. But users can access it using VPNs to conceal their geographical origin. It is also a way to bypass the 18-year-old age limit. The American media NBC News alarms at the number of high school, and even middle school, students who engage in gambling in one form or another in the country.
Specifically, as dissected by the London-based site Dazed, bettors purchase a contract for a price reflecting the probability of a yes or no answer to a question, from 0 to 1 dollar. They win 1 dollar if the prediction comes true. “Imagine you spend 20 dollars to buy 100 contracts at 20 cents each answering ‘yes’ to the question of whether the existence of extraterrestrials will be proven by 2027. If – fingers crossed – the answer is indeed positive, you will pocket 100 dollars.” The commissions charged by the platforms depend on the type of market.
On March 19, Kalshi raised 1 billion dollars (872 million euros) in a funding round, as reported by The Wall Street Journal. This brings its valuation to 22 billion, a figure comparable to that of Polymarket. Kalshi foresees hitting 1.5 billion dollars in revenue by 2026, as revealed by the New York financial daily.
