A group of nine US House Democrats, led by Representatives Kevin Mullin and Gabe Vasquez, has formally requested that the Federal Trade Commission (FTC) open an investigation into the advertising practices of online prediction market platforms. The lawmakers argue that event-based trading products are being marketed in ways that may mislead consumers and blur the line between financial tools and gambling.
In a letter sent to the FTC, the legislators highlighted concerns that platforms such as Kalshi and Polymarket often describe event contracts as investment instruments in regulatory filings, while using language associated with sports betting in consumer-facing ads. “These prediction market companies are presenting themselves differently to regulators than they are to the public. They can mislead consumers on what rules and protections actually apply,” said Rep. Kevin Mullin.
The request marks a significant escalation in scrutiny of the fast-growing prediction market sector, which has surged from niche forecasting sites to multi-billion-dollar trading venues. Much of this growth has been fueled by election contracts, regulatory outcomes, and geopolitical events, attracting both retail and institutional interest. The lawmakers are demanding that the FTC assess whether such advertising violates federal consumer protection standards.
This move follows earlier pressure from over 40 Democratic lawmakers who warned of potential insider trading and market manipulation on these platforms. A recent investigation into unusual trading activity tied to former Congressman George Santos has further intensified calls for oversight. Social media platform X has already imposed mandatory disclosure requirements for prediction market ads.
Despite the regulatory headwinds, prediction markets continue to draw volume. Firms like Galaxy have begun offering institutional over-the-counter prediction markets, underscoring the sector’s maturation—even as concerns about consumer harm and addiction mount. The next critical signal will be whether the FTC responds with a formal inquiry, enforcement actions, or new consumer protection guidance.
