Former CFTC Leader Shares Concerns Over Prediction Markets

CFTC commissioner Kristin Johnson stepped down from her role on Wednesday, but not before delivering a dire warning over sports prediction markets.

Johnson told attendees that the CFTC is not ready to regulate an expanded prediction market industry. She pointed to the many dangers these platforms bring, and how carefully crafted rules and regulations will be crucial. However, that hasn’t been done.

Given the CFTC’s inexperience and limited staff, Johnson believes disaster is inevitable if things don’t slow down. Some of the dangers include a massive spike in problem gambling and an increase in spot-fixing. 

Johnson’s words highlight a massive concern for many opponents of sports prediction markets. It shows that, according to the former commissioner, the CFTC isn’t really treating the industry as a form of gambling. 

US law may not view prediction markets as a form of gambling, but the thin veil separating the two industries is starting to fall away. Kalshi, whose Robinhood market is embroiled in lawsuits, recently announced that customers will be able to purchase contracts for spread, total, and prop bets. They will even allow customers to build parlays, just like sportsbooks. 

Are We Past the Point of No Return?

Kalshi’s current advertising campaign tells customers they can now legally bet in all 50 states. This shows the operator believes its relationship with the White House will protect the industry. While it's a bold assumption, it seems to be a correct one.

There is an overwhelming opposition that is made up of bipartisan lawmakers, tribal gaming groups, and much of the sports betting industry. The group has deep pockets and public support, but this hasn’t led to any changes. 

Instead of bowing to public opinion, the White House has only further entrench itself as an ally among the industry. President Trump has always publicly supported sports prediction markets and is currently trying to install an industry ally at the head of the CFTC. His son, Donald Trump Jr, has also reached deals to consult for Kalshi and Polymarket, giving the family a financial interest in the industry’s success.

If sports prediction markets are as successful as expected this football season, it could mark the end of a short but profitable era of legal sports betting.