When a U.S. fighter jet was shot down by Iran earlier in April, and an American airman needed rescue, users on Polymarket, the world’s largest prediction market, were already placing bets on what day he would be recovered.
That market briefly assigned odds to the rescue before pulling the wager after public backlash. Representative Seth Moulton, D-MA, a former Marine, called it a “dystopian death market.” The platform called it a lapse in “integrity standards.” What neither could deny was that the betting had already happened.
The episode is one of the most visible flashpoints in a growing national debate over prediction markets, an industry that has exploded in scale, influence, and controversy in a remarkably short period of time.
WHAT PREDICTION MARKETS ARE
A prediction market is a platform where people buy and sell contracts based on whether real-world events will happen. Think of it like a stock exchange, except instead of trading company shares, consumers trade contracts tied to outcomes. The contract price reflects a probability. So if a contract trades at $0.70, that suggests traders think there is roughly a 70% chance the event will occur.
Platforms like Kalshi, Polymarket, and PredictIt let anyone trade on elections, economic data, weather, sports, and more. Polymarket and Kalshi exploded on the scene just before the 2024 presidential election. Since then, the firms have notched respective valuations of $15 billion and $22 billion, and prediction markets have emerged as a major new player in finance, gaming, and media.
The two platforms are structured differently. Kalshi is a centralized, CFTC-regulated exchange based in the U.S. that accepts dollars and requires identity verification. Polymarket, on the other hand, runs on the Polygon blockchain, uses USDC stablecoin for all transactions, and operates without traditional regulatory oversight. That distinction matters enormously, both for consumer protection and for what bets are allowed.
A GROWING CRISIS AMONG YOUNG MEN
The industry’s boosters argue prediction markets are tools of collective intelligence, more accurate than polls, faster than news. But public health professionals are sounding a different alarm as evidence of social harm continues to mount.
Some mental health clinicians who treat addiction have seen an uptick in visits from prediction market users. Therapists working with compulsive behavior patients argue that platforms like Kalshi and Polymarket carry a false air of legitimacy. Their branding around data and analysis obscures what clinicians describe as straightforward gambling, making it significantly harder for families to identify a problem early.
Wall Street analysts also point to a disturbing trend involving teenage gamblers. Industry data shows that 18-to-20-year-olds, mostly blocked from gambling in the U.S., are pivoting to prediction platforms like Kalshi, and betting on everything from college basketball to Donald Trump’s next Federal Reserve pick. On Kalshi, users can bet starting at 18.
Kalshi’s trading volume increased from $27 million in 2024 to $867 million in 2025. That trajectory has alarmed addiction specialists. The continuous gamified interface, algorithmic targeting, crypto integration, and removal of land-based friction operate as a population-scale harm-delivery mechanism, systematically bypassing laws and social safeguards.
Former energy traders have warned that these platforms are designed to lure young men into a cycle of debt and addiction. Deliberately or not, sites have created a pathway for teenagers to get accounts and start heavy gambling, according to studies on the mental health and social impacts of the trend.
The harm is not theoretical. It was reported that a 21-year-old Instagram user first heard about Kalshi through an ad on the social media platform. He had about $20,000 in savings. His first bets were on the 2024 U.S. presidential election. When those wagers did not pan out, he tried to quickly make up for his losses by betting on the weather and on what the price of Bitcoin would be at the end of the hour. He would go on to lose about $10,000 over the course of five months.
PROFIT, POWER, AND THE TRUMP CONNECTION
The prediction market industry’s remarkable immunity from accountability is not accidental. It traces directly to who is watching and who benefits by looking the other way.
Donald Trump Jr. is an adviser to Kalshi and an investor in Polymarket, which was approved by the CFTC last year to operate in the United States. Trump Jr.’s conservative venture capital fund, 1789 Capital, invested an undisclosed amount in Polymarket.
A spokesperson for Trump Jr. told reporters he does not trade on prediction markets and that he only advises Kalshi and Polymarket about marketing strategies. Meanwhile, the Trump family media company announced it would open its own prediction market, Truth Predict.
The regulator responsible for oversight, the Commodity Futures Trading Commission, is currently led by Michael Selig, a Trump appointee. As chair, he has championed the prediction market industry, which is currently dominated by rivals Kalshi and Polymarket.
At a congressional hearing in April, Democratic Representative Jim McGovern asked Selig to acknowledge that the Trump family “has a financial stake in how these markets are regulated,” which ethics experts say is a conflict of interest. “It’s the definition of corruption,” McGovern said. Selig skirted the question and denied favoritism.
The CFTC’s credibility is further strained by its composition. According to the Associated Press, the agency is currently served by only one member, Selig himself, in a body that by law is supposed to have five members with bipartisan representation. Senator Richard Durbin, D-IL, noted earlier this year that enforcement attorneys at the agency’s Chicago office had declined from 20 to zero.
Rather than tightening oversight, the Trump administration has moved to shield the industry from state-level accountability. States, including Arizona, Connecticut, and Illinois, have said Kalshi and Polymarket are nothing more than unlicensed gambling sites that circumvent state laws.
The companies also do not pay the same gaming taxes paid by competing services like DraftKings, FanDuel, and other online sportsbooks. Arizona filed criminal charges against Kalshi in March, alleging that it was violating state gaming laws. The Trump administration’s response was to sue those states on behalf of the CFTC.
Kalshi spent $615,000, and Polymarket spent $360,000 on federal lobbying in 2025, according to OpenSecrets. Polymarket opened a pop-up bar in Washington. Kalshi blanketed bus shelters and newspaper inserts with mint-green advertisements, positioning itself as the responsible alternative. Neither platform has faced meaningful federal consequences for any suspicious trade.
WISCONSIN IS ALREADY IN THE GAME
Milwaukee residents and Wisconsin lawmakers cannot treat this as a distant federal problem. The industry is already operating here, and the state is struggling to respond.
The Ho-Chunk Nation sued Kalshi and Robinhood in August 2025, and that case is still pending. Until the legal arguments are resolved, prediction markets of all types remain available to users in Wisconsin.
Milwaukee Bucks star Giannis Antetokounmpo announced in February that he invested in Kalshi. DraftKings, FanDuel, and Fanatics also offer prediction products for Wisconsinites.
In April, Governor Tony Evers signed a bill authorizing online sportsbooks based on servers located on tribal lands. But that framework addresses traditional sports betting, not the prediction market platforms already operating in a regulatory gray zone statewide. Fanatics and DraftKings have already opened prediction markets in the state, and FanDuel is expected to follow suit in the near future.
Recent studies warn of significant financial fallout. A 2025 paper found that following the legalization of online sports betting, the rate of people gambling more than 1% of their income each month grew from 0.2% to 0.9% of the population, alongside a 75% increase in calls to gambling helplines. Wisconsin is estimated to have between 300,000 and 350,000 people with gambling problems, according to state legislative testimony.
The prediction market industry has positioned itself as a technology company, a financial exchange, and a forecasting service — depending on which regulatory definition is most advantageous at any given moment. They have shown a continued willingness to take more legal risks and break state and federal laws with essentially a “catch me if you can” approach.
Congress has introduced multiple bipartisan bills to restrict federal employees from using nonpublic information to bet on prediction markets. But the odds of any legislation gaining momentum this Congress were slim to none, in part because of the politics of prediction markets.
For now, an industry worth tens of billions of dollars – with direct financial ties to the president’s family, a Trump loyalist as the only federal regulator, and platforms already accessible on every phone in Milwaukee — operates with rules it largely writes for itself, without regard to who ultimately pays the price.
