Will NFL quarterback Josh Allen win this year’s most valuable player?
Will Taylor Swift and Travis Kelce get married this year?
Will Iran oust Supreme Leader Ali Khamenei by summer?
These are three of the innumerable bets offered on Kalshi, an online prediction market available anywhere in the U.S.
The federal government regulates Kalshi and its competitor, Polymarket, more favorably than online sports books like DraftKings and FanDuel — but the exchanges contain many of the same features that make online sports betting so addictive.
Here’s what you need to know about prediction markets — and why families should care.
Prediction markets are online exchanges where consumers buy and sell futures contracts.
Futures contracts refer to agreements between buyers and sellers to exchange a commodity at a predetermined price on some future date.
Traditionally, futures help business owners hedge against market volatility. A farmer, for instance, might enter a futures contract to sell his corn at a specific price. The contract protects the farmer and buyer from drastic changes to the price of the farmers’ corn, like those caused by a natural disaster.
Prediction markets like Kalshi, however, only offer event contracts — a kind of future in which the underlying commodity is whether or not an event occurs.
Right now, Kalshi users are buying futures contracts over whether Allen will win most valuable player. If he wins the award, users who bought “no” contracts must pay the agreed upon value to those who bought “yes” contracts.
Technically, yes — but it’s a controversial issue.
Event contracts are not new. For decades, the Commodity Futures Trading Commission (CFTC) — the federal regulatory agency which oversees futures trading — did not allow event contracts, deeming it too close to gambling.
It changed its policy in 2020, making Kalshi an official regulated exchange.
The CFTC did not allow sports event contracts until even more recently. In 2022, the commission banned Kalshi’s competitor, Polymarket, from the U.S. for offering event contracts on sports.
Now, the CFTC allows Kalshi to offer sports event contracts that mirror prop bets on FanDuel and DraftKings. In December, it lifted its ban on Polymarket, allowing it to roll out sports event contracts to a limited number of customers.
States like Nevada and traditional gambling lobbies like the American Gaming Association have sued to argue predictions markets should not be legal, but a definitive ruling could be years away.
Online sports books like DraftKings and FanDuel make money when their customers lose. They set the odds of every bet on their platforms to ensure as few people win as possible.
Kalshi, the biggest prediction market in the U.S., claims it does not benefit from customers’ losses because it does not bet against them. Instead, it offers a platform where buyers and sellers can effectively bet against one another. The exchange charges users a fee to purchase a contract, regardless of whether they win or lose.
Kalshi’s relationship with its customers is not nearly so cut and dry — but its argument convinced regulators to treat it as an investment platform instead of a gambling company.
Gambling companies like online sports books face costly regulations. They can only serve customers over 21 years old. They must be licensed in each state they operate in and pay a percentage of their profits to the states which license them.
In contrast, anyone over 18 years old can buy and sell event contracts on Kalshi. The federal government regulates Kalshi, which means it’s legal in every state and doesn’t have to give any of its income to state governments.
Outside their regulatory differences, predictions markets and online sports books become more similar every day. Users can place the same bets on both kinds of platforms, often with similar odds.
In places where online sports betting is illegal, FanDuel and DraftKings offer their own event contract exchange platforms. Sports event contracts accounted for nearly 90% of Kalshi’s income from fees in 2025, according to Barron’s.
Kalshi differentiates itself from gambling platforms by claiming it does not bet against users. But Kalshi isn’t just an exchange — it has a trading arm which actively buys and sells contracts on the Kalshi exchange platform.
Kalshi does not disclose what contracts its trading arm buys and sells, or how much money it makes from it. But if Kalshi is effectively betting against its users and profiting, the prediction market’s business model is no less predatory than that of online sports books.
Prediction markets like Kalshi contain the same addictive elements as online sports books with fewer guardrails.
Online sports betting eliminates the natural obstacles, like going to the ATM to withdraw more cash, which might give a gambler time to think better of placing one more bet. Users can bet as much as they want, on something as small as whether the next pitch will be a ball or a strike, without leaving their couch or pausing the game.
Online sports books and prediction markets alike offer constant action, which means users can bet on virtually anything, 24 hours a day, 7 days a week. Compulsive gamblers can seamlessly switch from betting on the Super Bowl to Russian women’s handball.
This new, more addictive iteration of sports betting poses particular risk to young people, many of whom are already addicted to their phones. Meanwhile, the gambling industry — including prediction markets — is bombarding the next generation with commercials and ads insinuating gambling is an essential part of the fan experience.
Now, with Kalshi, people can place bets at just 18 years old, from anywhere in the country — even places where sports betting is illegal.
Online sports betting has caused tens of thousands of people who would never have otherwise entered a casino to develop compulsive gambling, which increases sufferers’ likelihood of experiencing suicidal thoughts and domestic violence. Young people with good paying jobs are waking up to find their bank accounts drained, their plans to get married and start a family delayed indefinitely.
Compulsive gambling rips apart lives and relationships. The ripple effects impact all American taxpayers, who foot the bill for closed businesses, layoffs, bankruptcy, hospital stays, prison stints and addiction recovery associated with compulsive gambling.
Parents should warn their children against online sports betting and betting through prediction markets the same way they warn against other addictive products, like pornography, alcohol and drugs.
These conversations should dispel the myth that “gambling” only occurs in a casino. Gambling encompasses any activity in which a person bets money on an uncertain, unpredictable outcome. Gambling against businesses who benefit from customers’ losses is especially dangerous and likely to become addictive.
Parents should lead by example and refrain from online sports betting.
Parents should also prevent their children from accessing gambling platforms, including prediction markets, prematurely. The most effective way to do this is to control children’s access to the internet.
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