Prediction markets are rapidly expanding into US stocks and corporate events, raising concerns over investor protection and regulatory oversight, according to independent data and legal experts. Platforms such as Polymarket and Kalshi, initially known for markets covering sports, elections and geopolitical events, have increasingly moved into traditional financial markets. Experts warn that these products operate outside many of the investor protections and surveillance rules applied to regulated securities exchanges.
Polymarket International has offered markets on individual stocks since October, with traders placing more than $220 million across about 31,000 equity-linked markets through early September, according to an Allium analysis prepared for Reuters. Nearly 60% of the activity involved individual stocks, with Nvidia, Alphabet, Apple and Tesla among the most popular. Kalshi does not currently offer individual stock wagers but provides thousands of markets linked to indexes and corporate indicators, including iPhone launches and Tesla deliveries.
The rapid growth has intensified debate over which US regulator should oversee the products. The Commodity Futures Trading Commission considers prediction markets to involve derivatives, while legal experts and consumer groups argue that the Securities and Exchange Commission should play a larger role, particularly where contracts could qualify as security-based swaps. The SEC and CFTC sought public feedback in June on the regulatory framework. Lawmakers, including Senator Adam Schiff, have also raised concerns that prediction markets could circumvent securities laws, while the platforms say they monitor misconduct and work with regulators to protect market integrity.
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