Crypto attorney Aaron Brogan argues that prediction markets like Polymarket and Kalshi should not be classified as gambling platforms. He highlights the structural differences between traditional sportsbooks and prediction markets, stating that sportsbooks bet against users while prediction markets act as neutral intermediaries that facilitate trades without taking sides. This distinction alters the incentives involved. Brogan explains the legal framework surrounding prediction markets, noting that those registered as Designated Contract Markets (DCMs) fall under federal regulation in the U.S., which preempts state gambling laws. However, he points out that Polymarket is not registered in the U.S., potentially exposing it to state legal challenges. Brogan emphasizes that if the Commodity Futures Trading Commission (CFTC) does not act against new entrants in the prediction market space, they may significantly disrupt the $21 billion sports betting industry.

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