New Uses for Predictive Contracts Raise Questions Over What Constitutes Gambling

Gaming attorney Johnny ElHachem was interviewed by Marketplace about how states are attempting to regulate predictive contracts businesses. The concept of trading contracts on event outcomes started to gain traction around the 2024 presidential election, when stock trading apps began offering the option to buy contracts on the winner. Since then, companies such as Kalshi have seen considerable growth, leading some states to argue the practice amounts to gambling and market participants should be regulated like other players in the gaming industry. Mr. ElHachem commented on the increasing popularity of prediction trades and the regulatory battle brewing.

"GDP, growth rates, inflation levels, unemployment, weather derivatives," he cited as examples of predictions traders have been making. "What is happening now is that we could say we're at a crossroads, where financial innovation and public regulation are colliding."

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