Industry Leaders Unite to Form Coalition for Predictive Markets in the U.S.

In a significant move for financial innovation, Kalshi and Crypto.com, along with major industry stakeholders such as Coinbase, Robinhood, and Underdog, have announced the formation of the Coalition for Prediction Markets (CPM). This new national organization is dedicated to ensuring fair, transparent, and federally supervised access to prediction markets, which are increasingly viewed as essential tools for understanding various societal trends.

Prediction markets have gained traction as a popular means for individuals to translate their knowledge into financial gain, with nearly half of Americans under the age of 45 having utilized them for investment purposes. As more information becomes available in the public domain, prediction markets stand out by synthesizing this data into a clear signal that can guide decision-making. Furthermore, they represent a democratization of investment opportunities, enabling participation from a diverse array of individuals, including young adults, women, and historically marginalized communities who might not have easy access to traditional financial systems.

Research indicates that prediction markets outperform conventional polling methods by about 30%, providing immediate insights into both economic and cultural phenomena. The total trading volume of prediction markets has seen substantial growth, nearing $28 billion so far this year, underscoring the pressing need for cohesive regulatory engagement in this burgeoning field. Notably, a substantial majority of voters (over 70%) advocate against treating prediction markets like gambling, while two-thirds favor federal oversight over a fragmented state-based regulatory landscape.

Matt David, Executive Board Member of the Coalition and President of North America and Chief Corporate Affairs Officer at Crypto.com, remarked, “The U.S. is the most significant frontier for prediction markets, and the current momentum necessitates a unified industry voice. These markets function as a new civic infrastructure, offering enhanced transparency and better decision-making capabilities for institutions. By rewarding knowledge rather than connections, they level the playing field for all participants.”

The coalition’s initiation comes amidst attempts by various state casino regulators to extend their governance over prediction markets, which traditionally fall under federal jurisdiction. This trend could lead to inconsistent regulations that confuse consumers, restrict their access to reliable platforms, and drive them towards unregulated or offshore alternatives. Enhanced federal oversight akin to the protections existing in stock markets is vital for maintaining equity and transparency within prediction markets.

Sara Slane, another Executive Board Member of the Coalition and Head of Corporate Development at Kalshi, expressed the organization’s commitment to regulation, stating, “From our inception, we recognized the importance of federal regulation. We have partnered with the CFTC to ensure robust safeguards that mitigate risks of insider trading and promote transparency. Americans need uniformity in regulations, not a patchwork of conflicting state laws. Our experiences have demonstrated the rapid growth in demand for prediction markets and the urgent need for a cohesive industry voice.”

The Coalition for Prediction Markets aims to strengthen the existing federal framework governing these markets. Central to its mission is the establishment of nationwide integrity standards, which will guard against insider trading, facilitate equal participation, and promote clarity across the market landscape. The Coalition also seeks to counteract intrusive state regulations that could undermine market fairness concerning sports betting, electoral forecasting, and economic indicators.

As the Coalition embarks on its mission, discussions are underway with additional companies interested in joining this initiative. The CPM serves as a collective industry voice advocating for accessible, transparent rules that enhance forecasting abilities, improve risk management strategies, and aid the public in understanding future outcomes within a stable federal framework.

In conclusion, the formation of the Coalition for Prediction Markets marks a pivotal step towards establishing a responsible and inclusive prediction market environment in the United States. With a shared vision among industry leaders toward equity, transparency, and consumer protection, this alliance promises to foster a crucial new sector of financial technology that can benefit a wide array of societal segments.