Kalshi and Polymarket will not be part of the FTC sports gambling probe

Kalshi and Polymarket are reportedly outside the scope of a Federal Trade Commission (FTC) investigation into deceptive practices in online sports gambling, according to Protos. The inquiry is instead expected to focus on sportsbooks such as DraftKings and FanDuel.

Protos describes the industry under review as a $167 million market. Potential areas of scrutiny include misleading advertising and the incidence of suicides, hospitalizations and bankruptcies attributed to the industry. Sources familiar with the matter told The Washington Sun that the evaluation remains preliminary and involves both political appointees and career staff.

Other investigations remain in play

Exclusion from the FTC inquiry would not remove the prediction platforms’ other legal exposures. According to Protos, both are already subjects of an insider trading investigation overseen by James Comer, a Republican member of the House Oversight Committee. Polymarket uses blockchain technology, while Kalshi offers crypto perpetuals.

New York has also sued both companies this year, alleging that they operate illegal gambling businesses and encourage problem gambling among people under the age of 21. The Polymarket lawsuit filed last month cited a study from the National Institutes of Health and American Psychological Association linking pathological gambling with mental health disorders, suicidal behaviors and substance abuse, Protos reported.

A dispute over regulatory classification

Both platforms reject classification as gambling businesses and seek federal oversight through the Commodity Futures Trading Commission rather than regulation by individual states. Kalshi CEO Tarek Mansour recently argued that the platform functions as a financial marketplace connecting buyers and sellers, with company revenue not dependent on which participants win or lose, according to Protos.

Polymarket CEO Shayne Coplan made a similar distinction last year, describing its products as derivatives rather than sportsbook gambling. He also characterized DraftKings and FanDuel as a duopoly that disadvantages successful bettors. Protos additionally reported that President Donald Trump’s son Donald Trump Jr. advises both prediction-market firms, owns $300,000 in Kalshi shares and has an investment firm, 1789 Capital, that invested $500 million in Polymarket.

What it means for prediction markets

• The reported exclusion is narrow. Being outside the FTC sports gambling inquiry does not resolve the New York lawsuits or the separate insider trading investigation.
• Classification remains central. The platforms’ case for federal derivatives oversight contrasts with New York’s allegations that their businesses constitute illegal gambling.
• The scope is not final. The FTC evaluation is reportedly at a preliminary stage, so readers should distinguish the current reported focus from a definitive regulatory determination.