This article was contributed by Casino.org
If, like many fellow Californians and Americans, you have an interest in gambling and backing your hunches, historically, placing bets has been somewhat troublesome. However, everything is changing.
Emerging markets
Prediction market apps and platforms are totally shaking up the markets. If you have not heard of them, we have to ask: have you been sleeping under a rock? The likes of Kalshi and Polymarket are all over the news.
They are certainly causing a stir, but many citizens are confused. In a country that regulates gambling at a state level, how are they legal? California relatively recently said NO to online betting, but prediction market apps seem to be operating with impunity. How is that possible, and are these sites legitimate?
Not gambling, but trading
Well, here’s the thing: prediction market apps might share a lot in common with gambling sites, but they are not classified as gambling in the eyes of the law. They operate as trading platforms and are considered financial derivatives under CFTC jurisdiction. Rather than betting against a bookie who sets the odds and makes money from the house edge, prediction markets have people trading possible event outcomes with each other.
Event trading works on the premise that a real-life event in the future will have a definitive outcome. Traders take a position of either YES or NO and buy and sell those positions on the exchange. There is no bookie setting the odds, and the platforms make money by charging fees on trades. There are other big differences with conventional gambling. Prediction markets allow traders to ‘bet’ on something not happening (the NO position). They can also sell their positions before the event resolves. So, if they see the market moving in one direction, they can sell their YES (or NO) before the event outcome resolves.
Federally regulated
So officially, they are not gambling and are therefore regulated federally, meaning that citizens across the United States (and internationally) can trade with and against each other. What is available in each state varies, but traders can take positions on political, cultural, economic and sports events. This gives residents in states like California and Texas the chance to take a position on the Super Bowl, for example, which they had not been able to do so legally before.
The same but different or different but the same
As prediction market apps share many similarities with online gambling, expert independent review sites like Casino.org have decided to offer guidance and advice on what is available. Their experts uncover the best gambling sites, whether that is an online casino or a prediction market site. While Californians cannot legally play at the former, that is not the case with the latter. Taking some expert advice is always a good idea, particularly in such a new market. It is easy to make mistakes and rush straight in, but it might be wiser to get a better understanding before trading begins.
While Kalshi might be the noisiest of the prediction market apps, it is not necessarily the best choice for everyone—there are other options.
Finding the best
The best app depends on what is being traded and how comfortable a reader is with exchange-style pricing. Some apps are better for broad market access, while others stand out for crypto payments, sports-focused trading or bonus value. For now, bonuses and enhancements to trade are pretty limited. However, as competition between sites heats up, traders can expect to see more creative and lucrative bonuses and promotions.
For Los Gatans, the chance to back your hunch on the outcome of a sporting event is now possible, legal and appealing. However, while prediction markets cover major sporting events, you will not find small or niche event outcomes traded on. Sportsbetting behemoth FanDuel has recently entered the market too and launched FanDuel Predicts, which is now available in all 50 states plus DC. However, it is not a facsimile of the betting site. It can only offer trades on events with a binary outcome.
Does this mean that FanDuel is now legal in California?
FanDuel Predicts was launched as a parallel, federally regulated layer to the existing business model, expanding its reach beyond what state-regulated sportsbooks permit. Executives describe it as a ‘reasonable facsimile’ and not a replacement. This means that only the prediction services are available legally in the state. FanDuel has said that if and when states legalize online betting, it will remove the sports option from its prediction platform.
In general, prediction market apps are lighter-weight than their sports betting and casino counterparts. They are less focused on entertainment and are about the trade. While trading can be entertaining, it is a very different user experience.
Notable differences
On the subject of user experience, anyone familiar with the best online sports betting and casino sites might be surprised by the lack of customer service excellence on some of the latest sites. Bearing that in mind, traders are advised to take a good look around and follow expert advice before diving in. Have a good look at the terms and conditions and make sure all the fees and payments are understood.
It is really important to understand that prediction markets are not “just another sportsbook.” They operate like regulated marketplaces where trade is based on real-world outcomes. They are financial derivatives that work more like investments. However, unlike with investments, you are not buying a long-term (or even short-term stock or share in a business, you are trading possibilities. Until the event outcome is known, anything is possible. It is the exchange-style model that makes them legal and subject to federal oversight. What can be accessed on each platform varies from state to state, and there is still considerable pushback. Many state regulators are unhappy that the prediction market companies have exploited a “loophole in the law,” that has allowed operators to evade the state betting bans.
Here to stay
However, they have gone mainstream, and even South Park created an episode around a prediction market app. They offer a legal alternative to sportsbooks. They are gaining in popularity because they are transparent and offer market-driven pricing. For Californians, they are a bit of a revolution as they allow residents to trade their opinions and let the market decide whether they are right or wrong.
The editorial staff of the Los Gatan was not involved in the creation of this content. The content is for general information and does not constitute the financial, medical or professional advice of this publication. Readers should consult qualified professionals regarding their individual circumstances. The Los Gatan disclaims any liability for loss or damage resulting from reliance on this content.
