Insider trading. Addiction horror stories. Why the feds are probing America's insane new pastime.

The Federal Trade Commission is reportedly taking its first hard look at online sports betting. According to the Washington Sun, political appointees and career staff are reviewing sportsbooks such as FanDuel and DraftKings, most likely over deceptive advertising. DraftKings says it hasn't received a civil investigative demand (the FTC's version of a subpoena), and FanDuel says it hasn't heard a word from the agency.

Prediction markets like Kalshi and Polymarket reportedly aren't part of the review. Yet three out of four Americans consider them gambling, according to a new Reuters/Ipsos poll.

The 'event contract' pitch

Prediction markets insist they aren't gambling. You're not placing a bet, they say. You're trading an "event contract": buy a contract on whether something will happen, and if you're right, it pays out a dollar. Buyers and sellers set the price. The platform takes a fee instead of betting against you, which the companies say makes them a different animal from a sportsbook.

Maybe so. But a platform that lives on fees still needs people to keep trading.

Reuters/Ipsos surveyed 4,506 adults from Sept. 30 to Oct. 5. In the results, 75% called prediction-market wagering gambling, even though only 7% had ever used one to bet money. Every category drew more opposition than support:

Unsure and skipped responses aren't shown.

Markets on world events have already drawn insider trading charges. The CFTC has accused a U.S. Army soldier of buying more than 436,000 "yes" shares on whether Venezuela's Nicolás Maduro would be out by Jan. 31, 2026, and pocketing more than $400,000.

Opposition to election markets crossed party lines: 61% of Republicans and 69% of Democrats were against them.

Earlier polling found the same thing. A February survey by Siena Research Institute and St. Bonaventure University, released in April, found that 65% of Americans want prediction markets held to the same state rules as sportsbooks when users can profit on sports outcomes. Among men 18 to 49, it was 73%.

Kalshi objects

Kalshi told Fortune, "It's not hard to bias a poll, and this poll is biased." The company objected to what it called leading questions about betting on war and noted it doesn't offer war markets.

The poll described prediction markets as a way to wager money on real-world events, then asked separately about elections, military actions, government policy, and sports. Kalshi can quarrel with that framing. But the questions said "U.S. military actions," not "war."

The sportsbooks sell event contracts, too

FanDuel and DraftKings have launched prediction markets of their own: FanDuel Predicts and DraftKings Predictions.

In states where FanDuel runs a licensed sportsbook, Predicts sticks to things like stock indexes and economic data. In states where it can't run a sportsbook, it sells sports contracts. That includes California and Texas, and FanDuel's own state guide lists Predicts in both. DraftKings has done the same.

Sports is where the money's going. Pew Research Center found combined monthly trading on Kalshi and Polymarket more than doubled between May and July, from $26 billion to $53 billion, with sports driving most of the jump. Pew counts each contract at its $1 payout, not what traders paid for it.

These contracts run through federally regulated exchanges, and the Commodity Futures Trading Commission has sued at least five states, including New York and Illinois, arguing that it alone gets to regulate them. Courts are still sorting out whether federal rules beat state gambling laws. None of that explains why the FTC would leave prediction markets out of its review.

Prediction markets have had their own advertising trouble. In June, the Wall Street Journal reported that Polymarket paid people to post videos of fake bets and fake wins on near-copies of its website. They were reportedly told to keep quiet about being paid.

Monica Vaca, who spent more than two decades as a consumer protection attorney at the FTC, told the Sun that allegations like these sit squarely within the agency's core work and would justify investigating every platform involved.

Keeping customers betting

The New York Times reported last month that DraftKings used AI to find gamblers likely to bet more, and lose more, once they got free bets and bonuses. The Times drew on internal documents and interviews with more than 40 former employees. DraftKings disputes it, saying offers follow how actively customers use the platform, not their losses.

A gambler suing FanDuel says he lost $1.5 million with the company, then got a personalized Thanksgiving video from Bryce Harper through the FanDuel host who handled perks for big spenders. Harper later said he never knew FanDuel would use the video that way and never consented.

The industry says the broader harm is overstated. Joe Maloney, president of the Sports Betting Alliance, pointed the Sun to a Progressive Policy Institute study that found credit scores in states with legal sports betting have moved in line with the rest of the country.

Gambling at the White House

The Trump administration has largely welcomed the industry. At this summer's UFC event on the South Lawn, Stake, an online casino and sportsbook, was a sponsor. Polymarket branding sat right alongside it while users traded millions of dollars on the fights.

Not every conservative is on board. Jon Schweppe, a former senior policy adviser at the FTC now with the American Principles Project, has compared sportsbooks to Big Tobacco, Big Tech, and Big Pharma. One of the Sun's sources described a generational split among Republicans: Older officials wave it off, while younger appointees see an industry tearing up families.

The FTC's review is still preliminary, and its scope could change. If the agency is worried about deceptive gambling ads, it ought to follow the ads, whatever the company calls the bet.