Published by the Manhattan Institute, City Journal focuses on urban policy. Authors Jonathan D. Cohen and Isaac Rose-Berman discuss the complexities of prediction markets in the United States. These platforms involve billions in stakes on elections, album sales, and sports events. However, legally, these activities are not categorized as betting. Both the platforms and federal regulators regard prediction markets as investment platforms. The event contracts they provide are considered a form of financial derivative.
Prediction markets, if regulated, could address several significant issues. Regulation would ensure better oversight and might decrease the potential risks associated with these markets.