Copyright Forbes
Prediction markets, where people trade contracts based on the likelihood of future events, are facing a defining moment. Several days ago, New York lawmakers introduced the ORACLE Act, a bill that would prohibit most sports-related and event-based prediction markets for state residents. The bill’s name recalls the oracles of ancient Greece, figures believed to possess divine foresight yet known for offering answers that were open to interpretation and easily misused by those seeking certainty. That ancient metaphor captures the modern dilemma at the heart of these markets: when does the effort to predict the future become a wager on it, and who should decide where that line is drawn? Prediction markets are no longer the quiet forecasting tools once celebrated by economists. They have become highly liquid, socially networked, and behaviorally engineered platforms that blur the boundaries between insight and inducement. Prediction and Policy The ORACLE Act marks the first serious state-level attempt to draw that boundary. It would prohibit New York residents from opening speculative positions in certain markets, including those tied to athletic, political, catastrophic, securities, and “death” events, with enforcement authority set under the state’s General Business Law rather than exclusively through the New York State Gaming Commission. The bill’s sponsors frame it as a consumer-protection measure, intended to regulate emerging platforms that blend financial trading with gambling mechanics and have outpaced existing oversight. Critics, however, can argue that such a broad prohibition could isolate New York from a rapidly expanding financial frontier. Federally, the Commodity Futures Trading Commission (CFTC) regulates certain event-based derivatives, but its jurisdiction is narrow and contested. When states step in, they risk creating a fragmented patchwork where the same platform may be legal in one jurisdiction and illegal in another. That tension is not hypothetical. In 2024, a federal district court in Washington, D.C. allowed the platform Kalshi to proceed with political-event contracts after the CFTC denied its application. The agency later withdrew its appeal in 2025, leaving the matter unresolved. Kalshi has since raised $300 million at a $5 billion valuation, illustrating how investor confidence can thrive even in regulatory gray zones. Prediction and Perception Just as lawmakers were introducing the New York bill, Google Finance announced that it will now display real-time data from Polymarket and Kalshi directly in financial-search results. This means that soon enough millions of users will see prediction-market odds for events such as Federal Reserve decisions or commodity-price forecasts alongside stock tickers and bond yields. To advocates, this is democratization: bringing market expectations into public view. To skeptics, it is normalization: embedding speculative wagering within mainstream financial information systems. Either way, perception itself becomes a tradable asset, and the line between information and influence grows thinner. In behavioral-economics terms, the integration introduces what I have referred to in my academic work as financial gamification by design. When prediction probabilities are displayed next to investment data, users are nudged to engage not only intellectually but emotionally. That engagement, while valuable for liquidity, can also amplify risk-taking and compulsive participation. Prediction and Power Players The commercial stakes are rising fast. Major financial and gaming firms are moving aggressively into the space. DraftKings has acquired Railbird, a CFTC-licensed prediction-market operator, and partnered with Polymarket to use blockchain clearing. Similarly, FanDuel and CME Group are developing event contracts type of products to be launched. Likewise, Robinhood Markets has aligned with Kalshi to offer event-based trading to its retail-investor base. Meanwhile, traditional gambling authorities are pushing back. The American Gaming Association warns that sports-event contracts could undermine regulated online betting, and the Nevada Gaming Control Board has told licensed operators they risk sanctions if they partner with unapproved prediction-market platforms. The result is an uneasy truce: fintech innovators claim they are trading information, not offering wagers; gambling regulators see betting by another name. Prediction and Public Appetite Despite regulatory friction, Americans appear ready to bet, figuratively and literally, on prediction. Recent polling shows that nearly nine in ten U.S. adults support allowing prediction markets to operate freely, viewing them as innovative tools rather than threats. That sentiment reflects a broader comfort with speculation across retail investing, sports betting, and crypto trading. Public enthusiasm, however, often outpaces understanding of behavioral design. Many platforms employ variable-reward structures, gamified visuals, and social leaderboards that keep users engaged through dopamine-driven feedback loops. As research shows, these features mirror those that have raised addiction concerns in online gaming and day trading. The challenge for lawmakers, including those behind New York’s ORACLE Act, is to design a regulatory framework that distinguishes between healthy forecasting and harmful gambling, without freezing innovation. Prediction and the Path Forward Prediction markets occupy an uneasy but fascinating space between the futures exchange and the casino floor. Their growth signals both opportunity and risk: opportunity in the form of real-time collective intelligence, and risk in the form of speculative excess and behavioral manipulation. The ORACLE Act will test whether states can craft targeted consumer protections without overreaching into federally supervised markets. If enacted as written, New York would become the first state to prohibit most event-based prediction trading outright, a move that could set precedent nationwide. Yet an outright ban might also drive participation underground or offshore, replicating the very opacity regulators hope to eliminate. A more sustainable approach would align federal and state oversight through shared standards—mandatory disclosures, age and deposit limits, algorithmic transparency, and investor-protection audits—rather than blunt prohibitions. Such measures could ensure that prediction markets serve their informational purpose without crossing into exploitative design. Ultimately, prediction markets force regulators to confront a philosophical question: can a mechanism built on speculation ever be fully domesticated within financial law? As innovation races ahead, from Google’s integration of market odds to multimillion-dollar venture rounds, the answer will determine not only the fate of one bill in Albany but also the boundaries of risk and responsibility in the digital economy. Like the oracles of ancient Greece, these modern systems of foresight promise knowledge about the future but often deliver uncertainty disguised as insight. The challenge for policymakers is to interpret those signals wisely, without mistaking probability for prophecy. For now, one prediction seems safe: New York’s ORACLE Act ensures that the boundaries of prediction will now be openly debated.
