Polymarket and Kalshi have become major names in online wagering by calling themselves "prediction markets" instead of sportsbooks. But that label is drawing sharper criticism as opponents argue it helps the platforms sidestep gambling rules, tax obligations, and legal exposure.
Here's what to know
According to an Instagram video by More Perfect Union (@perfectunion), most activity on both platforms is still tied to sports, despite the companies' prediction-market branding. The creator argued that this classification helps Polymarket and Kalshi operate in jurisdictions that have not legalized sports betting while avoiding the taxes and regulations applied to traditional sportsbooks.
The video said sports wagering has been the main driver of both platforms' growth, citing roughly $11.5 billion in sports-related trading on Kalshi and $4 billion on Polymarket.
Baltimore, Maryland, has also challenged that distinction in court. The city is suing Polymarket and Kalshi, alleging that they are unlawfully operating as sports betting platforms and, as a result, violating the city's consumer protection laws.
Tax treatment was another central part of the argument. The video said that being treated as prediction markets lets these companies avoid gambling taxes in places like New York, where the sports betting tax rate is 50%, and pointed to an American Gaming Association estimate that states have lost more than $570 million in tax revenue because of the loophole.
More background
The criticism comes as online gambling continues to expand quickly across the United States, often through apps designed to make wagering feel fast, casual, and constant. Even when companies frame the experience as entertainment or finance-adjacent speculation, critics have raised concerns about predatory design, aggressive advertising, financial losses, and the ease of placing real-time bets.
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If a platform is treated differently from a sportsbook, it may face a very different set of rules on taxes, licensing, disclosures, and consumer safeguards.
A loosely regulated app can still encourage risky behavior while appearing more legitimate or innovative than a gambling product. One commenter on the post captured that frustration by writing, "Why does it matter if they're a sports betting app or not??? They're a gambling app regardless of what's being betted on."
Others focused on the economic harm they see in the model. "It's just another form of wealth transfer from the bottom up," another commenter wrote.
What's being done?
One of the clearest accountability efforts is litigation. Baltimore's lawsuit signals that local governments are willing to challenge whether these companies are truly offering a distinct financial product or simply repackaging sports betting under a different name.
Public criticism has pushed the issue into the public eye. Videos like More Perfect Union's frame a technical regulatory debate as a consumer-protection question: Who pays taxes, who follows gambling rules, and who bears the risk when betting is made easier and more widespread?
As the video put it, "the term prediction market is a ruse designed to shield these companies from liability and taxes and make them as much profit as possible."
Where can I learn more?
The questions around Polymarket and Kalshi fit into a much bigger story about gambling, speculation, and oversight. These articles examine governance problems at a major betting company, the flood of gambling ads aimed at young men, and how finance-style products can make steep losses seem normal.
• At Penn Entertainment, outrageous perks raised serious questions about governance at a major gambling operator.
• Across the U.S., nonstop gambling ads target young men with constant betting prompts.
• Former SEC officials warn things are going great until speculative crypto losses suddenly hit.
Read together, they help explain why critics think prediction markets are part of a wider effort to dress up gambling and speculation while softening oversight. That context makes the tax, liability, and consumer-protection stakes in this debate harder to brush aside.
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