Arizona sounds the alarm over prediction market platforms
Arizona regulators are raising concerns over online prediction markets, warning they may carry gambling‑like risks without the safeguards required of licenced operators.
Suzanne Trainor of the Arizona Department of Gaming told 13 News that prediction markets do not follow the rules. Unlike regulated sportsbooks, which must provide responsible gaming protections, prediction markets operate outside state oversight.
Prediction market platforms let users buy and sell contracts tied to future outcomes—ranging from election results and government actions to sporting events. Certain phrases are betted on whether they will appear in political speeches or a legislation will be enacted.
But unlike licenced sportsbooks, these platforms often lack consumer safeguards such as self‑exclusion programmes, deposit limits, and age verification. Regulators warn that this gap could expose users to addiction and irresponsible betting. Additionally, they caution that prediction markets may be more vulnerable to manipulation than sports betting because coordinated actions or insider knowledge could distort the results.
A growing national issue
Platforms like Kalshi and Polymarket have surged in popularity, with trading volumes reaching billions of dollars and user bases expanding rapidly.
Polymarket, which operates on blockchain, touts itself as a transparent, decentralised financial market. It recently reported nearly 478,000 active traders. Kalshi, meanwhile, surpassed $4.4 billion in monthly trading volume in late 2025, reflecting growing mainstream and institutional interest, as reported by several media outlets.
Institutional investors have fuelled this boom. Polymarket raised $2 billion from the Intercontinental Exchange at a $9 billion valuation.
Yet legal pressure is mounting nationwide. At least 10 states have issued cease‑and‑desist orders or filed similar challenges against prediction market platforms. Illinois and New York fined Polymarket, while Massachusetts and other states joined more than 30 lawsuits ranging from consumer protection claims to tribal gaming disputes.
Regulators argue these sites amount to unlicenced gambling. Companies like Kalshi and Polymarket counter that they fall under federal oversight by the Commodity Futures Trading Commission (CFTC). This clash has led to multiple cease‑and‑desist orders, underscoring the unresolved question of whether prediction markets are financial speculation or gambling.
Who uses prediction markets
Much of the growth of prediction markets is fuelled by younger, tech-savvy users. According to several media reports, analysts note that 18-to 20-year-olds. Many of them are students and make up a significant share of participants. These platforms often allow trading at age 18, even though traditional gambling laws in many states require a minimum age of 21.
College students and young professionals are attracted to contracts tied to politics, sports, and economic events–blending entertainment with speculative trading. Social media use and strong opinions about politics and finance make them natural participants in these markets.
Arizona’s position
For now, Arizona has not taken formal legal action. Trainor clarified that the state is not opposed to prediction markets in principle but insists that they must follow gambling laws. Trainor noted that they need to ensure the same protections are applied in the state as they are for licenced operators.
Regulators warn that prediction markets pose gambling‑like risks without the safeguards required of licenced sportsbooks. Key concerns include a lack of consumer protections like deposit limits and age verification, vulnerability to manipulation through coordinated actions or insider knowledge, and legal ambiguity over whether these platforms fall under financial or gambling laws.
Illinois and Arizona officials have labelled them illegal gambling, while federal regulators continue to debate whether the CFTC should step in.
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