Why RI is investigating popular Kalshi, Polymarket prediction markets

When someone bets on a military strike, they now have financial reason to hope for violence, even if they never consciously admit it.

• Rhode Island is investigating prediction market sites like Kalshi and Polymarket for potentially taking business from the state-sponsored sports betting app.

• Prediction markets allow users to bet on the outcome of various events, including sports, politics, and entertainment.

• Officials argue that these sites are a form of gambling and divert revenue that would otherwise go to the state.

Online sports betting is only allowed in Rhode Island through the state-sponsored Sportsbook RI app, but the state's lottery is now investigating whether prediction market sites like Kalshi and Polymarket are stealing sports gambling business.

Prediction markets allow users to enter into yes or no contracts on whether a particular thing in sports, politics, business, entertainment or random events will happen and to profit if they get it right. For example, some of the top markets on Polymarket are around when U.S. troops will enter Iran, or when Kanye West will release a new album.

The sites experienced explosive growth last year due to favorable regulatory treatment from President Donald Trump's administration, with much of their revenue coming from sports.

Why RI wants to crack down on prediction markets

Lottery Director Mark Furcolo argued to the State Lottery Commission that any online betting done not on the Sportsbook app takes revenue away from the state.

"Anytime someone wagers on a prediction market platform and doesn't bet on our platform, obviously, there is an economic impact to the state," Furcolo told the commission. "We have an active investigation ongoing currently on prediction markets. It is very active. I really can't comment too much on it."

Other states take legal action against Kalshi

A growing number of elected officials are arguing that prediction is just a dressed-up term for gambling and that contracts on athletic events violate state regulations on sports betting.

A Massachusetts judge in January issued a preliminary injunction against Kalshi in a lawsuit by Bay State Attorney General Andrea Campbell.

Arizona filed criminal charges against the site this month.

Bipartisan legislation was filed in Congress on Monday, March 23, that would ban sports betting on prediction markets nationally.

The Rhode Island Lottery would not say how long it has been investigating prediction markets, referring all questions to Furcolo's testimony.

Last September the state police began a crackdown on illegal sports betting sites but at the time did not appear to be targeting the prediction markets.

State Rep. Scott Slater, D-Providence, noted at the Lottery Commission meeting that Rhode Islanders can wager on sporting events involving local teams, such as Providence College or the University of Rhode Island, that are banned on SportsBook Rhode Island to protect the integrity of the game.