What Californians could lose betting on life through prediction markets

California has seen what happens when technology platforms grow faster than public understanding.

Social media companies have long argued their products are neutral tools. But parents, schools, attorneys general and young people describe a different reality. They say these platforms are designed to hold attention, reward repeated checking and keep users engrossed.

California’s legal system is catching up. Attorney General Rob Bonta co-led a multistate lawsuit against Meta alleging that Facebook and Instagram were designed with addictive features that harmed young users. And in March, a Los Angeles jury found Meta and Google liable in another closely watched social media addiction case.

That history should matter as prediction markets move into the American mainstream.

Polymarket, for instance, is not Instagram or Snapchat. It’s not a social media feed. And, to be fair, it is not operating without rules. Polymarket US is listed by the Commodity Futures Trading Commission as a designated contract market and has published rules against insider trading, fraud and market manipulation.

Those safeguards matter. They help protect the fairness of the market. 

But market integrity is not the same as civic integrity.

Prediction markets allow users to trade contracts on the outcome of future events, such as elections, interest rates, court decisions, government actions, international conflict and economic indicators. 

In theory, these markets can aggregate information and show what people believe is likely to happen. That is the strongest argument in their favor, and it should not be dismissed.

The problem is what happens when public life becomes tradable entertainment.

An election is not just a price signal. It decides who holds power. An interest-rate decision is not just a contract outcome. It affects mortgages, credit cards, small businesses and household budgets. A public crisis is not just a market opportunity. It affects families, communities and real people.

When everything becomes a wager, it becomes easier to detach from the human stakes.

California should not wait for that detachment to become normal. State lawmakers, the attorney general and consumer protection officials should start setting expectations now for products that sit somewhere between financial markets, gambling platforms and civic information tools.

That does not mean banning every prediction market or to pretend forecasting has no value. It means asking whether rules against cheating are enough when the product itself may change how people relate to democracy, public crises and shared civic life.

A sensible California framework should start with the basics: strong age verification, clear risk disclosures, deposit limits and cooling-off periods. 

Platforms should be restricted from marketing prediction markets as easy money or civic entertainment. And they should monitor and report suspicious trading, insider information risks and market manipulation.

California should also consider whether certain markets should be off-limits, especially those tied to violence, disasters or public tragedy. There is a difference between forecasting the weather and creating a market around human suffering.

Elections deserve special attention. Betting on politics risks changing how people relate to democracy. 

A voter should see an election as a collective decision about the future, not primarily as a chance to profit from volatility. If political event contracts grow without clear rules, public trust may become another casualty.

The goal should be a prediction market that is transparent enough to be useful, limited enough to be safe and regulated enough to earn public trust.

California does not need to be anti-technology to be pro-guardrail. It can support innovation while asking the question: Are we building tools that help people understand the world, or tools that train people to bet on it?

The state has been through this cycle before. First comes the exciting new platform. Then comes mass adoption. Then come the harms, lawsuits and years of regret.

This time, California should not wait for the lawsuit. It should write the rules while the market is still young enough to shape.