Equity-linked prediction markets are attracting regulatory attention after traders placed more than $220 million across approximately 31,000 Polymarket International contracts tied to stocks, indexes and corporate events.
Nearly 60% of the identified volume involved individual stock movements. Nvidia, Alphabet, Apple and Tesla were among the most frequently referenced companies, based on an Allium analysis prepared for Reuters. Reuters
The contracts usually ask whether a stock or index will reach a specified level before a deadline. Other markets settle on corporate performance indicators such as product launches or vehicle deliveries.
Kalshi does not currently offer direct wagers on individual shares. Reuters found that it offered roughly 2,500 markets on indexes and company performance indicators on a representative day. Its U.S. products operate under CFTC oversight.
The jurisdictional issue becomes sharper when a contract references one company. U.S. law generally treats derivatives based on a single security as security-based swaps, which fall under SEC supervision and are usually restricted to eligible professional participants.
Certain corporate indicator markets could also meet that definition depending on their design and economic relationship to the underlying security. Kalshi disputes that its products should be classified that way, while Polymarket says it is discussing the boundaries with regulators.
Market surveillance presents a separate problem. A corporate employee with nonpublic information about product shipments, revenue or another performance metric could potentially trade the corresponding event contract without buying or selling the company’s shares.
TOKEN RECON ASSESSMENT
Equity-linked prediction contracts are no longer too small to dismiss as novelty markets. They create instruments with stock-like economic exposure while operating outside several protections attached to securities exchanges.
The decisive development will be an SEC or CFTC determination explaining when a corporate event contract becomes a security-based swap. Until that boundary is established, exchanges face product-removal and enforcement risk, while traders may have fewer protections against informed counterparties and manipulation.
Source
Reuters: Equity prediction markets raise U.S. regulatory concerns
