The Federal Reserve has delivered a major boost to prediction markets — even as their legal standing remains uncertain. In a fresh study of macro markets on Kalshi, Fed researchers found that data from the prediction market rivaled established forecasting tools like the Bloomberg Consensus. Unlike survey-driven consensus estimates that update slowly, the Fed praised prediction markets for “real-time tracking of outcome expectations,” calling them a “rich benchmark.” As the report put it: “Our results suggest that Kalshi markets provide a high-frequency, continuously updated, distributionally rich benchmark that is valuable to both researchers and policymakers.” Why that matters - Prediction markets let participants bet on the likelihood of future events. Because they carry real financial incentives, their prices can crystallize collective expectations faster and—arguably—more accurately than polling or analyst surveys. - The Fed’s endorsement suggests prediction-market signals could complement or even outperform traditional indicators used to track things like rate-cut expectations (e.g., analyst consensus or Fed Funds futures). Market reaction and industry moves - The study drew support from market figures: Fundstrat’s Tom Lee said he agreed that “prediction markets are helpful for market insights,” while trader Benjamin Freeman called the Fed’s findings a “great” recognition of their predictive power. - Wall Street is already positioning for growth in the sector. Bitwise, together with two other asset managers, has filed for ETFs that would track bets on the 2026 U.S. election — a sign institutional players see commercial opportunity in market-priced event products. The legal snag: CFTC vs. the states - Despite the regulatory nod, prediction markets face an unresolved jurisdictional fight between the Commodity Futures Trading Commission (CFTC) and state regulators. - TD Cowen’s Jaret Seiberg told investors he gives “a slight edge to the states in this legal fight,” reasoning that states have historically regulated sports gambling. If courts treat prediction markets as a form of gambling, precedent could steer oversight toward states rather than the CFTC. - That uncertainty leaves the trajectory for prediction-market growth unclear: regulatory clarity could unlock broader institutional adoption; the opposite could constrain platforms and product rollouts. Bottom line The Fed’s study is a strong validation for prediction markets as a fast, distributionally rich source of market expectations. Still, regulatory ambiguity — and a potential tilt toward state-level gambling regulation — could shape how quickly these markets scale and which players benefit. Disclaimer: AMBCrypto’s content is informational and not investment advice. Trading cryptocurrencies or event-linked products carries high risk—do your own research before making decisions. © 2026 AMBCrypto Read more AI-generated news on: undefined/news

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