Vanguard CEO warns that prediction markets can harm “faith in the system”

Salim Ramji, Vanguard CEO, addressed the mounting criticism against prediction markets such as Kalshi and Polymarket at the Economic Club of New York on Thursday. 

He explained that there was a “really important distinction between investing and gambling”, with the former being the language used by these platforms to circumvent gambling regulators in the US. 

Ramji continued: “You have too many platforms out there that are focused on engagement, and not focused on outcomes.

“You have too many people . . . in the industry out there that are representing speculation as a form of empowerment. Really, we see this as a form of financial exploitation.”

Both Kalshi and Polymarket are regulated in North America under the Commodity Futures Trading Commission (CFTC), an independent agency of the US government.

They are both involved in several high-profile international lawsuits from regulators pushing back against their products that offer wagers on event outcomes, while the platforms themselves continue to claim this is not gambling.

Ramji continued: “The tension you have in the system right now is that you have a lot of people who have an incentive, because that’s their business model, to try and tell people the opposite.

“We’re a vocal force in being able to draw a distinction between investing and gambling.

“But as those lines get blurrier, I think it can certainly do harm for the investors — but also harm to faith in the system.”

Both Kalshi and Polymarket have also made headlines recently for facilitating insider trading.

The meeting also addressed that, according to the latest research, around one-third of the Gen Z audience has at least considered using prediction markets.

Ramji concluded: “On some level, if someone wants to do that with their fun money as entertainment, OK. The problem is when you ask why someone is doing that.

“They’re doing it because they think this is a fast path to financial security.”