Prediction markets like Kalshi operate in a gray zone where light-touch regulation creates real vulnerabilities. Without robust safeguards, these platforms become attractive targets for price manipulation and coordinated trading schemes.

The problem isn't new—any market without adequate monitoring can be gamed. Bad actors can exploit thin liquidity, spread misinformation to move odds, or coordinate large bets to distort outcomes. When there's no watchdog checking the playbook, things get messy fast.

Kalshi's growth shows there's genuine appetite for prediction markets. But scaling without proper guardrails? That's how you end up with trust issues. Retail participants deserve confidence that the game isn't rigged against them.

The real question: can prediction markets mature into legitimate price discovery tools, or will they stay in the shadows as speculation playgrounds? Tightening oversight might slow growth, but it could be the difference between a sustainable market and a ticking time bomb.