The pattern repeats with minor costume changes: a gambling product scales faster than regulators can study it, the damage compounds during the lag, and Congress arrives with hearings just late enough to look serious without having prevented anything. Kalshi and Polymarket are generating bipartisan alarm on Capitol Hill in 2026, with senators citing state revenue cannibalization and suspected insider trading on event contracts. But this scramble is arriving roughly eight years after the Supreme Court opened the door to legal sports betting and let the identical sequence play out at forty times the scale. Jonathan D. Cohen's Losing Big documents that earlier, larger episode, and reading it makes the current panic feel less like a crisis and more like a rerun.
The congressional frustration over prediction markets collides with several constraints at once. State governments see every dollar wagered on an election outcome as a dollar pulled away from licensed sportsbooks that pay state taxes. Federal regulators are fractured on jurisdiction: the CFTC approved Kalshi's event contracts, but Washington state sued the company for violating gambling laws, and Robinhood counter-sued to protect its right to offer prediction-market shares. Insider-trading allegations raise securities-law questions that gambling regulators have zero precedent for answering. Each of these constraints has a direct ancestor in the sports betting expansion. States competed to offer the friendliest terms. Industry lobbyists helped write the rules. Enforcement trailed adoption by years. Most coverage of the Kalshi moment treats it as unprecedented. Cohen's book says it is a sequel.
Losing Big is a case study in regulatory capture so thorough it almost looks consensual. After the Supreme Court struck down the Professional and Amateur Sports Protection Act in 2018, sportsbook executives sat in on the bill-drafting sessions that would govern their own industry. Cohen traces how tax rates were negotiated downward before a single legal wager was placed, and how "responsible gambling" provisions were written to satisfy press releases, not to prevent harm. The house, in short, wrote its own rules and then sat down to deal.
The prediction-market parallel is obvious once you see it. Kalshi sought CFTC approval for event contracts, effectively shopping for a friendlier regulator than state gambling commissions. FanDuel and DraftKings ran the same maneuver in the mid-2010s, classifying daily fantasy sports as "games of skill" to sidestep gambling statutes. Cohen shows how that definitional trick purchased years of unregulated growth. The prediction-market companies have swapped the jersey but kept the play. The book's most uncomfortable chapters concern the targeting machinery underneath the product.
Dynamic pricing algorithms adjust odds and promotions for individual users based on betting history and behavioral profile. A bettor on a losing streak might receive a "free bet" calibrated to re-engage them at the precise moment they should stop. Cohen describes marketing budgets that dwarfed state enforcement budgets by orders of magnitude. By 2023, Americans had wagered $121 billion on sports, more than the country spent on movies and video games combined, with the fastest-growing segment being young men betting on their phones at 2 a.m. One genuine weakness: Cohen's policy prescriptions lean toward tighter state-level regulation, and he spends little time asking whether prohibition-era lessons should temper that instinct. The book is exhaustive on how deregulation failed but thin on the mixed record of re-regulation. Given that Congress is now floating federal intervention in prediction markets, that gap stings. A chapter on what happened when states tried to put the genie back in the bottle, instead of just documenting how it got out, would have made the book substantially more useful to the lawmakers who need it most. The human-cost reporting is what stays with you after the policy arguments blur together. Cohen reconstructs individual stories of addiction with a historian's patience and a journalist's ear for self-deception. One gambler confesses to $300,000 in losses. Others describe downloading a betting app during a football game and, within months, gambling away rent money on obscure prop bets they barely understood. The speed of that pipeline, casual curiosity to compulsive behavior, is something anyone drafting legislation on Kalshi's event contracts should sit with before picking up a pen.
The prediction-market debate will keep generating headlines through 2026 and beyond. The forces driving it, fast adoption outrunning slow regulation, costs falling hardest on the people least equipped to absorb them, are already mapped in the sports betting expansion Cohen has documented. Losing Big gives you the history before it finishes repeating. Whether Congress learns from it is a separate question, and recent precedent does not inspire confidence.