Financial assets, and especially stocks, are instruments to trade something of financial value.

You can also use the prediction markets to hedge in different channels

I could hedge it at the blackjack table too -- that doesn't make a blackjack hand a financial asset. I'm talking about whether the instrument itself is backed by something of inherent value.

You could buy a stock expecting asset appreciation, but the stock itself is a certificate of ownership in a business. Even a derivative of this, like options trading, is a contract to buy or sell or deliver said certificate of ownership in a business. Ultimately it is backed by something of tangible value.

Stock trading isn't gambling. It's just owning assets that can change in value. Options trading is much closer to gambling, and I would say the biggest difference between it and Kalshi and similar gambling companies is that it's much more rigorously (if nowhere near perfectly) regulated.

Stock trading has become gambling in the last 3 decades.

There is now effectively little to no difference.

That's like saying real estate is gambling. It's a fatuous equivocation.

Both have risk associated with them yes, one has oversight from the goverment and the other is a game / world event.

With stocks if I try to do insider trading I run the risk of Jail time. Or if I try to do a Pump and Dump scheme, I go to jail. If I am an person and I "place a bet on polymarket/kalshi" and then go and influence that outcome. It may not be illegal. Since these markets commodify literally any event, its impossible to control the items themselves. So the markets need to be controlled.

Prediction markets are overseen by the CFTC.

But oversight from the government could change tomorrow. The definition of something shouldn't hinge on what the government thinks it is. The government's definition should be based in something meaningful.