Online prediction markets are many things. Their founders praise them as the apex of capitalist ingenuity. Others see a fountain of crowdsourced insight into financial vibes and global affairs. Critics condemn them as ethically bankrupt.
The complicated truth is they’re all of these at once. And business is booming.
Yet by monetizing the full gamut of reality, platforms have opened Pandora’s box. Basic tenets of liberal society — democratic integrity and respect for human life — are being corroded. Regulators need to step in.
For example, Wealthsimple recently became the second company approved to offer prediction trading in Canada, and is expected to launch Wealthsimple Predict this summer. This, despite how polling data suggests how two-in-five Canadians oppose such markets. That said, Wealthsimple gained its approval on the condition that sports and politics are off-limits. Instead, wagers will reportedly be confined to economic indicators, financial markets and climate trends. If so, it’ll be a major outlier within an industry that’s suddenly worth more than the GDP of Latvia or Tunisia.
Around US$5 billion is now trading weekly across Polymarket, Kalshi and others — hundreds of millions of dollars hinge on geopolitical outcomes. Wagers exist on whether US President Donald Trump runs for a third presidential term. Or a nuclear bomb being dropped before 2027. Trades on Kalshi based on Iran’s former supreme leader Ayatollah Ali Khamenei being “out” by March 1, 2026, reached US$54 million before the site cancelled payouts after he was killed in US-Israeli military strikes on February 28. The company’s CEO posted that the platform prohibits transactions “directly tied to death.” Users were unimpressed.
“This is American commercial immorality on steroids,” Democratic Senator Chris Murphy of Connecticut told The Washington Post in early March, as fresh chaos roiling the Middle East sparked a betting bonanza. “Once events that involve good and evil simply become a financial product, I don’t know how right and wrong matters any longer.”
Backlash is mounting. Anonymous, cryptocurrency-based accounts profiting from war and other grim scenarios doesn’t sit well with most people. Still, a surge in criticism has done little, so far, to dent the gambling sites’ magnetic appeal and room to operate.
The New Arbiters of “Truth”
Rather than a bookkeeper (“the house”) creating bets, users self-generate them tied to any conceivable event. Wagers are placed in binary fashion — yes or no — on whether that event will happen. Blockchain technology then matches up users taking opposite sides of the bet in an “event contract.” Odds are adjusted in real time based on the ensuing buy-in activity; platforms collect transaction fees.
The prospect of insider trading is glaringly obvious. A US special forces soldier involved in the January abduction of Venezuela’s former President Nicolás Maduro raked in around US$410,000 by betting with uncanny timing on when Maduro would be ousted from power.
“This particular bet has all the hallmarks of a trade based on inside information,” the head of financial reform advocacy group Better Markets told CBS News at the time. “It happened very late, right before the very event they were betting on happened; it was a relatively large amount of money; and it happened in a market that is not really regulated and where there is no transparency.” The soldier was later arrested by US authorities on April 23.
Elsewhere, an Israeli Air Force officer was indicted in March along with a civilian accomplice after they allegedly used classified information to previously win more than US$162,000. The pair had correctly forecasted Israeli airstrikes on Iran during the two countries’ 12-day war in June 2025. A Google engineer living in New York was then arrested in late May. Federal prosecutors claim the 36-year-old Italian citizen won more than US$1 million on Polymarket from “Google-related bets” based on his access to company search data.
These are just a few examples within a sea of suspicious trading behaviour. Yet another risk looms on the horizon — a gradual warping of the global information ecosystem. This will be much harder to disentangle.
“On X, both Polymarket and Kalshi have their own accounts that act as news feeds, where they post engagement-baiting and occasionally misleading headlines and speculate about world events that, conveniently, one can bet on via their platforms,” warned tech writer Charlie Warzel. But any claims to objectivity ring hollow, he argued. That’s because platforms don’t acknowledge that countless users also place opposing side bets to hedge against either outcome — a standard gambling technique. “This means that the markets don’t always reflect what people think will happen as much as they reflect what people think other people think will happen,” added Warzel.
What’s more, a recent study by researchers at the London Business School and Yale University found just over three percent of users “showed a predictive ability exceeding random chance.”
Still, public confidence in mainstream media and institutions continues to wither. And people everywhere are clamouring for alternative sources of information. Prediction market firms are thus promoting their betting data as superior to polling, journalism or expert opinion.
Kalshi sponsors branded daily news segments on CNN. Polymarket has forged a partnership with the publisher of The Wall Street Journal to allow reporters inside access to the platform’s data to use in their stories. The Associated Press, CNBC, Fox News and Substack have all struck similar deals. For a brief period, Polymarket bets even began popping up in Google News feeds. Google now plans to integrate both platforms’ data into new AI-powered financial analysis tools.
“Kalshi is replacing debate, subjectivity, and talk with markets, accuracy, and truth,” said its CEO Tarek Mansour. “We have created a new way of consuming and engaging with information.” Polymarket’s CEO Shayne Coplan went even further. In an interview with 60 Minutes in November 2025, he credited his platform as “the most accurate thing we have as mankind right now.”
Yet their financial motives matter. The tech industry has a long history of radiating confidence and doling out hyperbole as advertising tactics. Mansour and Coplan have meanwhile quietly launched a new venture capital fund to reap gains from the spin-off effects of the companies they’ve built.
Not All Bets — or Users — Are Equal
Still, governments are now scrambling to get a grip on an industry that’s treating life like a gameshow. Internationally, regulation swings between non-existent in most nations to platforms being banned entirely in others. Authorities in 34 countries have restricted access to Polymarket in particular. Still, prohibition is a blunt policy instrument that rarely works in the long term.
The White House could easily regulate the industry if it desired. Prediction markets in America are classified as derivative exchanges, overseen by the Commodity Futures Trading Commission (CFTC). Yet Trump has a vested interest against doing so. The president’s private media conglomerate has inked a deal with Crypto.com to integrate prediction market betting into his Truth Social platform. Donald Trump Jr. is an adviser to both Kalshi and Polymarket as well.
US senators have instead exercised agency by barring themselves from prediction market betting. Individual states are also reaching for their own levers of power. Nevada banned Kalshi for two weeks in March for not having a state gaming licence and therefore engaging in illegal sports betting. Ohio, Massachusetts, Tennessee and others have followed suit. In May, Governor Tim Walz made Minnesota the first state to ban prediction markets altogether. Although this has irked both Trump and the CFTC, which is suing Minnesota and other states for supposedly overstepping their jurisdictional authority.
The Project On Government Oversight, a non-partisan US federal watchdog, highlights several options for more durable fixes. First, to halt insider trading, restrict elected officials, government employees and their families from betting on policy and politics. Plus, have these same individuals report other prediction market activity on required financial disclosure forms. Also, prohibit event contracts “contrary to the public interest” — wagers related to terrorism, assassination and war.
This approach aligns with how most experts believe platforms’ worst instincts can be reined in.
“Some events should not be turned into anonymous profit opportunities,” wrote Vass Bednar, CIGI senior fellow and managing director of the Canadian Shield Institute think tank, in January. “A society doesn’t need a market price for atrocity and nothing says ‘innovation’ like turning coups and chaos into a push notification.”
Absent new rules, the world may be headed in that direction.
