If you watched the Golden Globes recently, you may have noticed something curious alongside the broadcast: real-time betting odds accurately spoiling the winners before the envelopes were even opened. Those odds came from a rapidly growing type of platform known as a prediction market. While many markets focus on innocuous topics like the Golden Globes, others concern global affairs, like the price of oil at the end of 2026, or weather, like the amount of rain in Denver this month.
The two largest prediction markets, Kalshi and Polymarket, are nearly inescapable. While the idea behind prediction markets has existed for decades, court decisions and regulatory approvals allowed Kalshi and Polymarket to offer politics and sports contracts in the United States, and trading volume exploded. Today, both companies routinely run advertisements during major sporting events, in basketball arenas, on screens in Times Square and on social media.
These platforms’ meteoric rise has been met with controversy. Minnesota politicians, led by Gov. Tim Walz, went so far as to ban prediction markets effective Aug. 1. Critics typically say prediction markets are particularly susceptible to market manipulation, insider trading and conflicts of interest. Serious concerns about these platforms are reasonable, and opposition to them is well-intentioned. However, prediction markets are not only here to stay — they may ultimately prove to be a force for social good.
It’s important to understand the mechanics of prediction markets. Polymarket and Kalshi serve as marketplaces between buyers and sellers. Each contract exchanged is structured as a binary question — the event will either happen or it won’t. Prices are between $0 and $1. If the event happens, you’d receive $1; otherwise, you’d receive nothing. If enough contracts are bought and sold, the market will settle on a price that accurately reflects the probability of the event occurring.
For example, suppose you buy a contract that says President Donald Trump will be impeached by 2028. If the current price is 60 cents, that means the crowd thinks there’s a 60% chance the event occurs. If Trump is impeached, the market would resolve to “yes,” your contract becomes worth $1, and you’d net 40 cents. These odds are down from 66% in late April; you could presuppose users are “pricing in” Democrats’ lower odds of taking back the House of Representatives in that timeframe.
These markets function as a social tool of information, not just of “betting.” People are motivated by incentives, particularly financial ones. Because people have money on the line, they are driven to make more accurate predictions and correctly price contracts. Financial accountability makes markets more efficient, so they more closely resemble the true likelihood of an event’s occurrence, accounting for all publicly available information.
This is in contrast to television or social media pundits who are motivated by ratings or likes instead of accuracy. Technology has amplified the amount of negative, untrue and sensationalist headlines on both traditional and online media sources. It’s difficult to discern what is important or even relevant. Even polling, a hallmark of political punditry, has become increasingly unreliable.
During the 2024 election, Polymarket priced Trump’s election odds higher than other predictors in the days leading up to the election. One “whale” bettor who made more than $80 million on the election conducted an obscure form of polling where he asked people how they thought their neighbors would vote. This indicated Trump had a much better chance of winning than public polling suggested. The markets’ aggregation of many sources, both public and arcane, took advantage of the “wisdom of the crowds,” rather than any single method of prediction, and subsequently was more accurate.
Beyond politics, these crowd-sourced forecasts offer extraordinary value. They may be able to provide early warnings about crises, like a pandemic or a geopolitical conflict. In 2020, during the COVID-19 pandemic, bureaucratic and economic systems were too slow to react to worrying signs about the virus’s spread in Asia. By aggregating information from thousands of participants in real time, prediction markets can rapidly incorporate new evidence into prices.
Just like previous advancements in forecasting, prediction markets have the potential to make the world better informed and more prepared for future risks. The global supply chain is extraordinarily complex, spanning several continents and accounting for trillions of dollars of consumer spending. Supply shocks, such as pandemics or conflicts in the Middle East, can exacerbate inflation, shortages and put companies out of business. Prediction markets, and the real-time odds they provide, can help logistics companies flag risks ahead of time or hedge against them.
They also serve as an interpreter of news — for example, Trump’s tariff policy announcements were quickly met by increased inflation expectations. While Trump’s allies insisted his tariffs weren’t inflationary, markets suggested otherwise. Markets are also interpretable in conjunction with each other. By comparing a candidate’s odds of winning a party nomination with their odds of winning the presidency, we can estimate how electable traders believe that candidate would be in a general election. For example, Secretary of State Marco Rubio appears stronger than Vice President JD Vance among Republicans, and Sen. Jon Ossoff, D-Ga., and Rep. Alexandria Ocasio-Cortez, D-NY, appear to be stronger candidates than California Gov. Gavin Newsom and Rahm Emanuel.
Much of the opposition comes from the potential for insider trading. Because it’s so easy to make trades, market participants might include people who can directly control the outcome. For example, former U.S. Rep. George Santos is currently being investigated by the Department of Justice for betting on whether he’d attend the State of the Union address. Additionally, prediction markets have spoiled reality TV shows like “Survivor” by correctly predicting the winner months ahead of time — someone involved with the production could have leaked the result.
These are completely valid arguments, and prosecuting offenders is essential to preserving market integrity. However, we shouldn’t dismiss prediction markets’ potential by focusing solely on their vulnerabilities. When the stock market first became prominent more than a century ago, it was plagued by fraud and manipulation. We didn’t ban stocks; we regulated them. Today, equity markets are an important part of the global financial system. In the case of prediction markets, it’s in the best interest of the public and markets themselves to police insider trading.
Prediction markets are not perfect, and we shouldn’t pretend they are. The concerns surrounding prediction markets are real and worth taking seriously. However, much of the political rhetoric neglects the societal good that accurate forecasting can provide. We are overwhelmed with so much information available in the internet era — much of it false. Prediction markets are a unique opportunity to get closer to the truth.
Hayden Buckfire is an Opinion Columnist who writes about American politics and culture. He can be reached at haybuck@umich.edu.
