Forgot Your Password?

New to The Nation? Subscribe

Print subscriber? Activate your online access

.nation-small__b{fill:#fff;}

How Prediction Markets Are Taking Control of Everything

We have seen the future, and it is Polymarket and Kalshi processing insider bets on mayhem, chaos—and celebrity-wedding guest lists.

Prediction markets—online casinos disguised as investment vehicles, where you can bet on propositions ranging from who will win a particular sports contest to who will be a bridesmaid at Taylor Swift’s wedding—have exploded in the past two years. The monthly trading volume among prediction wagerers has skyrocketed, from $1.2 billion in early 2025 to more than $20 billion in January 2026, according to the blockchain-research firm TRM Labs. The two largest prediction markets, Polymarket and Kalshi, have a combined valuation north of $30 billion, making their founders some of the world’s most improbably young billionaires.

Most Americans who know of these strange hybrid beasts—half futures markets, half slot machines—likely encountered them in one of two ways: in news reports on their use as a tool for political insiders to make easy money wagering on war and death, or by discovering their capacity as a backdoor way to bet on sports in states like California and Texas that haven’t legalized sports gambling.

The war-and-death contracts landed with particular force in early January, when a Polymarket account likely created a week before US forces seized Venezuelan President Nicolás Maduro turned a $33,000 bet on his removal from office into $400,000 in profit, with two other accounts of apparent insiders collectively clearing another $230,000. The timing was difficult to explain without invoking advance knowledge of a military operation so secret that top members of Congress hadn’t been briefed on it.

And then there was Iran. Starting in December, Polymarket booked more than $529 million in bets on whether or when the United States would strike Iran; Kalshi allowed $54 million in bets on when Ayatollah Ali Khamenei would be removed from power, which turned out to mean killed in the joint US-Israeli air strikes on February 28. The New York Times found that in the 24 hours before the strikes, over 300 bets of at least $1,000 flooded in, with at least 16 accounts clearing more than $100,000 each; one account turned $60,000 into nearly half a million. A trader going by the name “Magamyman” made more than $553,000; another suspiciously lucky Polymarket patron had taken in nearly $1 million on a series of stunningly accurate bets on US and Israeli attacks on Iran over several years, according to CNN. (Kalshi, awkwardly claiming that it didn’t allow betting on death, canceled all of the wagers and issued refunds, infuriating the traders who had predicted correctly.) Connecticut Democratic Senator Chris Murphy was blunt: “I think it’s likely there were people making the decision on war with Iran that had a financial interest in doing so because they had placed a bet on one of these markets. It’s worse than insider trading.”

The early days of the Iran war also saw a distressing example of how the prediction markets’ penchant for death-betting could take a dangerous, wag-the-dog turn. Emanuel Fabian, a reporter for The Times of Israel, fielded a stream of ever more urgent messages from online accounts demanding that he alter a report he’d filed on a March 10 Iranian missile attack on Israel; they wanted him to say that the fallen ordnance in question were fragments brought down when Israel intercepted the Iranian missile in the air. It turned out that many Polymarket bettors had bet “no” on March 10 as the date for Iran’s first successful missile attack on Israel, and an intercepted missile meant the strike didn’t count. Angry Polymarket users passed around a doctored screenshot that supposedly showed Fabian walking back his story; one distressed bettor who had staked $900,000 on his “no” bet threatened Fabian’s life and claimed to know the whereabouts of his family.

Polymarket, for its part, has defended its war markets as an “invaluable” source of information and insight, issuing a surreal statement celebrating “the wisdom of the crowd” and claiming that “after discussing with those directly affected by the attacks, who had dozens of questions, we realized that prediction markets could give them the answers they needed in ways TV news and X could not.” Sure, Jan. But as unbelievable as such a claim may sound, it signals something important: The prediction-market project is not only about business. It’s also ideological. “Kalshi is replacing debate, subjectivity, and talk with markets, accuracy, and truth,” the company’s cofounder and CEO, Tarek Mansour, declared in a press release with typical tech bravado, as if the fervid speculations of a legion of hyped-up crypto-bro gamblers are anything other than subjective. “We have created a new way of consuming and engaging with information. It’s hard to have an opinion about the future today without thinking about Kalshi.” And that’s the problem in a nutshell: Mansour and the other leading apostles of the prediction market have ambitions that go far beyond war and Taylor Swift. Mansour says that his aim is “to financialize everything and create a tradable asset out of any difference of opinion.” The intellectual godfather of prediction markets, George Mason University economist Robin Hanson, wants to push things even further, touting them as a kind of replacement for democracy, one capable of taking over much of the machinery of government.

To understand what this brave new world will actually look like, you first have to understand what online sports betting has already done to us.

In 2018, the Supreme Court struck down a federal law banning sports gambling in all states but Nevada. What followed was a digital gold rush. State legislatures, facing perennial budget shortfalls, fell over themselves in the effort to legalize and regulate—and tax. Harry Levant, a former Philadelphia attorney and recovering gambling addict who has become a leading advocate for federal gambling reform, puts it bluntly: “They were becoming addicted—and I use the word intentionally—to the idea of finding a new source of revenue. If my neighboring state has it, we have to have it too.” Within a few years, 39 states had legalized some form of sports gambling, and millions of Americans proceeded to collectively lose somewhere in the vicinity of $50 billion chiefly just by staring at their phones.

The product that those (mostly) men were staring at was not quite what state legislators had voted for. Beginning in 2021, the major sports leagues started selling granular real-time data to the betting industry to enable “prop” (or proposition) bets on every micro-event in a game, no matter how seemingly trivial. As Levant puts it: “These elected officials had no idea we were going to be allowing betting on the speed of every tennis serve.”

If you’re a sports fan, you may have some idea of what happened next, but you may still be a little taken aback by the full extent of the transformation. In 2017, before the Supreme Court’s decision, wagerers staked $4.8 billion in legal bets on sports. Last year, that figure reached $167 billion.

Nearly half of American men between 18 and 49 have an online sports-betting account, according to a 2025 poll by the Siena College Research Institute. Sports media has been thoroughly colonized: Gambling commentary is woven into broadcasts, ad breaks are dominated by FanDuel and DraftKings, and much of sports radio has become an extended advisory service for would-be bettors.

It’s not exactly rare for sports fans to consider themselves experts on the subject. And so it’s hardly surprising that the average sports bettor, confident in their knowledge, expects to come out modestly ahead over time. A Stanford University study found that this belief is nearly universal—and nearly universally wrong, with nine in 10 bettors........

© The Nation