The odds are 100 percent that the further infiltration of prediction markets into the public square and political decisions is going to make our lives worse. Recently announced partnerships—Polymarket with Substack and X, and Kalshi with CNN and the Associated Press—have created the conditions to incubate the worst existing trends in society: reality mediated by markets, screens, and gamification; the loneliness of late capitalism unaddressed beyond the soothing repetition of virtual lever-pulling.
This past weekend, bettors in prediction market contracts involving a U.S. attack on Iran won and lost millions of dollars. Polymarket’s exchange on the exact date of the bombing reached $529 million worth of trades, one of the largest volumes in its history.
There are some legal issues. Some of those who bet on the ouster of Ayatollah Ali Khamenei at Kalshi may sue the company after it resolved the market as Khamenei being ruler until the moment he died. Because he died in power, their argument goes, he never left power. This left bettors who predicted he’d lose power empty-handed. Kalshi refunded $2.2 million in fees but not losses. Kalshi built a contract around a man’s removal from power, and its response to accusations of assassination bingo is a terms-of-service argument—a distinction understandably lost on the users now suing the firm.
But every participant in those markets was betting on death. Even those that lost money in betting on the attacks themselves did so because they bet on the wrong day: Imagine a roulette wheel with a crowd shouting for the marble to fall in their favored slot. Now imagine that marble triggering body parts falling from the air.
At least a roulette wheel is equitably governed by chance. These markets are easily gamed by exactly the kind of ethically bankrupt monsters attached to the Trump administration who would have foreknowledge of the strike—or those fortunate to overhear the matter being discussed over drinks. (If you are already OK with civilian casualties, profiting directly on them is just a short hop further away from humanity.) Sure enough, the market-tracking company Bubblemaps announced on Sunday that six crypto wallets established within 24 hours of the strikes had won $1.2 million buying contracts on it. We’re in a boom market for Armageddon arbitrage: Earlier this year, two Israel Defense Forces reservists were arrested for using confidential information to place bets on unspecified Israeli military operations.
But the corrosive nature of prediction markets reaches beyond the merely morbid as news organizations increasingly treat them not just as grim curiosities but as genuine measures of public opinion or, worse, scrying mirrors that can accurately measure anything more than the motivated reasoning of the freaks who place the bets. As disturbing as the reports of insider trading on Iran might be, we should be just as alarmed by the straight-faced coverage of what the “markets” think about the ability of the United States and its allies to force regime change: “Trump Humiliated as Markets Bet Against His Iran War” in The Daily Beast. “Polymarket Bettors Don’t Expect Swift Collapse of Iran Regime” in The Wall Street Journal.
These headlines may sound neutral, but they’re not. Any coverage normalizes the practice and, maybe even worse, supports the markets’ own justification for their existence. Polymarket defends its “Middle East Markets” with a disclaimer worth quoting in full:
The promise of prediction markets is to harness the wisdom of the crowd to create accurate, unbiased forecasts for the most important events to society. That ability is particularly invaluable in gut-wrenching times like today. 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.
The wildest claim of the many astonishing sentences here is that Polymarket has done some kind of focus group with “those directly affected by the attacks.” Did they consult a medium or a ouija board?
But the other assertions fall flat under the barest scrutiny, as well: The movement of these markets (especially in early days) is about as relevant to reality as Punxsutawney Phil’s shadow or your horoscope. They are only as meaningful as a straw poll of the Proud Boys or Elon Musk’s solicitation of opinions on X (if those can be said to be different things). Do the hunches of a person who would bet on a war represent the beliefs or desires of a normal human? Is there actually that much wisdom in this crowd, or is this just a cackle of hyenas? A prediction market around deadly world events is, at best/worst, a snapshot of society unraveling.
In that sense, I’m not even sure that prediction markets “give them the answers they needed in ways TV news and X could not.”
When the markets trend toward correct predictions, to the extent they can tell you more than the news, it is because some people know more than others. Insider trading is a feature, not a bug. Without those suspicious wallets coming in to shift prices on bombings, you’re just depending on that site that measures pizza orders from the Pentagon, though these days it might do more to measure deliveries from Total Wine.
Compared to what you can bet on now, the small-beer trading on presidential futures at one of the earliest “world event” platforms, the Iowa Electronic Market, seems quaint or even harmless. Kalshi partner CNN has some restrictions around the goriest markets; both CNN and Kalshi’s newest partner, the AP, have positioned their use of the markets mainly to forecast election results. (Though, again, even their utility in that regard is suspect.) So it’s unlikely CNN’s excitable pollster Harry Enten will be trumpeting the odds around Polymarket’s more obviously upsetting contracts: children catching a once-eradicated illness or ICE deportations anytime (or more war in the Middle East, for that matter). But anyone betting on the U.S. elections on Kalshi is betting on those things happening too.
Polymarket’s partnerships with X and Substack hit differently: These are already corrupted platforms, each of them willing to monetize the alt-right and awash in AI content. When they encourage users to take Polymarket seriously, it’s of a piece with their current business plans. The Wall Street Journal’s embrace is a little more jarring, but only if you forget they cover the biggest casino of them all.
The ingenious Midwestern economics professors that debuted the Iowa market were still asking people to think of politics as something outside themselves. That their small experiment only attracted the wonkiest among us is the only reason no one recognized it as an early indicator of this asocial insanity. They were pursuing accuracy for accuracy’s sake, and that’s a form of blindness. As soon as the journalism industry began rewarding those who were savvy about who will win office more handsomely than those who could point out what voters would lose, an embrace of prediction markets was inevitable.
Predictions markets are in some ways just more honest about the sociopathy embedded in the stock market and the depersonalization that capitalism demands of all of us. If you’re invested in Wall Street, you’re betting on the value of shares before people. (I’m guessing most of us have a health insurance company or two in our 401(k)s and yet still want the Dow to rise.)
That existing alienation creates a feedback loop. Prediction markets reintroduce the illusion of connection in a world where the media environment flattens events into digestible memes and distances us from outcomes. Already, social media perverts our natural desire for dopamine into an endless scroll, thriving on the possibility of pleasure coming after the next flick of the wrist. Gambling hijacks that same nervous system response: Gambling is not addictive because you win; gambling is addictive because you might keep winning.
The sense of involvement that comes from wagering might feel immediate and quantifiable, but it is a distraction from, well, the stakes. Profiting off an outcome means you are always incentivized to care more about what happens than who it happens to. That is why it is as corrosive to bet on zero more measles cases as it is to bet on a thousand more. That’s why I’m as worried about people betting on the weather as I am about them betting on which party takes congressional control. It feels like “skin in the game,” but you always lose a bit of yourself; profiting off of the outcome of an event places investment in being right or wrong over what serves you or your community.
Contracts resolving into “right” and “wrong” predictions—“yes” or “no”—might be another subtle attractor to these markets for those of us adrift in the toxic, infinitely malleable present. How wonderful to just know something.
But I keep thinking of the “U.S. civil war before 2027?” contracts on Polymarket, currently trading at $.08 (or 8 percent chance) with a relatively low volume of $118k. The market will resolve, according to Polymarket, with “a wide consensus of credible reporting confirming the U.S. is in a civil war.” Polymarket clarifies further, “Use of the phrase ‘civil war’ metaphorically will not count. Only a wide consensus of reporting that the U.S. has entered a literal civil war will qualify.”
All the problems I’ve identified above exist with this wager. It is immediately reprehensible from a moral standpoint. But processing the logistics of that resolution is where my brain breaks down. Multiple blue cities could be rubble, but waiting for “a consensus of credible reporting” would keep us out of a civil war forever given the rate at which journalism is evaporating now. A civil war might be an occasion when the markets themselves “give us the answers we need in ways TV news and 𝕏 cannot.”
Perhaps Polymarket partner The Wall Street Journal will be left. And maybe their White House correspondent places a side bet, holding off posting to X the piece that will finally seal the consensus until one minute after midnight the morning of January 1. At that point, insider trading is the least of our worries; I’ll just be happy that someone is left to collect.
