Wanna bet?: Inside the rapid rise of prediction markets

We’ve all had that moment of thinking: “There’s a 0% chance this meeting ends on time.”

Prediction markets, one of the fastest-growing trading segments in the US economy, turn that same gut feeling into a financial instrument, except the stakes are a bit higher than office resentment.

How prediction markets work

Platforms like Kalshi or Polymarket—and similar offerings from Robinhood, DraftKings, FanDuel, and more—essentially represent stock markets for future events. Instead of buying shares in companies, users buy contracts tied to yes‑or‑no outcomes like: “Will inflation fall below 3% this year?” or “Will Trump win the election?”

Each contract trades between $0 and $1. The price reflects investors’ estimate of how likely an event is to happen: $0.20 implies a 20% chance, while $0.90 implies 90%. If the event happens, the winning contract pays out $1.

• Unlike conventional sportsbooks, prediction markets don’t act as the house and pay out to winners.
• They instead match buyers and sellers on both sides of a question and make money via transaction fees, a structure supporters say creates unusually honest forecasts.
• Prediction markets are legal across America, and aren’t covered by laws in 28 states that ban online gambling.

All bets are on

Once a niche tool for political junkies, prediction markets have exploded into the mainstream. Nearly $12 billion traded across Kalshi and Polymarket in December alone, up more than 400% from a year earlier.

That surge has caught the attention of major media companies in recent months.

• Kalshi partnered with CNN and CNBC to integrate their real‑time probabilities into news reports and live broadcasts.
• Polymarket struck a distribution deal with Dow Jones, making its data available across the Wall Street Journal, Barron’s, and other media outlets.
• Google now shows prediction‑market odds in its search results and finance tools.

It’s also attracted negative attention. Critics of the growing prediction market industry—including conventional casino operators and state regulators—argue prediction markets blur the line between forecasting and gambling, and technically violate state anti-gambling laws.

• Detractors also cite worries about the possibility of insider trading and market manipulation.
• In one high‑profile case, an anonymous Polymarket user placed a large bet that Venezuelan President Nicolás Maduro would fall just hours before he was captured, earning a $400,000+ payday and raising questions about potential insider info.

Supporters counter that prediction markets are fundamentally different from sportsbooks and provide real-world value, with odds that typically outperform traditional polls. “People don’t lie when money’s involved,” says Kalshi co-founder Tarek Mansour.

Big picture: Investors are betting big on prediction markets themselves. Kalshi recently raised new funding at an $11 billion valuation, while Polymarket is valued around $9 billion after new backing from Intercontinental Exchange (which owns the NYSE).

📊 Flash poll: Have you ever used a prediction market like Kalshi or Polymarket?

• Yes, to place a bet
• Yes, but only to check real-time odds
• No

+Note: Kalshi is a sponsor of DONUT Press Media. Our newsroom is kept 100% separate from our advertising operations.