Prediction markets open slippery slope to market manipulation, policy corruption

Due to the tumultuous state of the economy, many have turned to gambling as a side hustle. Many see it as a sort of outlet for the frustrations associated with the traditional means of income. In the wake of the legalization of sports betting around the nation, prediction markets have now become the next craze. Prediction markets are websites or apps where one can place money on the chance a prediction comes true. The type of predictions that can be made vary from the results of a political election all the way to whether or not the government will confirm that aliens are real. Prediction markets mark the nihilistic outlook that many Americans have due to the state of economics in the country, but it is not just an entertaining outlet. Prediction markets are currently fighting a legal battle in court over the designation of its service, to avoid being restricted as gambling. This, along with insider trading, illustrate the major threat that this new technology poses while it remains unregulated under gambling laws.

In the recent legal battle, industry giants like Kalshi and Polymarket have argued that, because these are predictions and have strategy involved, prediction markets should not be restricted under the same laws as casinos. A crucial factor in this battle is the very young audience that prediction markets have garnered. Similar to sports betting, the main market for these websites are young men who are influenced by paid sponsorships from internet personalities. Both sports betting and prediction markets are primarily targeting their marketing efforts at children, and as these services become more popular, they are getting integrated into places people go to look for information. 

CNN partnered with Kalshi as of December 2, 2025, and since then has been using Kalshi data as a source of public approval or belief on certain things. While this may seem logical under the guise that these are prediction markets, in reality these products are just gambling. These websites have bets on concepts that would be impossible to predict at this time, such as the 2028 presidential election, or the price of a cryptocurrency or stock five minutes from the time the prediction was made. Not only do these predictions have very little strategy involved, they are also fast-paced, like a social media platform, to incentivize predictions being made on whims, and not based on any real evidence. Though prediction markets may claim they are not gambling, the way they advertise themselves suggest the opposite, and without any change in regulation, this could develop into a major addiction for many children and young adults.

Beyond addiction, insider trading is becoming a major issue on these platforms as well. Polymarket specifically, allows many various predictions to be made on military action taking place, or when the US Federal Reserve will make their next announcement on the state of the economy, making insider trading very easy. Though websites like Kalshi claim that they do internal surveillance to avoid insider trading, their methods leave much to be desired. With services like Polymarket, the issue deepens. Polymarket offers no transparency regarding its methods for preventing insider trading and recently has been the source of major wins on near impossible odds without insider information. In February, six anonymous Polymarket accounts placed enormous predictions toward the time of US strikes against Iran’s capital Tehran. In total, these six accounts collected $1.2 million in profit off of this prediction. The specificity to be correct was within an hour of the attacks for this prediction, leading many analysts to mark these accounts as extremely suspicious. Along with this, the President’s son, Donald Trump, jr., sits on the advisory board for Polymarket, and has invested tens of millions into the platform. The large wins based on military action paired with Polymarket’s low degree of separation from government officials has led to concern regarding how fair a prediction market can really be on events with such high levels of insider information that could be abused.

As legal battles continue, so does the user base for prediction markets. According to the Wall Street Journal, both Kalshi and Polymarket are nearly worth $20 billion, making them some of the fastest growing startups in recent history. Culturally, this rise likely points to nihilism among many Americans due to economic strains, leading to a desire to hold control over their income through a prediction. Since layoffs and unemployment are on the rise, many feel as if they do not have the security of a stable income, and therefore have turned to these services as a possible source of extra income. Legally, they mark yet another attempt at redefining what is considered gambling under US law, and an attempt to loosen restrictions on both age and advertising for these types of services. Ethically, Kalshi swears the service prevents insider trading, but for an app with over 400,000 users, only 200 cases have ever been opened in investigation of suspicious trades last year, with likely even more users present now than ever. This poses the question, how can laws keep up with new technology? Can these corporations be trusted to self regulate, or does the government need to create a new subsection of laws for prediction markets? As of now, experts remain skeptical of these corporations’ self-regulation, but only time will tell what is in store for this new technology and the large amount of money it wields.

by Will Amel

Published March 20, 2026

Oshkosh West Index Volume 122 Issue VI