Kalshi and Polymarket are the big names in the new sector of "prediction markets", and other established names like Robinhood and Crypto.com are getting in on it too. They claim to be the most accurate way to predict future outcomes, but what are they really? They very specifically avoid the language of "bet" due to legal implications, but that gets closer to the heart of what is happening here. Are people really trading futures about who will be the presidential nominee in 2028, or would it be more truthful to say they're betting on who it'll be? Let's talk about what a future is, what these markets are, and how they work. P.S. Shout out to my friend Ty for some fact checking on economic topics, he's a numbers guy (i.e. has taken actual Economics courses).
Futures Present
Futures are a well established part of the stock market. Technically, a future is a "derivatives contract[s] to buy or sell specific quantities of a commodity or financial instrument at a specified price with delivery set at a specified time in the future"¹. In layman's terms, you're betting that you know which way the market is going and can get a deal by prepaying a contract to buy or sell something. Crucial to the future is the fact that you do eventually have to do a business, whether that business is buying gold, selling stocks, shares in a oil development, etc. At some point, there is an economic process happening where capital is exchanged for goods, services, and so on.
Events Past
Kalshi, Polymarket, and similar "prediction markets" all frame themselves as trading futures contracts on event outcomes, often called event contracts. Contracts themselves are supposed to be yes/no questions according to their FAQ pages² (e.g. "Will the U.S. invade Iran before 2027?"), but that doesn't seem to be what the platform primarily trades in. We'll return to the content of the markets in a moment; for now we focus on what these sites are.
Big picture, the "prediction markets" offer a range of contracts with multiple outcomes across a range of "odds" (something markets do not have) with fixed end dates and times. The platforms themselves act as the arbiters of truth, stating what will be their source of truth for the contract³. Please do remember that actual futures necessitate something actually changing hands, and there is no such thing happening here. Money just goes into a pot and is paid out to the winner, loser gets nothing. That's it; it's just gambling. We can quibble about it being of use as an event predictor, that doesn't make it a market, just gambling with some weird, abstract layer of utility.
Additionally, they are now both offering (Kalshi is open for all, Polymarket however is waitlist only at this time) "perpetual contracts" on crypto currencies, staking money if a cryptocurrency is going to go up in value or down. It's worth noting that this is just gambling on crypto values with a faint layer of abstraction; there's no end date as required by a future, it's an unlimited "contract" with a fixed price and odds for payout.
Short Digression: Aren't These Supposed To Be Binary?
As a random sample, I looked at Kalshi and Polymarket's front pages on the day of writing, August 7, 2026. 13 out of 16 events on Kalshi's homepage were not binary options, and 27 out of 37 events on Polymarket's. It's a small thing but the way these sites talk about themselves simply does not align with what they actually do. More options on more contracts means more ways for people to lose money. These services are dishonest about how they work and what they are.
What Is An Event?
The category of "event" is as wide as it seems as first blush. Both sites offer a range of categories for events that you can bet on, including elections, sports, culture, climate, economics, and more. There are shorter (more time-limited) contracts for sports matches (frequently under the "Live" tab on these sites). Polymarket also offers "Combos", which are just sportsbook parlays, which famously pay out very rarely.
Kalshi appears slightly more buttoned up and careful about what it lets be an event, as a vast majority of its traffic is from the USA. Polymarket on the other hand is more loose, offering a category for geopolitics (a.k.a. war), and has had said controversy about being a breath away from being an assassination market. From a brief bit of digging around it also seems to allow contracts on convictions (e.g. "Clavicular sentenced to prison?"), which Kalshi does not seem to allow (or if they do they do a good job of hiding it). Both websites prominently featured contracts on who would be the winner of the 2028 Presidential nomination for the Republican party (Kalshi also promoted one for the Democratic nominee), however Polymarket featured several of the contracts on acts of war as well (If the US will invade Iran, if the Israel/Iran ceasefire will hold, and if the US ends its Iranian Blockade by a certain date, among several others).
What's Wrong With Event Contracts (A.K.A. Gambling, But In A Suit)?
The "markets" are justified as legal as they are regulated similar to futures (which is in ideal circumstances, we'll get to what that looks like in practice in a moment), and useful as indicators of event outcomes. They are more accurate, according to them, because people are more honest when they have money in the game. There exists a problem twofold in the way these markets work though. First, like all financial instruments, they are prone to exploitation. Most markets don't operate as prediction markets do, with a big sign reading "DO YOUR INSIDER TRADING HERE!" This isn't a spurious claim either, it's been documented quite a few times already and we'll find many more instances in the future where individuals have used the markets to enrich themselves, some notable events include:
- The case of an account linked to a US Soldier that made several suspicious bets just before the arrest of Venezuela's president Nicolás Maduro.
- NBA star Giannis Antetokounmpo blatantly spread and profited from a rumor that he would be traded, just before announcing he was now a shareholder in Kalshi as well.
- A Mr. Beast editor was reported to the FTC for accusations of insider trading and a "near perfect" trading record. I will pause to note that this was over $4K and is paltry compared to the size of many of these markets.
- An as-of-yet unnamed individual made over $1M in 24 hours on a range of extremely specific bets mostly concerning Google rankings for various people and events.
- A user used a hair dryer to change an outcome on Parisian weather hitting a specific temperature.
These are just some of the instances that we know about; there can only be assumed to be many more happening just outside of view, or better hidden across accounts. This isn't to say that the sites shouldn't exist purely because they can be exploited, the internet itself wouldn't exist if that was the case. The platforms seem well aware of this problem too, but are perfectly comfortable just profiting off of it in the meantime. Wins of personal enrichment always mean that a lot of people had to lose, when there's no way they knew the real odds at play. Its an unfair system at its heart encouraging regular people to throw their money away.
See, "prediction markets" do not operate like either of its siblings, futures or gambling, largely for the worse. Traditional futures markets are hard for an individual or a group of individuals to shape the outcome of a particular stock or future. The markets operate at a size and scope far beyond the scale most people can affect. They're more resistant to large scale fraud and instances that do take place, we have a well established means of working through those claims in the CFTC and/or SEC. The CFTC and/or SEC is designed for the way these markets operate, with their scale and number of claims to boot.
The current regulatory system fails to accommodate this explosion of prediction markets. New sites are offering predictions each week, and the regulatory bodies are no more ready to handle new complaints and reports. It ends up adding a significant amount of claims, like the debacles mentioned², but also smaller ones like disagreeing on how the Parisian temperature contract paid out. These all take a certain level of resources to investigate, which are finite. On top of that, futures are typically certified by the CFTC, which is impossible for events contracts given the number that pay out every day. This means a lot of fraud is happening simply by nature of not being checked. The prediction markets get to boast about being "regulated" similar to these markets without actually playing by the same rules as the markets they ape.
Looking to the other side, the games in casinos are chance (though usually weighted in favor of the house) and in this way they are resistant to meddling; it's all just a numbers game that shakes out for the casino in the end. The more a person plays, the more the house wins, generally. Those games that do have some level of skill to manipulate odds (primarily card games like poker, blackjack, etc.), well they'll just ban you if they catch you doing so. It hurts the casino more than it does any individual other player, and thus they have a financial incentive to stop it.
The most damning evidence of these event contracts just being gambling comes of course from the site operators themselves. Kalshi, the one that controls approx. 90% of US trading volume, has a page on Responsible Trading. The page offers site integrated trading blocks, an integrated self-exclusion portal (identical to the ones used for the casino industry, just for prediction markets), and a link to the National Council on Problem Gambling. If your product isn't gambling, but you have to have gambling-like restrictions and links to gambling support resources, just give up the game and call it gambling!
So here we are: prediction markets skirt fitting in exactly one category or another, and thus have the worst of both worlds. They have a real vulnerability to meddling from even marginal lumps of cash or a dedicated people, and a lack of financial incentive to fix it, since they still get their fee. We have gambling mechanics applied to real world events, without any of the tools or expectations that come from gambling instituions.
Fine, It's Gambling: So What?
Partly, it really irks me that these sites lie about what they are. There was a similar issue with "skill games" in Pennsylvania, which were just recently ruled gambling. It excuses problem behavior as "trading" and creates wider access to systems that are known to cause problem behaviors. This isn't a call for a ban necessarily, but we know from study after study on problems like gambling, drugs, alcohol, gun crime, that one of the biggest factors by far is access. These platforms are facing several suits from different states and countries for acting as an unregulated casino because we know the harms and behaviors that come from unrestricted access to these products, especially when these products are so heavily advertised on social media platforms and even the news. These do pose a very real, demonstrable risk to communities and individuals.
Outside of it being gambling, I think there's a more serious conversation about what these sites do to be had as well. Is it good to create institutions that allow people to bet on who the presidential nominee is going to be? Is it better or worse if it's album sales? How about natural disasters, job losses, deaths? At some point, it feels like a moral failing on the part of society as a whole; people get literally invested into outcomes that hurt people. Obviously, yes, some of it is not that serious and is just gambling, but some of it is harmful and incentivizes future death threats or worse for journalists and those reporting the news when things don't go someone's way. Part of legislation is laying out rules for how things operate, and some of it is dictating what we think is acceptable to do. In this way, prediction markets jumped well over the line and absolutely need to face punitive damages at the least.
I would encourage you to check on people in your life that are prone to problem gambling and other behaviors. Part of the problem of why these grow so out of control is the stigma and shame. Until these are appropriately regulated, we need to be there for each other more than ever. Good luck, godspeed, and please don't gamble on war crimes.
¹ Wikipedia, accessed 8/6/2026.
² See Polymarket's What is Polymarket, under quick overview, and Kalshi's About Kalshi, under Event Contracts. Both accessed 8/7/2026.
³ Both platforms have also had very public controversies where users disagreed with what their final verdict was on the "truth" of an event; see Polymarket's bets on if Vladamir Zelenskyy would wear a suit during a visit, and Kalshi's brush with death in a contract around when Iran's leader would leave office. This has also lead to at least one instance of a journalist getting death threats and harassment over an article.