The recent expansion of the gambling industry has transcended the world of sports through prediction markets such as Polymarket and Kalshi. These platforms, however, extend far beyond sports, providing the opportunity to effectively gamble on everything, from a U.S.-Iran nuclear deal to the categorization of incoming hurricanes.
Prediction markets can be thought of as gambling in which the odds are determined not by statistical algorithms but directly by those placing the bets. Presented in a binary format, the probabilities in prediction markets indicate the proportion of money wagered for each option. One might think this grants prediction markets merit that typical gambling methods lack. Advocates scoff at those who call prediction markets gambling, opting instead for the nuanced title of trading. In actuality, it hardly matters what one calls it. The addictive volatility of betting is at the core of every form of randomized wagering. It is not simply the reward that motivates bettors. It is the thrill of not knowing when or if the reward will come, prompting participants to develop an almost Pavlovian relationship with placing bets. Prediction markets are no exception.
Across their social media accounts, Polymarket and Kalshi assert their odds as if they are facts, deriving confidence from the “Wisdom of the Crowds,” as coined by journalist James Surowiecki.
This is not to say that prediction markets are entirely synonymous with other forms of gambling. Across their social media accounts, Polymarket and Kalshi assert their odds as if they are facts, deriving confidence from the “Wisdom of the Crowds,” as coined by journalist James Surowiecki. Theoretically, the “Wisdom of the Crowds” differentiates prediction markets, as it states that many people together can more accurately predict outcomes than any single expert. This concept, however, hinges on four conditions: diversity of opinion, independence, decentralization, and aggregation. Prediction markets satisfy the aggregation condition, as they systematically turn independent judgments into a collective decision, but fall short in all other respects.
Diversity of opinion relies on a variety of backgrounds to ensure the average of estimates centers near the true value. Prediction market users are disproportionately represented by Gen-Z. 71% of bettors are men, and higher-income and educated individuals are overrepresented. These asymmetrical demographics do not exactly indicate a variety of backgrounds. Furthermore, the independence condition requires that individuals make decisions without being influenced by others. With the rapid expansion of the prediction market digital manosphere, many users derive their information from identical sources. Finally, the condition of decentralization fails as it requires individuals to draw on different, specialized pools of local information tailored to their environments. A CEO and clerk will differ in their knowledge and opinion of the future of their company. Again, if the vast majority of users reside in similar environments, their knowledge is not decentralized. Prediction markets have no “Wisdom of the Crowds.”
Prediction markets know their audience; they know how to exploit them, too. They make this clear in their advertisements. Through pairing entrancing slogans such as “Can You Predict the Future?” with pop culture references, commercials curate an allure tailored to young, impressionable men craving success. In June, The Wall Street Journal released an investigation into Polymarket’s advertising, which fabricated influencers winning a payout of $900,000 on bets that did not exist. If they did exist, they would have resulted in a loss of $166,000. Further, Kalshi’s recent campaign, set in 1947, asks the question “Will Baseball End Segregation?” and, in essence, gamifies the Civil Rights movement. Equating Black Americans gaining basic human rights to a sporting match is a gross reduction of dignity. This advertisement exposes the moral ambiguity of betting on social and geopolitical issues. Is it ethical when a wealthy twenty-five-year-old man rejoices as his bet cashes on the extension of the Iran-Israel War? And what happens when individuals who control these issues venture into the world of prediction markets?
Prediction markets know their audience; they know how to exploit them, too.
In July, reports emerged that a White House teleprompter operator made over $100,000 betting on whether President Trump would utter certain words, phrases, or topics during public speeches. In March, a U.S. Army Master Sergeant profited $400,000 on the successful capture of the president of Venezuela. In February, clusters of new accounts made highly accurate predictions regarding strikes on Iran, with one account scoring over $500,000. High-profile individuals can use classified information for self-enrichment, and, if powerful enough, they can make certain outcomes a reality. This shifting of incentives fosters the ideal environment for grossly unethical practices. Perhaps there exists no better breeding ground for this type of insider trading than an administration shepherded by a man who made $1.5 billion trading stocks within the first quarter of 2026 alone.
Prediction markets spearhead the advancement of gambling and capital acquisition into every facet of American’s lives. They are constructing a multibillion-dollar enterprise on a foundation of economic falsities, deceitful advertising, and most concerning, corruption.
Jordan Falk ‘28 studies in the College of Arts & Sciences. He can be reached at falk.j@wustl.edu.