Prediction Marketing
“The best way to predict the future is to create it.” -Peter Drucker
The recent “procuring” of Venezuelan President Maduro seems to have put prediction markets on everyone’s radar overnight. Is that surprising? Probably not. The news of someone making $400k on a prediction trade tied to his capture is one of those headlines that will have people’s ears perk up, because it sounds like easy money. Prediction markets allow people to place wagers in an increasing number of situations, given that someone is willing to take the other side of the bet.
Though prediction markets are much broader than the standard casino-gaming or sports-betting platforms, it still sounds like gambling to me, and gambling isn’t exactly known as a reliable happiness practice. In addition to weighing the societal good of this technology, whether the futures we bet on are permitted to be a “sure thing” is another part of the current story. Let’s do a deeper dive (or begin to scratch the surface) to learn more about the world of prediction markets and what utility they may offer in this first Alt Blend edition of 2026. Here we go!
Where were we? And where are we now?
According to Britannica Money, the concept of prediction markets was first developed at the University of Iowa in 1988, where the Iowa Electronic Markets were created to bet on political outcomes. After that, a company called Intrade operated from 2001 to 2013 but was ultimately brought down by regulatory issues. Until recently, there have been two primary players in the prediction market space that readers have possibly heard of, namely:
- Kalshi: founded in 2018 by former MIT students, regulated by the CFTC (Commodity Futures Trading Commission), and garnering about 40% of the US prediction-market share.
- Polymarket: founded in 2020; not available in the US (that is expected to change soon), but has been the highest volume platform.
The space is evolving quickly, with newcomers and familiar faces launching very recently or imminently, including FanDuel Predicts, DraftKings Predictions, Fanatics Markets, Crypto.com, and Robinhood.
Note: The CFTC regulation element of Kalshi is important, as it allows for national approval and involves substantial monitoring, risk-management, and operational requirements, part of which is designed to comply with anti-manipulation rules (source: VegasInsider.com)
Inside jobs?
First, it’s important to point out that even the Maduro-capture trade involved betting about $32,000 to win the $400,000 we’ve seen in headlines. It’s a sizeable amount of money, representing what would be years of savings for many Americans, so that person (known as “Burdensome-Mix”) really put their money where their mouth is. Now, maybe they’re wealthy, and $32k represents a drop in the bucket. Or maybe it’s a group of people who pooled money together. Even so, in my line of work, I know many people in very strong financial positions, yet I can count on one hand (or less) the number of them who would bet even a fraction of that amount on a binary political event. That leads us to our next questions, which are:
- Was there insider trading involved?
- Is that legal?
Of course, if one had advanced knowledge that the US was flying a mission to capture Maduro, then that bet would sound much less like gambling; however, I still don’t think that eliminates all the risk of the trade. After all, can you ever say the kidnapping of a foreign leader is a sure thing?
At the same time, per this recent Forbes article, an even bigger win that anecdotally seems to have garnered much less attention was the award of “$1 million from guessing 22 out of 23 of Google’s most popular searches of 2025 correctly” in advance of Google releasing that information. Now that sounds more like someone stole the test answers and purposely got one question wrong to throw the teacher off the trail.
Both of those trades sound suspicious, but my money’s on the Google situation for winning the outright-cheating award. Regardless of my thoughts, these big wins have generated consumer backlash and even a bill seeking an “Insider Trading Crackdown” that would ban “government employees from using prediction markets while having access to nonpublic information.” As for the legality, it seems insider trading (even in prediction markets) is already illegal, even though more rules are being proposed.
#Winning?
Robin Hanson, “the economist, who’s commonly known as the godfather of modern prediction markets, thinks that using inside information to place bets like this is actually necessary for these markets to work.” In fact, he goes so far as to say, “People with more information should trade more and get more money because that’s how they get paid for the information they contribute.” And there seems to be a divergence between the founders of Polymarket (“insider trading is a public good”) and Kalshi (“strictly prohibits any insider trading”) on the merits of insider trading.
Suppose prediction markets are essential for the future of mankind; then, ensuring people are well paid for contributing information via betting on “predictions,” even if that information is ill-gotten, perhaps has a leg to stand on. As that’s certainly not the case today, I can’t see how insider trading would be helping the situation. On the other hand, I can surely envision legal insider trading quickly and consistently incentivizing illegal theft of information for financial gain via prediction markets. After all, plenty of people have been willing to engage in insider trading in stocks that was overtly illegal (Steve Cohen and S.A.C. is another common example the other article left out). And if one knows (or creates) the future, then they aren’t predicting anything; they’re just stealing from the poor souls on the other side of the wager.
My bet is that – even if the insider trading isn’t legal – some of that information is going to find its way into prediction markets and they will function perfectly fine. We’ll see where this all goes, but we do know there is wisdom in crowds, and prediction markets are quickly becoming a significant part of the future of crowdsourcing, potentially leaving polling in their wake. As this quote astutely observes, “Polls measure what people say. Bets measure what people believe.”
Until next time, this is the end of alt.Blend.
Thanks for reading,
Steve
