Prediction Markets Hit Fever Pitch
Image generated by AI.
A wager, a trade, a contract – can you tell the difference? Each one involves a calculated risk predicated on a hoped-for outcome. Prediction markets blur the boundary further.
Even before Polymarket correctly called the winner of last year’s US presidential election the line was pretty fuzzy. Then blockchain technology bridged it. When the ban on political betting was lifted in 2024, a door was opened. Prediction market platforms walked straight through.
Last month the category minted its first unicorns. Polymarket raised $200 million on a $1 billion valuation. Two days later, Kalshi announced a $185 million round against a whopping $2 billion price tag.
With online trading giants like Robinhood getting into the game, investors see big things in store. Have prediction markets achieved liftoff? And what about the blockchain upstarts who hope to exploit the leaders’ Achilles Heel?
Hedging the future
Prediction markets let anyone try their hand at forecasting the future and get paid when they get it right. Everyone from sports fans to current affairs buffs can channel their inner Nostradamus and take a punt on topics both trivial and weighty – perhaps the likely Rotten Tomatoes score for the next Superman movie, or who will be New York City’s next mayor.
For economists and others who try to tap into the wisdom of crowds, the success of prediction market platforms makes perfect sense. They offer a future where every uncertainty can be priced, hedged, and insured against.
They’re built on the idea that a large pool of bettors with cash on the line can foresee an outcome better than any one expert, no matter how deep …
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