by David Hagenbuch - professor of marketing at Messiah University -
author of Honorable Influence - founder of Mindful Marketing -
author of Mindful Marketing: Business Ethics that Stick
author of Honorable Influence - founder of Mindful Marketing -
author of Mindful Marketing: Business Ethics that Stick
Q: Who will be the next head coach of the North Carolina Tar Heels men’s basketball team?
Q: When will the Department of Homeland Security be funded again?
Q: Where will Taylor Swift and Travis Kelce's wedding occur?
You might know the answers to these questions now, but at the time of writing this article, most people did not, which is why they were among the top trending questions on Kalshi, a key player in one of the fastest-growing consumer trends: prediction markets.
It’s human nature to speculate, and in many ways the habit is helpful – we need to anticipate future events and outcomes so we can prepare for them, e.g., natural disasters, economic cycles. But will betting on the outcomes of all manner of life events pay out as simple diversion or social/economic disaster? Now that’s a great question for Kalshi!
What are prediction markets and how does betting in them differ from other common kinds of gambling, e.g., casinos, lotteries, sports?
At the most basic level, prediction market betting is the same as other gambling in that the bettor places a wager on the outcome of an event, e.g., at a casino, where the ‘pill’ will land on a roulette wheel; for a Powerball drawing, what the winning numbers will be; in the NCAA Division I basketball tournament, which men’s/women’s teams will win.
However, a key difference is that betting in prediction markets is not limited to one or a few specific types of bets; rather, people can wager on the outcomes of virtually any activity, which players seem to be doing with increasing enthusiasm.
For instance, for the 2026 Super Bowl, Kalshi alone handled over $1 billion worth of bets – an increase of 2,700% from 2025. One of the most popular wagers was, ‘What will be the first song that halftime performer Bad Bunny will sing?’ Bets on that ‘event’ alone surpassed $100 million. People wagered on many other incidental Super Bowl outcomes such as ‘Will Elon Musk or Lionel Messi attend the game?’
Thanks to companies like Kalshi and Polymarket, the other main purveyor of prediction bets, this kind of gambling doesn’t need to wait for a once-a-year sports spectacle. People can wager on virtually anything that gains the interest of enough people to create a betting market. For example, while writing this paragraph, some of the trending bets only Polymarket are:
The great variety of bets and ease of placing them from almost anywhere have spurred a prediction market boom. In December of 2026 alone, Kalshi and Polymarket collectively saw almost $12 billion in wagers, an increase of more than 400% from the previous year.
Another important difference: prediction markets don’t serve as the ‘house’ like sports books do; rather, markets like Kalshi and Polymarket earn money by charging trading fees for bringing together opposite sides of a bet. The price of a bet on their sites indicates the likelihood that a given outcome will occur, e.g., a $0.20 bet = 20% probability of ‘yes, it will happen.’
The screenshots below from Kalshi show a bet on whether the government shutdown will last for at least 70 days. Given the market-calculated 62% probability of ‘yes,’ $1.00 bet on the affirmative earns $2.00, if the shutdown reaches 70 days, while $1.00 wagered on ‘no’ earns $3.00, apparently because of its lower, 41% chance, of occurring.
Q: When will the Department of Homeland Security be funded again?
Q: Where will Taylor Swift and Travis Kelce's wedding occur?
You might know the answers to these questions now, but at the time of writing this article, most people did not, which is why they were among the top trending questions on Kalshi, a key player in one of the fastest-growing consumer trends: prediction markets.
It’s human nature to speculate, and in many ways the habit is helpful – we need to anticipate future events and outcomes so we can prepare for them, e.g., natural disasters, economic cycles. But will betting on the outcomes of all manner of life events pay out as simple diversion or social/economic disaster? Now that’s a great question for Kalshi!
What are prediction markets and how does betting in them differ from other common kinds of gambling, e.g., casinos, lotteries, sports?
At the most basic level, prediction market betting is the same as other gambling in that the bettor places a wager on the outcome of an event, e.g., at a casino, where the ‘pill’ will land on a roulette wheel; for a Powerball drawing, what the winning numbers will be; in the NCAA Division I basketball tournament, which men’s/women’s teams will win.
However, a key difference is that betting in prediction markets is not limited to one or a few specific types of bets; rather, people can wager on the outcomes of virtually any activity, which players seem to be doing with increasing enthusiasm.
For instance, for the 2026 Super Bowl, Kalshi alone handled over $1 billion worth of bets – an increase of 2,700% from 2025. One of the most popular wagers was, ‘What will be the first song that halftime performer Bad Bunny will sing?’ Bets on that ‘event’ alone surpassed $100 million. People wagered on many other incidental Super Bowl outcomes such as ‘Will Elon Musk or Lionel Messi attend the game?’
Thanks to companies like Kalshi and Polymarket, the other main purveyor of prediction bets, this kind of gambling doesn’t need to wait for a once-a-year sports spectacle. People can wager on virtually anything that gains the interest of enough people to create a betting market. For example, while writing this paragraph, some of the trending bets only Polymarket are:
- Who will be the winner of Eurovision 2026?
- When will the U.S. and Iran reach a ceasefire?
- What will SpaceX’s IPO closing market cap be?
- What will be the price of crude oil by the end of March?
- Who will be the Republican presidential nominee in 2028?
- How many Elon Musk # tweets will there be March 31 - April 7?
The great variety of bets and ease of placing them from almost anywhere have spurred a prediction market boom. In December of 2026 alone, Kalshi and Polymarket collectively saw almost $12 billion in wagers, an increase of more than 400% from the previous year.
Another important difference: prediction markets don’t serve as the ‘house’ like sports books do; rather, markets like Kalshi and Polymarket earn money by charging trading fees for bringing together opposite sides of a bet. The price of a bet on their sites indicates the likelihood that a given outcome will occur, e.g., a $0.20 bet = 20% probability of ‘yes, it will happen.’
The screenshots below from Kalshi show a bet on whether the government shutdown will last for at least 70 days. Given the market-calculated 62% probability of ‘yes,’ $1.00 bet on the affirmative earns $2.00, if the shutdown reaches 70 days, while $1.00 wagered on ‘no’ earns $3.00, apparently because of its lower, 41% chance, of occurring.
So, if someone bets $100K on ‘no,’ and the shutdown ends in fewer than 70 days, they earn $300K. They also would apparently earn 3.25% interest on the $100K wagered from the time they place the bet and put the money in their Kalshi account until the bet is paid.
That’s a quick primer on why prediction markets have grown so rapidly, what they are, and how they work. However, the most important question, which more individuals and organizations have begun to ask, is, Should they exist? Just because they’re popular and profitable doesn’t mean they’re desirable, or right. So, what are the pros and cons of prediction markets?
Prediction Market Positives
Diversion: For people who like to bet, prediction markets offer a plethora of possibilities. As mentioned above, the types of wagers are virtually limitless, far exceeding the options in sports and casinos. For some, betting is entertainment – something that brings them enjoyment and/or escape from life’s daily challenges.
Income: People who are good prognosticators can make money in prediction markets. As the example above from Kalshi illustrated, a person can wager a little or a lot and, if skilled/lucky, earn a sizable return on their ‘investment.’
Information: At a minimum, prediction markets allow anyone who visits their sites see what the betting public perceives will be the outcomes of a wide variety of events. Some proponents maintain that the markets “generate real-time information beyond traditional news or intelligence analysis.” (Bloomberg Morning Briefing: The Americas, 3-2-26). Organizations could conceivably use such insights in their planning as part of a situation review or SWOT analysis.
Kalshi cofounder Tarek Mansour agrees with that informational utility, arguing that prediction markets are “the most effective way to aggregate information and the crowd wisdom,” and “People don’t lie when money’s involved. You want to be right about your predictions so you don’t lose money.”
Hedging: The uncertainly of economic, political, and other events often lead businesses to try to manage financial risk by taking positions on opposite sides of a given outcome. Prediction markets offer such opportunities in ways that would not have been possible decades ago.
For example, Kalshi is reportedly partnering with the insurance company Game Point Capital to help “college athletics departments, sports teams and sponsors to manage the financial risks of performance incentives in athletes’ and coaches’ contracts” (New York Times DealBook, February 10, 2026).
Just as there are apparent benefits of prediction markets, there are likely disadvantages.
Prediction Market Negatives
Time-Sink: Although many different activities can become unproductive, wasteful uses of time, betting in prediction markets seems to hold greater than average potential both because of the exceedingly wide variety of types of trivial bets and because of the addictive nature of gambling where ‘increasing tolerance for [the activity] requires more gambling as time goes on to feel satisfied.”
Minimalization of meaningful life events: While the topics of some prediction market bets are clearly trivial, e.g., ‘What will be the top U.S. Netflix show this week?, for others the markets minimize serious topics by encouraging bets to be placed on them. Although Kalshi prohibits wagers involving death, such as the demise of a nation’s head of state, some prediction markets have no such exclusions, and some, like Polymarket, accept bets related to war – see below. Such bets beg the question:
Do we want people pulling for destruction and reducing other human beings’ deaths to a wager won?
Difficult Regulation: While the 39 U.S. states that allow sports gambling regulate it within their own borders and the U.S. Security & Exchange Commission (SEC) regulates the trading of stocks, the Commodity Futures Trading Commission (CFTC) regulates prediction markets like Kalshi and Polymarket.
The CFTC is a long-standing regulatory body that promotes the “integrity, resilience, and vibrancy of the U.S. derivatives markets,” which includes financial products like swaps, futures, collateralized debt obligations, and options. The name derivative comes from the fact that the products are derived from the value of underlying financial assets such as commodities, stocks, and currencies.
A challenge for the CFTC in regulating prediction markets is that unlike the common financial assets listed above that tend to be relatively finite in number, the financial assets underlying prediction markets (bets) are constantly changing, as are the individuals who can potentially influence their values. As such, the CFTC necessarily delegates some of the regulation to the prediction markets themselves, or as it calls them, the “designated contract markets” (DCM). Two of the CFTC’s core principles highlight this delegation:
This delegation suggests that regulation of prediction markets is not nearly as tight as that of other derivatives or financial products, which seems to increase the potential for abuse, as the next bullet describes.
Risk of manipulation: Per its website, the SEC is intent on stopping the buying and selling of securities based on material, nonpublic information:
“Because insider trading undermines investor confidence in the fairness and integrity of the securities markets, the SEC has treated the detection and prosecution of insider trading violations as one of its enforcement priorities.”
Fair treatment of all buyers and sellers is essential for the effective functioning of any market, whether it’s for physical goods or financial products. As the SEC can attest, even when you know organizations’ executives and can track their trading, it’s not easy to maintain market integrity. Fair treatment of all participants is even more challenging in prediction markets where information flow and influence of outcomes is often more obscured.
For instance, one currently trending bet on Polymarket poses a question about a signature esports competition: ‘What will be said at the BLAST Premier Open Rotterdam 2026?’
I’m not familiar with the event, but as it appears 11 cast members will be involved in broadcasting the competition for BLAST.tv, it’s easily imaginable how someone remotely connected to the broadcast could either find out what will be said or influence the dialogue, then either place bets for themselves or advise others’ betting, all while avoiding detection.
Betting based on inside information for esports commentary is one thing; betting involving covert military operations is another. “Hours before the U.S. military captured Venezuela’s president, Nicolás Maduro, an anonymous user on Polymarket bet tens of thousands of dollars that Mr. Maduro would fall.” The bettor, who some believe may have been a government official with inside information about the operation, pocketed $410,000.
Difficult Regulation: While the 39 U.S. states that allow sports gambling regulate it within their own borders and the U.S. Security & Exchange Commission (SEC) regulates the trading of stocks, the Commodity Futures Trading Commission (CFTC) regulates prediction markets like Kalshi and Polymarket.
The CFTC is a long-standing regulatory body that promotes the “integrity, resilience, and vibrancy of the U.S. derivatives markets,” which includes financial products like swaps, futures, collateralized debt obligations, and options. The name derivative comes from the fact that the products are derived from the value of underlying financial assets such as commodities, stocks, and currencies.
A challenge for the CFTC in regulating prediction markets is that unlike the common financial assets listed above that tend to be relatively finite in number, the financial assets underlying prediction markets (bets) are constantly changing, as are the individuals who can potentially influence their values. As such, the CFTC necessarily delegates some of the regulation to the prediction markets themselves, or as it calls them, the “designated contract markets” (DCM). Two of the CFTC’s core principles highlight this delegation:
- “a DCM is responsible for preventing market manipulation, price distortions, and disruptions in the settlement of contracts.”
- “DCMs must establish and enforce rules to protect markets and participants from abusive practices, and promote fair and equitable trading.
This delegation suggests that regulation of prediction markets is not nearly as tight as that of other derivatives or financial products, which seems to increase the potential for abuse, as the next bullet describes.
Risk of manipulation: Per its website, the SEC is intent on stopping the buying and selling of securities based on material, nonpublic information:
“Because insider trading undermines investor confidence in the fairness and integrity of the securities markets, the SEC has treated the detection and prosecution of insider trading violations as one of its enforcement priorities.”
Fair treatment of all buyers and sellers is essential for the effective functioning of any market, whether it’s for physical goods or financial products. As the SEC can attest, even when you know organizations’ executives and can track their trading, it’s not easy to maintain market integrity. Fair treatment of all participants is even more challenging in prediction markets where information flow and influence of outcomes is often more obscured.
For instance, one currently trending bet on Polymarket poses a question about a signature esports competition: ‘What will be said at the BLAST Premier Open Rotterdam 2026?’
I’m not familiar with the event, but as it appears 11 cast members will be involved in broadcasting the competition for BLAST.tv, it’s easily imaginable how someone remotely connected to the broadcast could either find out what will be said or influence the dialogue, then either place bets for themselves or advise others’ betting, all while avoiding detection.
Betting based on inside information for esports commentary is one thing; betting involving covert military operations is another. “Hours before the U.S. military captured Venezuela’s president, Nicolás Maduro, an anonymous user on Polymarket bet tens of thousands of dollars that Mr. Maduro would fall.” The bettor, who some believe may have been a government official with inside information about the operation, pocketed $410,000.
Similarly suspicious, six newly created Polymarket accounts bet that the U.S. would strike Iran by February 28, and earned about $1 million. Bets on when the U.S. would attack were the only bets the accounts had placed. Apparently, some offshore prediction markets allow betting from anonymous or pseudonym accounts, which makes tracking insider influence all-the more difficult. Such systemic flaws provide a segue into the last point – danger.
Danger: Of course, the signaling of secretive military operations through prediction market bets places service personnel at great risk. However, almost anyone who doesn’t confirm, or validate, an event outcome that bettors desire also can be at risk. Such was the case for Times of Israel journalist Emanuel Fabian, who gamblers threatened to kill because the story he wrote about Iranian missile strikes on Israel didn’t support their side of a Polymarket bet.
Unfortunately, such gambling-related aggression is not an anomaly. Even in the case of sports betting, a recent NCAA study found that bettors harassed more than a third of Division I men’s basketball players. When money is at stake, people who gamble often don’t take their losses lightly, and sometimes they take out their frustrations on others in violent ways.
To plan for future events, individuals and organizations often need to try to predict them, then allocate resources, e.g., time and money, accordingly. Such ‘bets’ are crucial for our own effective functioning, as well as for those who rely on us.
That kind of ‘betting’ (i.e., planning) is different than wagering on the outcome of events that don’t involve us. While such betting can offer entertainment, afford income, and provide information, it also carries significant concerns including addiction, financial disaster, and even death.
Anticipating future occurrences for purposes of better planning is wise. Betting on largely irrelevant events invites unnecessary risk and introduces an array of unfavorable outcomes, beyond losing a bet. Encouraging others to play prediction markets may be profitable, but it's an investment in Single-Minded Marketing.
Similarly suspicious, six newly created Polymarket accounts bet that the U.S. would strike Iran by February 28, and earned about $1 million. Bets on when the U.S. would attack were the only bets the accounts had placed. Apparently, some offshore prediction markets allow betting from anonymous or pseudonym accounts, which makes tracking insider influence all-the more difficult. Such systemic flaws provide a segue into the last point – danger.
Danger: Of course, the signaling of secretive military operations through prediction market bets places service personnel at great risk. However, almost anyone who doesn’t confirm, or validate, an event outcome that bettors desire also can be at risk. Such was the case for Times of Israel journalist Emanuel Fabian, who gamblers threatened to kill because the story he wrote about Iranian missile strikes on Israel didn’t support their side of a Polymarket bet.
Unfortunately, such gambling-related aggression is not an anomaly. Even in the case of sports betting, a recent NCAA study found that bettors harassed more than a third of Division I men’s basketball players. When money is at stake, people who gamble often don’t take their losses lightly, and sometimes they take out their frustrations on others in violent ways.
To plan for future events, individuals and organizations often need to try to predict them, then allocate resources, e.g., time and money, accordingly. Such ‘bets’ are crucial for our own effective functioning, as well as for those who rely on us.
That kind of ‘betting’ (i.e., planning) is different than wagering on the outcome of events that don’t involve us. While such betting can offer entertainment, afford income, and provide information, it also carries significant concerns including addiction, financial disaster, and even death.
Anticipating future occurrences for purposes of better planning is wise. Betting on largely irrelevant events invites unnecessary risk and introduces an array of unfavorable outcomes, beyond losing a bet. Encouraging others to play prediction markets may be profitable, but it's an investment in Single-Minded Marketing.
Subscribe to Mindful Matters blog.
Learn more about the Mindful Matrix.
Check out the book, Mindful Marketing: Business Ethics that Stick
Learn more about the Mindful Matrix.
Check out the book, Mindful Marketing: Business Ethics that Stick
RSS Feed