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Prediction markets, fresh off their success in calling the 2024 presidential election, are offering a wild array of betting contracts and testing the limits of what they can get away with.
Polymarket, the unregulated offshore prediction market, has listed contracts related to the Los Angeles wildfires and Israel’s war with Hamas. Kalshi, a rival platform subject to U.S. regulation, enabled bets on whether Luigi Mangione, the suspect in the fatal shooting of a UnitedHealth Group executive, would plead guilty, before backtracking. In January, Kalshi listed contracts tied to the Super Bowl, blurring the boundary between financial markets and sports gambling.
Such trading venues are chasing growth when betting on sports, cryptocurrencies and meme stocks has gone increasingly mainstream. They are also expanding into new territory as President Trump ushers in an era of light-touch financial regulation, which will potentially ease constraints on what U.S. prediction markets can list. The president’s oldest son, Donald Trump Jr., joined Kalshi in January as a strategic adviser.
Prediction markets are exchanges through which users bet on future events. The prices of their betting contracts—which typically range from zero to $1—reflect traders’ assessments of the probability of those events happening.
Economists developed the concept of prediction markets in the 1980s, arguing that they could harness the wisdom of the crowd to forecast elections and assist government decision-making. As the idea has been commercialized, the results have sometimes been less high-minded.
Kalshi recently let users bet on whether Federal Reserve Chair Jerome Powell would say “good afternoon” at his recent press conference, while Polymarket listed a contract on how many men the OnlyFans star Lily Phillips would have sex with in one day.
Behind the proliferation of edgy bets is a stark business reality: Elections are the big cash cow for prediction markets, and trading volumes at Polymarket and Kalshi have slumped since November. Seeking to drum up new business, the platforms have listed a stream of buzzy, ripped-from-the-headlines betting contracts.
Polymarket, a crypto-based prediction market, has a history of listing contracts in questionable taste, such as a 2023 contract on the search for the Titan submersible, whose five passengers were killed in an undersea implosion. The platform is officially off-limits to Americans, though traders said the ban can be circumvented. Polymarket has explored setting up a regulated arm that would be accessible to U.S. users.
In January, as deadly wildfires ripped through Los Angeles, Polymarket allowed users to bet on when the Palisades fire would be fully contained, whether it would spread to Santa Monica within a given time, and other questions about the disaster.
A columnist for the Los Angeles Times slammed the wildfire contracts as ghoulish. Another observer—Molly White, an independent researcher who studies the crypto industry—argued that the contracts could encourage bettors to engage in arson for profit.
“It’s a grim reflection of society that there are people who see a wildfire and decide that they should try and make money on it,” White said.
Regulated U.S. prediction markets face more constraints. They are overseen by the Commodity Futures Trading Commission, which can ban contracts that involve terrorism, assassination, war, gaming or illegal activities, as well as similar activities that the CFTC deems to be against the public interest, according to a 2010 law. The law doesn’t define “gaming,” which has led to disputes over what kind of bets are permitted.
Under the Biden administration, the CFTC attempted to block Kalshi from offering election bets and proposed a broader ban on contracts tied to sports, elections and awards shows. Kalshi sued the CFTC and won a key court ruling, opening the door to legal U.S. election betting, which also became available on Interactive Brokers and Robinhood Markets. The ruling—along with Trump’s victory—emboldened Kalshi and its peers to push the envelope and list contracts on the edge of what the CFTC might allow.
In December, Kalshi listed several contracts on Mangione, the suspect in the killing of the UnitedHealth executive Brian Thompson. Users could bet on whether Mangione would plead guilty and whether he acted alone, among other contracts.
Within two days, Kalshi yanked the Mangione contracts. In a message to users, Kalshi said it had paused trading in them after “receiving notice from our regulator (the CFTC),” prompting speculation that officials viewed the Mangione wagers as potentially illegal assassination contracts. A Kalshi spokesman declined to comment on the episode. Mangione has pleaded not guilty.
Sports betting might be the next frontier. Just before Christmas, the crypto exchange Crypto.com listed Super Bowl contracts on a trading platform it owns called the North American Derivatives Exchange. In one of the last acts of the CFTC’s departing Democratic leadership, the regulator announced a review of the Nadex contracts and asked Crypto.com to suspend them. Crypto.com declined to do so.
Kalshi followed up after Inauguration Day, listing contracts on the Super Bowl as well as on coming championships for the National Hockey League, men’s college basketball and the National Basketball Association.
In recent trading, bettors on Kalshi favored the Kansas City Chiefs to win next weekend’s Super Bowl, giving them a 54% probability of beating the Philadelphia Eagles.
