How Prediction Markets Turned the World Into a Casino

When it comes to what you can gamble on these days, all bets are off.

On prediction markets — platforms where people bet against each other on the outcomes of real-world events — traders are wagering on the chances of a major meteor striking Earth before 2030, whether Taylor Swift will mention her fiancé on her next album, and who TIME’s "Person of the Year” will be. As demand soars for the ability to bet on almost anything, prediction markets are processing billions of dollars in volume every week. Traditional players are taking notice: a number of financial giants and sports-betting firms are getting in on the action.

The relaxed regulatory environment under the Trump administration has fueled this growth and blurred the line between trading and gambling. Amid the rise of sports betting apps, novelty cryptocurrencies, and meme stock speculation, prediction markets are yet another way for amateur traders to rack up losses quickly. Critics say that thin oversight also leaves markets exposed to insider advantages that can undermine their integrity.

The sudden emergence of the industry in the mainstream is beginning to recast public life as a series of bets waiting to be placed. Here’s what’s important to know.

How do prediction markets work?

Prediction markets such as Polymarket, Kalshi and PredictIt allow people to bet on the outcome of real-world events. Traders bet either "yes” or "no” that something will or will not occur — that the Democratic Party will control the US House of Representatives next year, that Bugonia will be nominated for Best Picture at the Oscars, that the Denver Nuggets will win the National Basketball Association Finals, or that Chicago will get more than 12 inches of snow this month.

This is very similar to online betting, but unlike with gambling companies, there’s no "house” setting odds or taking the opposite side of your bet. When you buy a "yes” or "no” share — or an "event contract,” as the bets are known — someone else on the exchange is selling it to you and betting against you. The exchange matches buyers and sellers and holds the money until the event takes place. Buying a "yes” or "no” share typically costs anywhere between $0 and $1. The price is set by supply and demand: Strong demand for "yes” pushes the price of that side of the bet up and the price for "no” down. Strong demand for "no” reverses those movements.

After the event happens, traders who bet correctly get $1 for each contract they bought. Those who bet on the incorrect side lose their money. For example, if you bought a "yes” contract for 40 cents that it will snow more than 12 inches and it does, you get $1 back — a 60-cent profit (minus fees). If it doesn’t snow, you lose the 40 cents you paid.

• https://www.bloomberg.com/news/articles/2025-12-12/how-prediction-markets-are-blurring-the-line-between-trading-and-betting