As so-called prediction markets like Kalshi and Polymarket embed themselves in every aspect of our daily lives, from elections to sports and entertainment, concerns have grown about what the explosion of these poorly understood, loosely regulated platforms could mean for regular people and democracy writ large.
Celebrities from LeBron James to Sydney Sweeney have inked lucrative deals with prediction platforms. Legacy news outlets have even begun including prediction market data in their coverage. And the Trump family is deeply embedded in these platforms’ success; Donald Trump Jr.’s VC firm just became a lead investor in Polymarket, and he is a paid adviser to both Polymarket and Kalshi.
But what actually is a prediction market, and what separates it from online sports betting platforms like DraftKings or FanDuel?
This week on The Intercept Briefing, Kate Knibbs — a senior writer at Wired who covers prediction markets, the future of media, and how AI is changing the internet — breaks down the battles to define prediction markets; what they’re getting away with in the meantime, while existing in this “weird” regulatory gray zone; and their potential to be a "disruptive force” in next month’s midterm elections.
States have been looking to regulate these platforms like they do sports gambling. But the companies are pushing back: The founders of Kalshi donated $200,000 to a new Texas-focused political action committee, a week after state lawmakers held hearings to investigate whether prediction markets constitute sports betting, which is illegal in Texas.
“Both Kalshi and Polymarket are tech unicorns at this point. They have a lot of money to spend, and they realize that this is an existential fight,” says Knibbs. “Donald Trump Jr. is very involved in this industry, and stands to gain a lot from prediction markets being able to operate as they desire and not be beholden to various state regulations that they're currently not beholden to. ... I am very interested in what is going to happen in this space when we have a different administration. Kalshi is seeming to hedge its bets by aggressively hiring former Biden administration stars.”
In addition to spending heavily on lobbying, their survival strategy includes inking deals with mainstream media companies like CNN, CNBC, and even Substack to establish credibility.
“I have been following the enmeshment between prediction markets and the media very closely because I think it's flown under the radar a little bit, while all of these regulatory fights have been going on, just how quickly the prediction markets managed to establish themselves as another source of truth about what's potentially happening in the world,” says Knibbs. “They are still so new, and the way that they are operating is still in this murky regulatory gray area. It just boggles my mind that they've managed to just become part of the financial news establishment in the way that they have.”
Full transcript: https://interc.pt/47sZKlv
Keep our investigations free and fearless at theintercept.com/join.
","author_name":"The Intercept"}