I’ve been following prediction markets for years, fascinated by their core question: What happens when you can bet on anything? I think there is value in what these markets provide, but I worry about where the limits are. Should you be able to bet on a world leader getting overthrown? On the Golden Globes Podcast winner? On the specific words a press secretary says during a briefing? Some uses make sense. Thomas Peterffy, the former C.E.O. of Interactive Brokers, said in his organization’s January earnings call that the “most frequently traded contracts are temperature contracts,” allowing traders to hedge electricity and natural gas swings. That’s genuinely useful. Beyond the trading room floor, the 2024 election — where prediction markets outperformed traditional polls — made prediction markets impossible to ignore, shifting the framing from “here’s one data point” to “here’s what informed money thinks.” That linguistic shift with the implication that money knows best, paired with the move from possibility to consensus, felt worth unpacking. More recently, the Venezuela operation made things more confusing with alleged insider trading, giving rise to a bizarre situation in which Polymarket itself was put in the position of deciding whether an “invasion” had taken place, and therefore which bets paid off. There is an overall sense that we have taken things too far. The Senate vote five days later felt ceremonial because traders had already been paid, the event contractually defined, and the overall narrative set. Money had spoken. Capital had moved faster than democracy. As I wrote in a Times Opinion guest essay this week, when money wraps into everything, incentives skew so-called assassination markets, a long-predicted and troubling way for people to speculate on the death date of individuals, which have the potential to become real, perhaps with dangerous, self-fulfilling results. This betting frenzy threatens to turn everything into entertainment, detaching us emotionally from actual outcomes. And the gambling opportunities these platforms offer retail investors could accelerate the trend of economic volatility shifting from institutions to individuals. Legitimacy is shifting too, benefiting whoever processes uncertainty the fastest. When prediction markets weigh in on our politics faster than our democratic institutions can deliberate, there’s a danger that capital decides what’s real.
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