Online prediction markets are many things. Their founders praise them as the apex of capitalist ingenuity. Others see a fountain of crowdsourced insight into financial vibes and global affairs. Critics condemn them as ethically bankrupt.<\/p>\n
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The complicated truth is they\u2019re all of these at once. And business is booming.<\/p>\n
Yet by monetizing the full gamut of reality, platforms have opened Pandora\u2019s box. Basic tenets of liberal society\u2014democratic integrity and respect for human life\u2014are being corroded. Regulators need to step in.<\/p>\n
For example, Wealthsimple recently became the second company approved to offer prediction trading in Canada and is expected to launch Wealthsimple Predict this summer. This, despite how polling data suggests two in five Canadians oppose such markets. That said, Wealthsimple gained its approval on the condition that sports and politics are off limits. Instead, wagers will reportedly be confined to economic indicators, financial markets, and climate trends. If so, it\u2019ll be a major outlier within an industry that\u2019s suddenly worth more than the gross domestic product of Latvia or Tunisia.<\/p>\n
Around $5 billion (US) is now trading weekly across Polymarket, Kalshi, and others\u2014hundreds of millions of dollars hinge on geopolitical outcomes. Wagers exist on whether United States president Donald Trump runs for a third presidential term. Or a nuclear bomb being dropped before 2027. Trades on Kalshi based on Iran\u2019s former supreme leader Ayatollah Ali Khamenei being \u201cout\u201d by March 1, 2026, reached $54 million (US) before the site cancelled payouts after he was killed in US\u2013Israeli military strikes on February 28. The company\u2019s chief executive officer posted that the platform prohibits transactions \u201cdirectly tied to death.\u201d Users were unimpressed.<\/p>\n
\u201cThis is American commercial immorality on steroids,\u201d Democratic senator Chris Murphy of Connecticut told the Washington Post in early March, as fresh chaos roiling the Middle East sparked a betting bonanza. \u201cOnce events that involve good and evil simply become a financial product, I don\u2019t know how right and wrong matters any longer.\u201d<\/p>\n
Backlash is mounting. Anonymous, cryptocurrency-based accounts profiting from war and other grim scenarios doesn\u2019t sit well with most people. Still, a surge in criticism has done little, so far, to dent the gambling sites\u2019 magnetic appeal and room to operate.<\/p>\n
Rather than a bookkeeper (\u201cthe house\u201d) creating bets, users self-generate them tied to any conceivable event. Wagers are placed in binary fashion\u2014yes or no\u2014on whether that event will happen. Blockchain technology then matches up users taking opposite sides of the bet in an \u201cevent contract.\u201d Odds are adjusted in real time based on the ensuing buy-in activity; platforms collect transaction fees.<\/p>\n
The prospect of insider trading is glaringly obvious. A US special forces soldier involved in the January abduction of Venezuela\u2019s former president, Nicol\u00e1s Maduro, raked in around $410,000 (US) by betting with uncanny timing on when Maduro would be ousted from power.<\/p>\n
\u201cThis particular bet has all the hallmarks of a trade based on inside information,\u201d the head of financial reform advocacy group Better Markets told CBS News at the time. \u201cIt happened very late, right before the very event they were betting on happened; it was a relatively large amount of money; and it happened in a market that is not really regulated and where there is no transparency.\u201d The soldier was later arrested by US authorities on April 23.<\/p>\n
Elsewhere, an Israeli Air Force officer was indicted in March along with a civilian accomplice after they allegedly used classified information to previously win more than $162,000 (US). The pair had correctly forecasted Israeli airstrikes on Iran during the two countries\u2019 twelve-day war in June 2025. A Google engineer living in New York was then arrested in late May. Federal prosecutors claim the thirty-six-year-old Italian citizen won more than $1 million (US) on Polymarket from \u201cGoogle-related bets\u201d based on his access to company search data.<\/p>\n
These are just a few examples within a sea of suspicious trading behaviour. Yet another risk looms on the horizon\u2014a gradual warping of the global information ecosystem. This will be much harder to disentangle.<\/p>\n
\u201cOn X, both Polymarket and Kalshi have their own accounts that act as news feeds, where they post engagement-baiting and occasionally misleading headlines and speculate about world events that, conveniently, one can bet on via their platforms,\u201d warned tech writer Charlie Warzel.\u202f<\/p>\n
But any claims to objectivity ring hollow, he argued. That\u2019s because platforms don\u2019t acknowledge that countless users also place opposing side bets to hedge against either outcome\u2014a standard gambling technique. \u201cThis means that the markets don\u2019t always reflect what people think will happen as much as they reflect what people think other people think will happen,\u201d added Warzel.<\/p>\n