This is a fascinating take by Lit Nomad about prediction markets like Kalshi and Polymarket.
A little background – prediction markets are places where you can make bets on whether something will happen. The most familiar example is sports gambling – will team A beat team B. You make a bet by buying Yes or No for some amount of cents and you get paid a dollar if it comes true and nothing if it doesn’t.
These markets are unregulated so insider trading is likely. Maybe not for a game but there are other events you can track, like who will be TIME’s Person of the Year for 2025, where someone is likely to know before the issue is released. An editor, someone on the selection committee, someone who works for the printer, etc.
Lit Nomad argues that the prediction markets business model isn’t that of a sportsbook, trying to earn money by taking a cut of all the bets, but is closer to Bloomberg where you can sell the data. In that case, prediction markets want insider trading because that’s valuable information that makes the predictions more valuable. It’s a compelling case.
The final two minutes where he talks about creating markets and leveraging your insider information was less interesting to me but he makes great points nonetheless. It’s a legal gray area.
Anyway, worth watching for 11 minutes: