Prediction markets want to be the news

What It Covers

Verge editor Nilay Patel and senior reporter Liz Lopatto examine how prediction market platforms Kalshi and Polymarket position themselves as news sources rather than gambling operations, why insider trading is structurally embedded in their business model, and how a fragmented regulatory landscape across federal and state authorities may shape their future.

Key Questions Answered

• •Pseudo-events and betting overlap: Prediction markets gain traction specifically around pseudo-events — debates, polls, press conferences — rather than genuine news events. Because pseudo-events are knowable in advance and repeatable, they are easier to price into contracts. Recognizing this distinction helps explain why political markets dominate trading volume over markets tied to unpredictable real-world events.
• •Insider trading as structural feature: Prediction market proponents, including an academic paper cited by Lopatto, frame insider trading as a mechanism for surfacing hidden information publicly. Polymarket CEO Shane Copeland has called it "cool." Understanding this framing clarifies why self-regulatory enforcement remains minimal and why fines issued by Kalshi so far reach only low thousands of dollars.
• •Journalism partnerships create feedback loops: When outlets like CNN or Substack integrate Polymarket odds directly into coverage, prediction market rumors can become news stories, which then shift contract prices, which generate further coverage. This ouroboros dynamic — demonstrated by a fabricated Jeff Bezos quote that briefly moved markets — actively degrades information quality rather than improving it.
• •Regulatory conflict runs state vs. federal: The sole CFTC commissioner Mike Selig has stated he will sue any state attempting to regulate prediction markets, while governors of New Jersey, Utah, and Nevada are prepared to litigate. FanDuel and DraftKings both exited the American Gaming Association specifically to launch competing prediction products, signaling that billions in regulated sports-betting tax revenue are directly at stake.
• •Financial nihilism drives user growth: Younger participants enter prediction markets partly because stagnant wages and inflation make conventional retirement saving feel inadequate, mirroring the same psychology behind crypto and meme-stock trading. Intermittent reinforcement — not rational information-seeking — keeps many users engaged, a mechanism casinos deliberately engineer through slot machine design and flow-state maintenance.