Prediction markets want to be the news
Episode
45 min
Read time
2 min
Topics
Relationships, Investing, Fundraising & VC
AI-Generated Summary
Key Takeaways
- ✓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.
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.
Notable Moment
Robinhood CEO Vlad Tenev argued prediction markets deliver news faster — sometimes before events occur — while simultaneously claiming insider trading should be prohibited on these platforms. Lopatto points out these two positions are irreconcilable: advance knowledge of outcomes is only possible through insider information, making the claimed news value entirely dependent on the practice Tenev says should be banned.
Episode Transcript
Support for the show comes from Anthropic, the team behind Claude. You know how sometimes a problem just grabs you? Like, you sit down thinking it's a quick thing, then suddenly it's midnight. That's exactly the kind of mind Claude is built for. People who don't just want the answer, they wanna chase the thing that's underneath it. Anthropic positions Claude as a thinking partner, not a search engine. It works through the problem with you, and it doesn't try to just wrap things up in an easy answer. Get started with Claude for free at claud.ai/decoder. Adobe Acrobat Studio, your team's home base collaborate within a shared PDF space. You've got your docs, your plans, your specs, and then invite the crew to build what's next. They talk off the team words. They think that this design could be a contender. When somebody wonders, what's the next step? AI Vanta uses AI and automation to get you compliant fast, simplify your audit process, and unblock deals so you can prove to customers that you take security seriously. You can think of Vanta as your always on AI powered security expert who scales with you. That's why top startups like Cursor, Linear, and Replit use Vanta to get and stay secure. Get started at vanta.com/vox. That's vanta.com/vox. Vanta.com/vox. Hello, and welcome to Decoder. I'm Eli Patel, editor in chief of The Verge, and Decoder is my show about big ideas and other problems. Today, let's talk about prediction markets, which continue to insert themselves into the news cycle and the news in increasingly weird, unsettling, and potentially illegal ways. My guest today is Liz Lupato, a senior reporter here at The Verge who owns what we cheerfully call the chaos beat. Liz has been writing a lot about prediction markets lately, and especially why they all seem so intent on being perceived as sources of news. A position which directly incentivizes insider trading, which in turn creates a long list of very predictable problems. For example, this past weekend after The United States and Israel went to war with Iran, leading prediction market platforms, Kalshi and Polymarket, erupted with activity. That included extremely contentious markets around the death of Iran's supreme leader, and some that appear to be rife with insider trading from people with advanced knowledge of US military actions. That's right. In 2026, you can, from the comfort of your couch, wager on when The United States will bomb a foreign country. And for Kalshi and Pali market, that's quite literally the business model, betting on anything. Right now, sports is where they make most of their money, which is why both companies are in the crosshairs of so many state gambling authorities. But this industry thinks of itself as something far grander. Prediction market players want to be the news, and they've devised new, frankly, unconvincing frameworks for why they should be considered legitimate sources of information instead of just anything goes casinos. Kalshi's tagline is trade …
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company
“prediction market platforms Kalshi and Polymarket position themselves as news sources rather than gambling operations”
“When outlets like CNN or Substack integrate Polymarket odds directly into coverage”
“FanDuel and DraftKings both exited the American Gaming Association specifically to launch competing prediction products”
“When outlets like CNN or Substack integrate Polymarket odds directly into coverage”
“FanDuel and DraftKings both exited the American Gaming Association specifically to launch competing prediction products”
“Robinhood CEO Vlad Tenev argued prediction markets deliver news faster — sometimes before events occur”
“prediction market platforms Kalshi and Polymarket position themselves as news sources rather than gambling operations”
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