Want To Win Big In Prediction Markets? Here's What You Should Know.

Added: 2026-05-22

[00:00:00]Right before the 2026 Super Bowl, one account on Poly Market made a series of highly specific bets on the Bad Bunny halftime show.

[00:00:10]>> The account had never used Prediction Markets before and disappeared after, but 17 out of 19 bets hit, earning nearly $17,000, according to the Wall Street Journal. That kind of accuracy is hard to ignore, and it's part of why prediction markets are suddenly everywhere. Was it luck or something else? the rules on insider trading um for prediction markets aren't really established. Uh if you think about, you know, the Super Bowl, right, is a dancer who is there for the recording of Bad Bunny's first song and knows the order and then go places it. Are they an insider? No one really knows, right? On the one hand, you have an athlete betting on themsel or a politician betting on themsel. Pretty clearly that's insider trading, but there's a lot of, you know, gray area there.

[00:01:00]Prediction markets like Kshi and the Poly Market are exploding in popularity, letting users trade on everything from elections to interest rates to which turkey President Trump will pardon.

[00:01:10]>> Unconditionally pardon.

[00:01:12]>> Instead of buying stocks, users are betting on what happens next. For Jared Strober, prediction markets turn realorld moments into trades. He managed prediction market portfolios trading thousands of times per year with both six-figure losses and six-figure gains.

[00:01:29]If you turn on the TV and you see a pollster talking about the midterm elections, are you more likely to trust the pollster or go on Kshi?

[00:01:36]>> Koshi, I think for me to go and like trust somebody if they're talking about polls or if they're talking about political events and kind of odds happening with them, I would have to go do background on that person. But because Khi is, you know, an amalgamation of a bunch of people betting on, you know, a bunch of different events, I kind of intrinsically trust that rather than just believing one person, it's kind of like believing a bunch of people. And that source of truth is very helpful.

[00:01:59]>> One Gen Z trader says these markets are better than polls because they aren't a snapshot. They're a live digital pulse, a real-time weather report for the likelihood of what's coming next.

[00:02:10]Effectively, I think that it's it's the best or closest ability to determine what the real likelihood or odds of somebody winning these types of things are.

[00:02:18]>> But Swan Bitcoin CEO Corey Clipston warns that regular users are often trading against massive institutional groups. There's big sophisticated groups in prediction markets like Saskuana and and other people like that that have these trading desks and they're using algorithms and AI and in many cases they're the ones actually creating the markets very deliberately. You're just playing a game where basically people who are not actually using their phone or their keyboard to place trades are probably taking something like 50 to 80% of the profit off the table.

[00:02:51]>> According to blockchain data, most users aren't making money. around 70% of poly market traders have lost while a small group at the top takes the bulk of the profits >> for especially for retail customers they are losing right nothing is being created they're playing a zero sum game and so most people are losing and so the problem is not you know speculation necessarily but when people are shifting from investing or something that is likely to make them money in the long run towards something that is likely going to make them lose money >> then why are people still using these platforms for many users prediction markets are less about placing bets pets and more about tracking what's known as the wisdom of the crowds. The idea that thousands of people trading in real time can sometimes forecast events better than polls or experts. According to a recent Federal Reserve Board working paper, Khi correctly predicted every Fed rate decision since 2022. And supporters point to election calls where prediction markets moved faster than traditional polling. And as more money flows in, questions are growing about who really has the edge. I am seeing a lot of people do insider trading. So those stories are cropping up almost daily where there's somebody that has inside information and the market starts to move, you know, before the event. Uh and so that'll be really interesting to see that play out in the regulatory battlefield. It's gotten a pass so far mostly because uh Don Jr. the president's son is an adviser uh compensated adviser to both Poly Market and Khi.

[00:04:16]>> Even Khi CEO says insider trading is likely to surface in court. Would you expect say within the next 12 months there will be C FTC case started trading >> we can't comment on reg what regulators will or will not do what I would expect >> you what if you were and there was a yes no bet >> yeah I think yes because my expectation is like this is a large market that is starting to look like a financial like I mean there are cases that come in the stock market no system there is no system that is like basically any system will have bad actors no system is perfect bad actors will try to attempt fraud and they will do things that are bad and what our job as an exchange And the job of regulators is over time you flag these bad actors and detect and deter you punish them when you find someone who did something bad. Um and inevitably in our markets this is going to happen.

[00:05:00]>> How do you think that this it should happen? It's a good thing.

[00:05:03]>> So if you do have insider information like it's going to be found and it's going to be figured out and they're getting really good at figuring out who has insider information. Honestly, it probably makes markets over the long term more informed. Ishmail Green, a partner at Bachner Law, who advises clients on emerging financial and regulatory issues, says insider information may be hard to control.

[00:05:22]>> There is no way to preempt someone from using insider knowledge to give to a friend, colleague, associate, business partner to make money off of. In fact, that is how the economy works. The people with the best information profit the most. enforcing it is going to be very difficult.

[00:05:43]>> Platforms say they are taking steps to address those risks. According to Axios, Khi says it plans to block athletes, coaches, and officials from betting on their sports and political candidates from trading on their own campaigns. And prediction markets aren't limited to sports or elections. Users are now wagering on war, on political instability, even on public figures dying, drawing growing backlash. On poly market alone, half a billion dollars was traded on when US forces would strike Iran and bets on a ceasefire between the US and Iran drew more than 170 million, one of the largest geopolitical wagers these platforms have seen. In some cases, newly created accounts have placed large, well-timed bets on events tied to the war in the Middle East. The timing has triggered calls for investigations from lawmakers who warn that government or military insiders may be profiting from classified information. Federal prosecutors have now brought forward one of the first major insider trading cases tied directly to prediction markets. In late April, the Justice Department charged a US soldier with allegedly using classified information to place bets on Poly Market that prosecutors say turned roughly $33,000 into more than $400,000 in profits. According to the indictment, Ganon Van Djk helped plan and execute the Maduro operation and had access to sensitive classified information before placing the trades. A case federal officials say could become a major test for how insider trading laws apply to prediction markets. Even under scrutiny, Wall Street is all ears. On May 7th, Khi announced its valuation had climbed to 22 billion from just 2 billion only a year ago. The company says it now handles more than 90% of US prediction market activity.

[00:07:32]And some of the biggest players in finance are already moving in.

[00:07:35]Intercontinental Exchange, the parent company of the New York Stock Exchange, agreed in October to invest up to$2 billion dollars into Poly Market. And now, the information reported April 19th that the platform is now raising funds at a $15 billion valuation. And Poly Market has a data partnership with Dow Jones, the publisher of Investors Business Daily. As prediction markets grow, they're drawing attention from both regulators and the White House. The legal fight could go all the way to the Supreme Court. Arizona filed criminal charges against Khi in March, accusing the company of operating an illegal gambling business. A case that could help determine whether these platforms are treated more like betting apps or financial exchanges.

[00:08:16]>> Is there enough being done? Almost certainly not. And that's just because we have a relatively lax, you know, regulatory environment.

[00:08:23]>> I would say that the current administration is very much in favor of poly market and koshi.

[00:08:29]>> How to classify them? Investing or gambling is becoming a critical issue.

[00:08:34]Robin Hood reported a 3% increase in quarterly profit in April, helped in part by prediction market trading. Event contracts hit a record 8.8 billion in early 2026. So, I wanted to know how does Robin Hood CEO see it? Is it gambling? At the Wall Street Journal future of everything event, I went straight to him.

[00:08:53]>> A majority of Americans view betting on prediction markets as gambling. My question is, do you?

[00:09:00]Well, I think that um I mean short answer, no. Um I think that every financial market to some degree has gotten this criticism of oh there's just uh there's people are gambling and the the track the the the reality is financial markets have a a number of different participants. Uh there's folks hedging, right? They're also folks speculating and a lot of people just consider they equate speculation with gambling. It's really I believe that an event is going to turn out a certain way so I'm just going to put money behind that. And you can't have a functional financial market without speculators. If everyone's just hedging, the market's going to break. I think as long as you have a strategy and it's systematic, um, who am I to say that you shouldn't engage in trading of that asset class?

[00:09:55]>> Robin Hood says it doesn't offer all prediction markets, citing concerns around market abuse and insider trading.

[00:10:01]The company has excluded certain event contracts, including so-called mention markets, where users bet on what someone might say during a speech or event. Even major banks are weighing the risks.

[00:10:12]According to Barons, in early May, JP Morgan told employees to limit participation in prediction markets tied to the bank. While CEO Jaime Diamond recently said prediction markets are for the most part like gambling. So, for now, the industry is growing faster than the rules around it. And whether it becomes as big as the stock market may depend on how it's regulated.

[00:10:32]>> If we're really being honest, what harm is being done to the market? People are making tons of money. It's a disruptive technology. If you want to bet money on whether or not a pink elephant is gonna walk down the street, that's your prerogative.

[00:10:46]>> There is a big incentive across kind of the finance and gambling complex to get people to trade everything. This is true in crypto with tokenized the world. This is true with prediction markets where you can bet on anything. And it's this idea that none of that is productive.

[00:11:03]And so you just being a normal person who thinks this is fun and thinks it might be like, you know, betting on your favorite team on Sunday, something like that, it's not even close to a 50/50 bet for you.