Prediction Market Theorists Question Kalshi, Polymarket Boom

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1:56Carol Massar:Bloomberg Audio Studios. Podcasts. Radio. News. You're listening to Bloomberg Business Week with Carol Masser and Tim Stenevek on Bloomberg Radio. Robin Hood, you know, has a prediction market. That's right. I kind of forget that. So it's sort of a good little, you know, indicator. Barometer. They've had a banner year, though. I keep seeing that. Do you see that Timothee Chalamet ad when you're watching the World Cup? Yes. He's at the dentist. Yes. Have you seen? Yes. Chris, have you seen this thing? I saw him on his dentist. Okay. I'm the only one. You're the only one, and you write about prediction markets, too.

2:26But you don't really know.

2:27Carol Massar:Like, it's just so odd. He's doing this whole marketing campaign with them. Trading volume on Kalshi has rocketed from hundreds of millions of dollars per month in early 2025 to more than$18 billion in May. It's real. Polymarket has also seen rapid growth. Both platforms are mired in lawsuits with state regulators who accuse them of offering illegal gambling. Yet, the CFTC has come to their defense arguing that trading doesn't amount to gambling, a position the companies hold to. All right. So in other words, as Bloomberg Businessweek senior writer Chris Beam writes, it's never been a better time for someone trying to bet on the world.

3:01Carol Massar:Chris joins us here in the Bloomberg Interactive Brokers Studio. Chris, good to have you here. Maybe, as you write, it's never been a better time for someone to bet on the world. Like, tell us what's going on here. Well, you know, for all the controversy that Calci and Polymarket are generating, they just keep growing. You know, we're seeing more people trading and we're seeing growth inside the US and especially in areas that are outside sports. So we've we have this trend. Maybe never, never a better time to bet on these companies. It almost feels like but go ahead. Well, yeah. I mean, so sports have become the sort of dominant area that you can bet on in on Calcio Polymarket.

3:52But they're pointing out that that dominance is slowly ebbing, that other areas like politics and crypto and other things are growing. So I want to get to your recent story in Bloomberg Business Week. That is just it's so great because I had no idea there were purists out there for the prediction market. But you actually went to this gathering where you spent some time with folks who say that prediction markets can actually be a force for good in the world. But these are folks who say, yeah, if we get the sports out of it.

4:28Carol Massar:What's left. Exactly. And prediction markets love to talk about this, too. The platforms, they say, yeah, bet on the next Fed decision. Insurance companies can hedge their bets by betting on weather, those sorts of things. But compared to what happens versus sports, it's pretty small. Yeah, so this conference that I went to is an annual gathering in Berkeley of, as you say, prediction market purists. Basically, people who've been following the space for decades, back to the 1980s, way before anyone knew. I didn't realize it was that old, but anyway. Oh, yeah. And underlying the original prediction markets was this idea that a group of people betting on an event will be better at predicting what happens than any individual.

5:15And they see that as a force for good, like a public good, that it'll help people make better decisions and plan their lives. Can you give us an example of a public good that would be the result of a prediction market? Well, I mean, a very simple example is just using prediction markets to bet on interest rates. You know, what is the Federal Reserve going to do next quarter? But don't we have markets for that already? Yes, definitely. So, you know, there have been studies that show that prediction markets are as accurate and in some cases better than the other forecasters that we already have out there.

5:52So in that case, it's just another tool. But you could talk about weather events, you could talk about elections and global geopolitical outcomes.

6:03Carol Massar:I guess I would say that so much has been institutionalized, right? So opening up something to the masses, I do wonder whether or not we get a much more balanced view on something, whether it's rates, whether it's elections. We certainly saw that play out in terms of prediction markets. But I do wonder about, is it a broader, better set of data? Well, they certainly argue that it is. Or they argue that it's as good as anything we have, and therefore we should be considering them in our decision making. So how do the folks at this conference feel about the rise of Polymarket and Kalshi? They're not psyched about it.

6:42I mean, fundamentally, they think that prediction markets are a better source of information than anything else we have. and they're disappointed that Calci and Polymarket are predominantly betting on sports. I'm curious about digging into a little more to this group. You make the point in the piece that there are some connections to Sam Altman, Sam Bankman-Fried, and I think to myself, okay, is this effective altruism that we're talking about? Is there a Venn diagram with these prediction market purists and the folks who think about effective altruism? Yeah, there's a lot of overlap. I'd say the sort of umbrella category here is rationalists, which is sort of a Silicon Valley group that is dedicated to kind of analyzing the world through data and probabilistic thinking in an attempt, as they would probably put it, to make the world a better place.

7:33Obviously, you mentioned Sam Bankman-Fried. Sometimes those best intentions can go awry. But there's a lot of overlap within the rationalists between the effective altruists and also people who are excited about prediction markets.

7:48Carol Massar:Because it's interesting. You do talk about their ideas have inspired Sam Altman, Dario Amadei, Sam Bankman-Fried, Elon Musk. But it's interesting to see how some things evolve as we get into kind of the capitalistic side of this, right? and the business side of all of this. Yeah. So that's why I would draw a distinction between, as I say, like the purists, the people who are ideologically and kind of philosophically interested in prediction markets and how they can play a role in society versus people who just want to make money by making better bets on the future than other people. They're also betting on, what about mentioned markets and the things that get a lot of attention now?

8:32Remember when Fed Chair Jay Powell was asked by that Harvard class a few months ago what he was going to say at the next Fed meeting, and it was clearly a question to get him to help him with a prediction market. What do they say about mentioned markets? I think most even the staunchest defenders of prediction markets probably wouldn't say that mentioned markets have a real social utility. It is kind of the closest thing to gambling that that you can have out there. Sure, there are some examples of mentioned markets where you can bet on, say, the words coming out of Jerome Powell's mouth or if Trump is going to say, you know, tariff or Iran or ceasefire.

9:18Like, sure, you can argue that some of those mentioned markets might have some sort of broader social implication. But for the most part, it doesn't really matter.

9:28Carol Massar:There are romantic prediction markets. Well, there's also things that maybe people wouldn't argue as romantic, but events occurring at certain conferences. I'm just going to say you have to read Chris's piece to understand what people at the conference were betting on. And it has to do with romance, I guess some could say. Yeah, or. Or is correct. What? Well, people could set up part of the fun of the conference is they use this platform to set up their own prediction markets guessing what's going to happen at the conference I don't know if I'm allowed to talk about this on the air You have five seconds They did set up a market where you could bet whether they were going to work you Yeah, I saw that part too You can search on it too in the story and get right to that point Bloomberg Businessweek, senior writer Chris Beam A great read, check it out, it is on the terminal

10:49We'll be right back. 15-2026. Past performance is no guarantee of future results.

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