Why 'Big Short' trader Danny Moses thinks investors need to pay close attention to prediction markets

• Prediction markets have boomed, and Americans are betting on everything from sports to Labubus.
• Danny Moses, a trader made famous by 'The Big Short,' thinks the market is set to expand.
• He told Business Insider why he believes investors should be paying close attention to betting platforms.

You can bet on pretty much anything these days. From sports to the weather to the price of a Labubu, platforms like Polymarket and Kalshi have offered people a new way to gamble.

According to Danny Moses, one of the investors from "The Big Short," they've also offered investors a useful tool to help navigate markets.

Moses, who was among the investors betting against the US housing market ahead of the 2008 crash, isn't surprised by the prediction-market boom, and he thinks investors need to be watching these markets closely to stay on top of their game.

"I think it's great to scan through all the prediction markets out there, certainly economics and business-related, because it actually will get you thinking about things you might have been missing," he told Business Insider in an interview before the new year.

Moses isn't too focused on short opportunities these days, despite being famous for his role in Michael Lewis's now-iconic saga of the housing crash. But he thinks that prediction markets can serve to provide valuable info for bullish and bearish investors alike.

He pointed to the recent example of popular fintech stock SoFi Technologies being listed as having a 38% chance of being added to the benchmark index in 2026, something that could be a likely catalyst for the stock, which is up 93% in the last year.

"If you're short SoFi and you weren't thinking about the possibility of it being added to the S&P 500, like we just saw happen to Carvana recently, that's something you need to be aware of," Moses said.

That's not the only way prediction markets could help investors make smarter decisions. Moses said he thinks there may be circumstances where they can offer a more appealing risk-reward than investors might get from traditional derivatives. He cited crypto as an example.

"Will bitcoin trade below $70,000 in the first quarter of 2026?" he mused. "Well, if I own bitcoin, and it's a much cheaper way to bet, if it's an eight cent possibility, so call it twelve to one, I might be getting a better market, or I might want to buy that rather than buying a put option on crypto."

In his view, it's early days for prediction markets. Their usefulness will grow as a predictive tool for hedging traditional investments as well as gauging the likelihood of market-moving events. And as they grow, expect more prominent players to participate, he said.

"I think institutions are going to start using prediction markets more, and as institutions use it, you're going to see a lot more activity," he said.