Prediction markets are breaking the news and becoming their own beat

Depending on whom you ask, prediction markets are either:

• A dangerous, unregulated form of gambling that allows for degenerate betting on real events, unfettered by the economic and legal rules that keep stock markets and sports betting in check, creating an opportunity for corruption and insider trading on a scale we have never seen before.
• Perfectly legal crystal balls that could replace polling and happen to come with a side of money.

Whatever they are, they’re constantly changing, and they’re increasingly becoming a part of the news business. In the last few months, Kalshi, a New York-based prediction market, has struck deals with CNBC, CNN, Fox News, and the AP, among others. Polymarket, another prediction market, announced a partnership with Substack in February and one with Dow Jones in January. Both Kalshi and Polymarket are also been positioning themselves as news providers in their own right — Polymarket, for example, borrows the language of news organizations (“BREAKING” and “JUST IN“) in its social media presence, which is dominated by tweets about the news followed by a link for users to bet on that news (and is also filled with misinformation).

Keeping up with prediction markets is practically a full-time job, and for a few journalists they’ve become an opportunity to stake out a new beat at the intersection of politics, culture, finance, technology, sports, and even possibly true crime.

“I see a lot of connections to things that I’ve covered in the past,” said Kate Knibbs, a senior writer at Wired who recently established herself as that publication’s resident prediction markets reporter. “I see it as an extension of the crypto boom. It’s a future of money story, an industry story, and very much something that is emerging as a natural extension of ongoing trends in American culture.”

Knibbs’ beat started percolating in her mind when she was on maternity leave. On the day she got back, she wrote a memo to her editors about covering prediction markets, which they were thrilled to receive — they had been talking about asking Knibbs to cover them anyway, because they knew she was interested in them.

For Knibbs, the beat is interesting not only because of potential future effects of prediction markets but also because of their ties to the past. “Someone was asking me, ‘Aren’t you worried that this is going to be like NFTs, and it’s just going to fizzle out?’ And I went, ‘Well, it literally is NFTs. It’s the same story.’ And you don’t get NFTs without Occupy Wall Street in my book. It’s all mixed together. I think we have this huge appetite for products like prediction markets because of the overall precarity of ordinary people’s finances.”

Dustin Gouker, an independent journalist who writes the prediction markets-focused newsletter Event Horizon, got interested in prediction markets because of his history covering fantasy sports and gambling. Until around 2018, he said, sports gambling involved going in person to a bookie — usually in Nevada — and placing a bet, getting a physical ticket to confirm the bet, waiting for the game to end, and then returning to the bookie to cash out any wins. The rise of sports gambling apps like FanDuel and DraftKings changed that dynamic, making gambling accessible to anyone with a smartphone. Prediction markets took that one step further, allowing people to bet on granular details of all kinds of events beyond the world of sports. “The velocity is supercharged,” Gouker told me from his office in Oregon. “You can lose a lot of money really quickly.”

Gouker writes two daily newsletters — Event Horizon and The Closing Line, about sports betting — and uses a combination of reporting methods to find stories. A friend helped him build a custom dashboard that plugs into Kalshi’s API to track trades, allowing him to quickly spot any notable movement, and he reactivated his X account, which he was on the verge of deleting, because he found much of the social chatter about prediction markets was happening on that platform.

“I wake up every day and I’m like, this is the world. I’m still in the fever dream,” Gouker told me. “It feels very Republican-coded, but that’s also because that’s why they exist, right? This would not exist without the Trump administration.” The Trump administration has sued states over their attempts to regulate prediction markets; Donald Trump Jr., the president’s son, is an advisor to Kalshi and sits on Polymarket‘s advisory board.

Gouker frequently gets texts from people within the prediction markets space about things they think he’d be interested in. His coverage is often critical (a recent newsletter was headlined “Prediction markets need to stop doing dumb shit”), but he says that’s a necessary balance to the narrative pushed by the prediction markets themselves.

“I’m a pain in the ass, but I’m a needed pain in the ass,” Gouker told me. “Am I overly harsh on them? Maybe, but I think there’s enough people glazing them out there in the world. If they do something good, I say that too.”

Knibbs, meanwhile, uses the service Unusual Whales to track particularly large movements on prediction markets, and often finds herself talking to academics and lawmakers about legal efforts to regulate them. She’s one of the few reporters on her beat (Suzy Khimm also covers prediction markets for NBC News, but NBC declined to participate in this story) and she is trying to approach sourcing holistically, talking to as many people in as many fields as possible.

“I’ve been dying to report stories about how the government is approaching this, because it blows my mind that we haven’t seen anyone arrested for insider trading yet,” she said. “I think if arrests are made, we’re going to get a new level of insight into what is actually going on here, because there will be criminal complaints that we can read and hopefully things that we can FOIA. Right now, it’s pretty opaque.”

Both Gouker and Knibbs have played around with prediction markets to some extent, but neither is a big gambler. (“That’s not my vice,” Knibbs said.) Gouker has used Kalshi to place the occasional bet on college sports, and Knibbs made $50 on PredictIt when she correctly predicted that John Fetterman would be elected to the Senate in 2023. Both also think it makes sense for news organizations to use prediction market data in their reporting, as long as they’re accepted as flawed forecasting tools rather than gospel truth. But Knibbs is concerned about how prediction markets and journalism might overlap in other places.

“What is deeply disturbing to me is all of these efforts to really enmesh the prediction markets in media companies,” she said. “I’m concerned about a world in which editorial is being told that they have to use certain phrasing in order to clear up any ambiguity in how these markets resolve. That’s really gross and would be a violation of editorial independence.”

Knibbs is also on the lookout for “the first big journalist insider trading scandal.” There’s information asymmetry, she points out: Journalists often learn information before the public does, and often have off-the-record conversations that could give them insights other people might not have. They’re also underpaid, which provides them a financial incentive to act on that information. She’s not the only one concerned about that possibility; this week, ProPublica updated its code of conduct to ban journalists from placing bets on news events on prediction markets.

Gouker is less concerned than Knibbs — he points out that the history of news organizations making ad deals is similarly fraught with thorny editorial questions — but he is curious about what will happen to prediction markets if the political winds shift. Prediction markets have been positioning themselves as something akin to the news, and while that might help them build legitimacy it could also open them up to the same political attacks the news has faced since Donald Trump’s first run for the presidency back in the 2016 election.

“Will Republicans continue to lead on prediction markets when the story is not one that they want to hear or see?” Gouker asked. “If Kalshi says there’s an 85% chance the Democrats will win the House, are Republicans going to say that’s fake news? There’s this huge intersection of politics and government and tech here. At some point, does the monster start eating its own tail?”