When I was born in the 1970s, legal gambling was basically limited to Las Vegas, Atlantic City and horse racing. Then came Indian casinos, and finally, the floodgates opened with online gambling. Nowadays, with the advent of prediction markets, we can lay down a marker on almost any event on Earth.
One serious upshot of the rise of companies like Kalshi and Polymarket, which would be happy to set up a market to see if Lindys sells more cheesecake or strudel today, is that far, far more people have the feedbox noise than ever before. To paraphrase Andy Warhol, in the future, everyone will have inside information on a prediction market for 15 minutes.
Take a market like “Who will win the reality TV show “Big Brother?” Dozens, maybe even hundreds of people know this answer, thousands probably have inside info, and while, if they say anything out loud they will get sued into oblivion, what’s to stop them from telling their cousin, “Hey, drop a few thousand on this contestant?”
This isnt a hypothetical anymore. We have seen, just this year, a soldier use inside information to win a bet on the timing of military action in Venezuela, we have even had the guy who runs the White House teleprompter profit from foreknowledge of President Donald Trumps speeches.
These are not the types of people we think of as insider traders.
When we think of insider trading we think of wood-paneled financial offices with Paul Revere silver sets and guys in $5,000 suits. I also think of members of Congress who go to Washington worth thousands and leave worth tens of millions, but that’s another story.
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As in sports betting, it is easy to trace who, among the elites or insiders, might have non-public information that can move a stock. But right now, you can bet on whether Space X will have a successful launch by July 31, or whether Rihannas album will come out before the next Grand Theft Auto video game. How many thousands of people have information on those wagers?
Could a reporter who is sitting on a scoop they know will harm a politician running for office ethically place a bet on a prediction market in that race? It seems clear that legally they can, but we are in uncharted waters now that prediction markets open up this possibility.
In politics, manipulation can be used the other way round as well, especially in smaller congressional or local races. Prediction market wagers can act almost as campaign donations, making it appear, even for a short period of time, that a candidate is surging.
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There is something a bit dystopic about the constant online wagering over every aspect of our lives, as if the world is not a miracle of beauty and poetry, but rather a set of m
