Odds are you’ve heard about so-called “prediction markets.” While traditional casinos fleece workers with games of chance, platforms like Polymarket and Kalshi allow users to gamble on anything. Users can bet not only on sports, but also who will show up to the Oscars, which words Trump will use in a speech, or whether this month will be the hottest April on record.
Gamblers even wager on war and regime change. Trader “Magamyman” made $553,000 for predicting the death of Ayatollah Ali Khamenei. Half a dozen traders made $1.2 million betting on the timing of the US and Israeli war on Iran. At the time of writing, there are over 250 open “event contracts” on Polymarket to gamble on various aspects of the imperialist slaughter.
In January, one anonymous gambler pocketed $400,000 when Venezuelan President Nicolás Maduro was removed from power. Most of the big winners who bet on Maduro’s kidnapping created their accounts less than 24 hours before Trump attacked Venezuela. Of course, by law these platforms prohibit “insider trading,” and are not supposed to profit from death, assassination, or war. However, Kalshi only enforced this “death carveout” under severe pressure.
CNN and The Wall Street Journal will integrate real-time prediction market odds in their reporting. In a dystopian admission, Polymarket CEO and founder Shayne Coplan told Bloomberg:
When I get hit up by people in the Middle East who are saying, “Hey, we’re looking at Polymarket to decide whether we sleep near the bomb shelter; we look at it every day,” and I’m like, “Oh, it’s really that popular over there?”
How do these “markets” work? Players, known as “traders,” bet against each other by buying “event contracts.” Traders buy “shares” of “yes” or “no” on whether a particular event will happen.
Winners are rewarded according to the odds set by the aggregate of traders on the market. For example, if more traders are betting yes than no, the odds for no become more favorable, and vice-versa. Meanwhile, the apps secure juicy transaction fees no matter what happens, in much the same way as traditional bookies pocket the vig regardless of whether or not the Knicks cover the spread.
When it comes to their potential user base, prediction markets are just as unscrupulous. According to The Wall Street Journal, prediction markets have paid university fraternities and social media influencers to promote their brands to young people. Kalshi even had to back off from making a 15-year-old videogame streamer an affiliate sponsor. As their representative wrote, “Yo brother, legal team confirmed that we can’t work with minors rn. Kinda sad tbh [sic].” What is really “kinda sad” is that capitalists are compelled to transform young adults and children into addicts because they have to get their pound of flesh anywhere they can.
Trader “Magamyman” made $553,000 for predicting the death of Ayatollah Ali Khamenei. Half a dozen traders made $1.2 million betting on the timing of the US and Israeli war on Iran. / Image: Fair Use
Polymarket is not yet licensed in the US, but many players still access it through virtual private networks. Even without the full US market, Coplan became the world’s youngest “self-made billionaire” last year. In fact, Polymarket and Kalshi are each seeking additional rounds of investment for $20 billion valuations.
Along with the app owners, the real winners are a tiny pool of professional gamblers, or “sharps,” who make a job out of researching obscure prediction markets. Analysts found that 70% of Polymarket users lose money, while just 0.04% of Polymarket users collected 70% of total winnings paid out by the app.
For liberal commentators, prediction markets pose a risk to national security because “insider trading” on wars and assassinations will “distort” American foreign policy. They also highlight Donald Trump Jr.’s close relationship with both Kalshi and Polymarket as a marketing consultant. But the rot goes deeper than that.
The rise of prediction markets parallels the rise of online sportsbooks, which ballooned after a favorable Supreme Court ruling in 2018. This brought sports betting out of remote dens of vice and onto everyone’s smartphones. According to The Financial Times, online bookmakers have grown from handling $13 billion in 2019 to $167 billion last year. Over the same period, “irresponsible gambling”—defined as spending more than 1% of one’s income on bets—has risen fourfold.
Online sportsbooks, “prediction markets,” slots, or craps—it’s all a means for capitalists to profit off the desperation of the working class. As many as 23 million Americans have gambling debts, and gambling addicts lose an average of $55,000 each. But the consequences are not only financial, Rehab International found that 65% of marriages in which one spouse is addicted to gambling end in divorce. One in five gambling addicts attempts suicide at least once.
The Financial Times also cited a study that found:
$1 of online sports betting deposits corresponds with a reduction in net investment of about 99 cents. They also discovered an increase in credit card debt and the frequency of account overdraft, and a decrease in available credit.
Even more, the gambling already occurs on the stock market. A few “lucky” speculators successfully bet on April 23 that Trump would back off from destroying critical Iranian power plants—buying $1.5 billion worth of S&P 500 futures just five minutes before the announcement. Whether insider trading on Polymarket or the stock market, the symptoms of a system in decline are all around us.
This is an expression of monopoly-finance capital’s limits. The fields for productive investment are narrower than ever, and the ruling class seeks out ever more parasitic avenues for profit. A tiny minority is profiting from the suffering, addiction, and desperation of the working class, for whom there is no way out but to overthrow casino capitalism.