Yes, prediction markets have won, but why do they feel so gross? (with Kate Irwin)
I feel weird about prediction markets. I think a lot of us do?
Those of us who feel weird about them call it gambling. Those of us who think they are great prefer “gaming.” Our whole country is in the middle of a big conversation about whether or not prediction markets are on balance good or on balance bad.
So, I invited someone who made her beat gaming — the kind of gaming where people try to have fun more than they try to make money (though she was covering crypto gaming, so that line got blurry too, in all fairness), the great Kate Irwin.
You know her from Decrypt, PCMag and Blockworks. Now she’s leading content at the vault company Veda.
* She broke the fall of a major crypto gaming operation [https://blockworks.com/news/neon-machine-shrapnel-in-the-red], Neon Shrapnel.
* And GameStop bagging on NFTs [https://decrypt.co/212761/gamestop-bails-on-crypto-gaming-killing-nft-marketplace].
* She made some waves last last year with her big take on the industry, “Extraction Isn’t the Only End Game [https://x.com/kateirwin/status/1997382197226119238?s=20].”
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In this episode, we hear from a number of proponents of prediction markets, from key moments in the history of this sector: before they were legal here, amid the election of 2024 and afterward, as they started to settle in as a clear industry in the United States.
As I edited this episode, I realized that I don’t represent my views on this topic as well as I should. As usual, my general approach is: “Let’s wait and see.”
However. Most use on prediction markets now is sports betting.
Sports betting is bad. As a great man [https://en.wikipedia.org/wiki/Bill_Hicks] once said: “That’s a judgement call and I’m making it.”
You can see it in the fact that we have more and more scandals in sports.
I don’t even care about sports. I don’t watch them. I don’t follow them, but it’s clear to anyone who cares to look that gambling not only corrupts the game but also hurts enough of the bettors to make it not actually worth it societally.
The big idea of prediction markets is that people would bet on things that would help societally. Like, could we set up markets on, for example, which presidential candidate is likely to yield a better overall employment rate? Or a lower national deficit?
As Robin Hanson [https://substack.com/profile/280980-robin-hanson] explains in a quote (admittedly, from quite a few years ago) that I clipped from an old episode of Epicenter (linked below), you usually can’t get a lot of liquidity into questions like that. People just don’t find them that interesting.
The tough question that Irwin speaks to a lot in this episode is insiders.
* Is society better off if prediction markets give them a profit motive to reveal privileged information by making a bet on something that they are more informed about than anyone else?
* Or is society worse off, because those insiders hover up all the money from retail traders who are making bets on public information and vibes?
On that one, I’m a little bit sympathetic to the Hanson view that it’s good to get that information out there, albeit indirectly. But there will be weird edge cases. For example, the Israeli reservist charged [https://www.timesofisrael.com/two-indicted-for-using-classified-info-to-place-online-bets-on-military-operations/] for placing bets using privileged military information.
The Racket News [https://substack.com/profile/21674950-the-racket-news] has a good post up today about people betting on the war in Iran. We can’t know for sure that insiders were placing bets, but the sudden rush of wagers just before the attack looks suspicious. And that’s not the only event that looks suspicious.
As Racket reports, Democrats have prepared legislation to forbid Federal employees from placing bets, but I would not bet on that legislation going anywhere. At least not in this session.
Even in crypto, some influential folks are starting to raise their eyebrows. I’m a regular listener to Castle Island Ventures’ weekly news roundup podcast. Nic Carter [https://substack.com/profile/882701-nic-carter] is starting to give the markets side eye. He suspects retail will get out of the game, soon, as they realize how outclassed they are [https://murmurationstwo.substack.com/p/prediction-markets-are-not-good-markets] in most markets.
On the other hand, prediction markets offer some good features for bettors. First of all, their odds are just much more legible [https://www.si.com/betting/prediction-market/prediction-markets-101/prediction-markets-vs-sports-betting].
Second, sports books also stack the deck against bettors. If you are any good at placing wagers, sports books will just kick you off. Michael Lewis [https://substack.com/profile/15614529-michael-lewis] and his producer Lidia Jean Kott [https://www.lidiajeankott.com/] broke all this down in season 4 of their podcast, Against the Rules [https://www.pushkin.fm/podcasts/against-the-rules/gambler-billy-walters-on-the-sharps-life].
Prediction markets won’t do this because you aren’t betting against Polymarket or Kalshi. You’re betting against another user (you don’t know which one, but you are). So they don’t care if you’re good or bad. They just like your liquidity.
So it is fair to say that prediction markets are different in kind from sports books. OK. But are they different in consequence?
If we were getting lots of compelling insights about the fate of companies or the fate of policy in the U.S. out of these things, I might feel differently. But we mainly seem to be getting a new way for corrupt politicians to max extract and for nobodies to lose money.
These are some of the topics Irwin and I explore in today’s pod. In this post, I wrote more of what I actually think about prediction markets, because I don’t think I say it very well in the episode.
* That’s okay though! Kate does a great job making her take clear! So listen for Kate!
One last thing: As I was researching clips to make for this episode, I stumbled on this video about not making rookie mistakes:
I thought I might make a clip from it as something orthogonal for Kate and I to discuss, but, to be honest, I didn’t even understand it. It made me feel like even dumber money. Buy markets on the future at your own risk, friends. Looks pretty rough out there.
Sources
The Folly of Prediction [https://freakonomics.com/podcast/the-folly-of-prediction/]Steven LevittFreakonomics2011
Robin Hanson: Futarchy, Prediction Markets And The Challenge Of Disruptive Technology [https://epicenter.tv/episode/98-futarchy-prediction-markets-and-the-challenge-of-disruptive-technology]Epicenter2015
Polymarket CEO says his prediction market is “the most accurate thing we have as mankind right now.” [https://www.youtube.com/watch?v=ZA5bY4K9XPs]Anderson Cooper and Shayne Coplan2025
Why the Media Got the 2024 Election Wrong [https://www.youtube.com/watch?v=AIy2b4KtRZw]Tom Schmidt, Robert Leshner and Haseeb QureshiThe Chopping Block 2024
Prediction Markets and the “Suckerifcation” Crisis [https://www.youtube.com/watch?v=76kF5J-7avs]Charlie Warzel and Max Read [https://substack.com/profile/238208-max-read] 2025
Show notes
Meta layoffs [https://www.cnbc.com/2026/03/16/meta-ai-costs-mass-layoffs-20percent-up-premarket.html] — this was weird. We discussed this as a hypothetical market on the show and then it happened, right after we taped.
Male suckerification crisis [https://maxread.substack.com/p/predictions-markets-and-the-suckerfication]
Kalshi beats CFTC ahead of 2024 election [https://www.axios.com/2024/10/02/election-betting-prediction-markets-kalshi-polymarket]
Polymarket comes back to USA [https://www.cnbc.com/2026/02/14/how-prediction-markets-work.html]
FBI raids Shayne Coplan’s home after 2024 election [https://www.nbcnews.com/tech/tech-news/fbi-raids-polymarket-ceo-shayne-coplans-apartment-seizes-phone-source-rcna180180]
Rain Protocol [https://www.rain.one/]
Variant post on Melee [https://blog.variant.fund/investing-in-melee-markets-permissionless-prediction-markets-with-uncapped-upside]
Disclosure
I have made a few bets on a few markets. I don’t trade. I let ‘em ride.
I threw in about $50 and spread it across several of the Democrats who were favorites to get the Democratic Party’s nomination for President. I don’t actually care about this race, I just noticed that the prices for all of them were so low that if any of the ones I bet on won, it would more than make up for my losses on the other.
Of course a dark horse could easily hit and I’ll lose it all. So it goes.
I also have roughly $20 in on whether or not we will learn aliens exist this year. I bought that more as hopium than because I actually think it will work out. I did it right after Trump announced [https://www.politico.com/news/2026/02/19/trump-declassify-reports-ufos-00790415] he was asking Hegseth to reveal what the military really knows (looking at your Air Force — you guys have been so sketch).
As we know, I love this topic [https://www.frontstageexit.com/p/receipts-not-rumors-the-specific].
Kate and I actually discussed this but as I was editing I decided to cut it for time as one of the weaker bits. So the same info is now here in the post.
There was one good part in the tape I was sad to cut. After saying which bets I’d made, Kate basically says, “Congratulations, Brady. You’re exit liquidity.”
Not wrong.
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