Prediction Market Theorists Question Kalshi, Polymarket Boom

**SPEAKER_1** (0:02)
Bloomberg Audio Studios, Podcasts, Radio, News.

**SPEAKER_2** (0:07)
You're listening to Bloomberg Businessweek with Carol Massar and Tim Stenovec on Bloomberg Radio.

**Carol Massar** (0:14)
Robinhood has a prediction market.

**Tim Stenovec** (0:17)
That's right, I kind of forget that.

**Carol Massar** (0:17)
So it's sort of a good little indicator. They've had a banner year though. I keep seeing that. Do you see that Timothy Chalamet ad when you're watching the World Cup? He's at the dentist.
Yes. Chris, have you seen this thing?

**Chris Beam** (0:29)
I somehow missed it. Okay. I'm the only one.

**Carol Massar** (0:31)
You're the only one and you write about prediction markets too.

**Tim Stenovec** (0:32)
But you don't really know, it's just so odd.

**Carol Massar** (0:34)
Yeah, he's doing this whole marketing campaign with them. Trading volume on Kalshi has rocketed from hundreds of millions of dollars per month in early 2025 to more than $18 billion in May.

**Tim Stenovec** (0:46)
It's real.

**Carol Massar** (0:47)
Polymarket has also seen rapid growth. Both platforms are mired in lawsuits with state regulators who accuse them of offering illegal gambling. Yet, the CFTC has come to their defense arguing that trading doesn't amount to gambling, a position the companies hold too.

**Tim Stenovec** (1:00)
All right. So in other words, as Bloomberg Businessweek Senior Writer Chris Beam writes, it's never been a better time for someone trying to bet on the world. Chris joins us here in the Bloomberg Interactive Brokers Studio. Chris, good to have you here.
Maybe, as you write, it's never been a better time for someone to bet on the world. Tell us what's going on here.

**Chris Beam** (1:20)
Well, for all the controversy that Kalshi and PolyMarket are generating, they just keep growing. We're seeing more people trading and we're seeing growth inside the US, and especially in areas that are outside sports, so we have this trend where-

**Tim Stenovec** (1:45)
Never a better time to bet on these companies, it almost feels like, but go ahead.

**Chris Beam** (1:49)
Well, yeah. Sports have become a dominant area that you can bet on on Kalshi and PolyMarket, but they're pointing out that that dominance is slowly ebbing, that other areas like politics and crypto and other things are growing.

**Carol Massar** (2:08)
I want to get to your recent story in Bloomberg Businessweek. That is just, it's so great because I had no idea there were the purists out there for the prediction market, but you actually went to this gathering where you spent some time with folks who say that prediction markets can actually be a force for good in the world, but these are folks who say, yeah, if we get the sports out of it.

**Tim Stenovec** (2:35)
What's left?

**Carol Massar** (2:36)
Exactly. And prediction markets love to talk about this too, like the platforms. They say, yeah, bet on the next Fed decision.
Insurance companies can hedge their bets based on by betting on weather, those sorts of things. But compared to what happens versus sports, it's pretty small.

**Chris Beam** (2:52)
Yeah. So this conference that I went to is an annual gathering in Berkeley of, as you say, prediction market purists, basically people who've been following the space for decades, back to the 1980s, way before anyone knew.

**Tim Stenovec** (3:05)
I didn't realize it was that old, but anyway.

**Chris Beam** (3:07)
Oh, yeah.
And underlying the original prediction markets was this idea that a group of people bedding on an event will be better at predicting what happens than any individual. And they see that as a force for good, like a public good, that it'll help people make better decisions and plan their lives.

**Carol Massar** (3:28)
Can you give us an example of like a public good that would be the result of a prediction market?

**Chris Beam** (3:33)
Well, I mean, a very simple example is just predicting using prediction markets to bet on interest rates. You know, what is the Federal Reserve going to do next quarter?

**Carol Massar** (3:44)
But don't we have markets for that already?

**Chris Beam** (3:47)
Yes, definitely.
So, you know, some prediction market, there have been studies that show that prediction markets are as accurate and in some cases better than the other forecasters that we already have out there. So in that case, it's just another tool. But you could talk about weather events, you could talk about elections and what the global geopolitical outcomes.

**Tim Stenovec** (4:09)
I guess I would say that like so much has been institutionalized, right? So like opening up something to the masses, I do wonder whether or not we get a much more balanced view on something, whether it's rates, whether it's elections, we certainly saw that play out in terms of prediction markets. But I do wonder about, is it a broader, better set of data?