Ultimate Resource For Prediction Markets Covering Politics, Pop Culture, Sports And More

Kamala Harris Will ‘Win’ First Debate With Trump, Polymarket Traders Are Betting. Ultimate Resource For Prediction Markets Covering Politics, Pop Culture, Sports And More

Also, there are now prediction market contracts about other prediction market contracts.

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This Week In Prediction Markets:

* Harris Primed For Post-Debate Polling “Win” After Trump Odds Survive Highly Unprofitable Trading Strategy.

* Kalshi Bettors Say Harvard Applications Will Fall As Gay Leaves A Dark Cloud.

* No Canadian Election In 2024.

The second U.S. Presidential debate, and the first with now Democratic nominee Kamala Harris, is scheduled for Sept. 10 on ABC.

With the total amount bet on the Polymarket election contract approaching $850 million in the days leading up to the debate, bettors are still giving former President Donald Trump an edge against Harris, with the odds at 52-46.

Polymarket is a blockchain-based platform, programmed onto the Polygon network as a smart contract, and bettors ante up by depositing the stablecoin USDC, a type of dollar-linked token.

Then it gets a bit meta, with prediction markets about polls (something prediction markets are supposed to be an alternative to) and even prediction markets about other prediction markets.

Polymarket traders are betting the traditional pollsters will give the debate to Harris, with a 75% chance that the Ipsos/538 survey will find she “wins” it.

At the same time, bettors also have their money on this “win” not mattering much.

Harris, in their eyes, only has a 22% chance of retaking the lead in the main Polymarket election contract the day after the debate. (Yes, there are Polymarket contracts about other other Polymarket contracts.)

The debate is also expected to draw an audience of well over 70 million people, which may put it in range of challenging the first Clinton-Trump debate, which holds the record as the highest-rated at 84 million, followed by the second Carter-Reagan debate, which had an audience of 80.6 million.

Meanwhile, the market seems to have righted itself after a very expensive failed manipulation attempt over the weekend.

The manipulation, on-chain data suggests, involved a group of whale accounts, led by DJTHolder, which apparently tried to artificially juice Harris’ odds in the U.S. Presidential Election Winner market to profit from a derivative market that resolved based on the leading candidate on Sept. 6.

This group burned through $9 million of USDC and simultaneously bought large amounts of Kamala YES shares and Trump NO shares, temporarily driving Harris shares’ price by anywhere from 2 cents to 27 cents.

(Each share pays out $1 if the prediction comes true and zilch if not, so Harris’ current 47 cent price indicates a 47% chance of victory.) The price subsequently fell back to Earth.

Despite spending millions, they failed to keep Kamala’s odds above Trump’s, leading to over $60,000 of USDC-denominated losses in the derivative market and six-figure losses in the main election market.

Right now, the apparent ring leader, DJTHolder, is showing a total loss on his account of over $46,000 based on $2.9 million in positions.

A highly profitable trading strategy this was not. They probably should have tried this first in the Minecraft version of Polymarket.

Updated: 8-5-2022

Popular Election-Betting Site PredictIt Throttled By US Regulator

The site where people can wager on the outcome of political battles has until February to close its U.S. operations, said the CFTC.

Election betting platform PredictIt must shut down for U.S. users in February, according to an order from the Commodity Futures Trading Commission.

The CFTC said the operators haven’t complied with the agency’s requirements for running the popular site.

Eight years ago, the CFTC issued a no-action letter – a document that says the regulator wouldn’t make trouble about something that might not otherwise meet existing rules – to Victoria University of Wellington, New Zealand, the site’s operator.

PredictIt was able to take wagers from its “traders” on such open questions as the future Republican nominee for the 2024 presidential election, whether the U.S. Senate will pass a reconciliation bill by Sept. 2 or whether Rep. Alexandria Ocasio-Cortez (D-N.Y.) will seek the White House.

This week, the CFTC stated that the university “has not operated its market in compliance with the terms of the letter.” PredictIt was told to shutter in the U.S. by Feb. 15.

PredictIt told its U.S. users that “the security of trader funds will not be affected by this action,” and that it’ll keep going until next year.

It won’t start new markets, according to a statement on PredictIt.org, and it hasn’t yet determined how it’ll resolve predictions that have an end date after February, which would include the U.S. presidential election.

The crypto industry – including Augur, PrediQt, Polymarket and FTX – has also made forays into trying to build decentralized prediction markets, with varying levels of success.

Earlier this year, Polymarket was fined $1.4 million by the CFTC and ordered to close its U.S. market, though it continued with an information market for non-U.S. residents.

The university behind PredictIt was given its no-action permission on the basis that it run “a small-scale, not-for-profit, online market for event contracts in the U.S. for educational purposes.”

As long as it met CFTC expectations, it didn’t have to register for oversight from the agency. The regulator didn’t specify in its statement how the no-action was violated.

Updated: 8-29-2024

Bloomberg Adding Polymarket Election Data To Terminal

The move signals the crypto betting market’s growing importance.

Bloomberg LP, the financial data and news service, is adding election odds data from crypto betting platform Polymarket to its Terminal, according to an Aug. 29 X post by Michael McDonough, Bloomberg’s chief economist for financial products.

The integration highlights the growing importance of prediction markets in analyzing political trends and election odds. It also underscores the increasing adoption of Web3 by traditional financial institutions.

Bloomberg features Polymarket odds for the United States presidential election outcome alongside data from other prediction markets, such as PredictIt and polling services, according to the post.

Bloomberg’s Terminal is the world’s most popular institutional financial data platform. It controls approximately one-third of the market share for financial data services, according to Wall Street Prep. It has approximately 350,000 subscribers globally.

Polymarket is a blockchain-based prediction market built on the Polygon network. It allows users to create and bet on a variety of event outcomes and uses transparent onchain data and smart contracts to facilitate trades and payouts.

Polymarket has emerged as the go-to platform for tracking real-time odds on outcomes for the US elections, with monthly trading volume for August approaching $450 million, according to Dune Analytics.

A total of nearly $760 million has been bet on the outcome of the Nov. 4 US presidential election on the platform, according to Polymarket. As of Aug. 29, Republican candidate Donald Trump has slightly more favorable odds than Democrat Kamala Harris, with Trump at 50% and Harris at 48%.

Polymarket faces challenges from rivals such as Solana-based Drift Protocol’s BET platform, which surpassed Polymarket in daily trading volume for the first time on Aug. 29, according to an X post by Solana-focused news account Solana Floor.

In August, Polymarket bettors accurately predicted that independent presidential candidate Robert. F Kennedy Jr. would exit the presidential race before September 2024. Odds surged from 8% to upward of 90% ahead of RFK Jr.’s Aug. 23 speech, during which he suspended his presidential bid.

Can Prediction Market Boom Continue After Election? This Crypto Team Has A Plan

Hedgehog Markets, which runs on the Solana blockchain, wants to do for prediction markets what Pump.fun did for meme coins: Let anyone roll their own.

SALT LAKE CITY — As Kyle DiPeppe sees it, crypto’s prediction market fad has a looming expiration date: Nov. 5, 2024.

Election day will bring judgment for hundreds of millions of dollars in bets placed on the U.S. presidential contest and the myriad other political races that have turned sector leader Polymarket into a massive success.

Once these races are decided, so will their prediction markets, leaving their bettors with a win or a loss.

What happens then? Will bettors keep prognosticating when the quadrennial Super Bowl of prediction markets is over?

Probably not, says DiPeppe, an attendee at the semiannual mtnDAO hacker house gathering who runs far-smaller competitor Hedgehog Markets.

He reckons that 90% of prediction markets trading volume is “all around politics,” and will likely evaporate when this cycle is over, as it has before.

DiPeppe mused: “Once November 6 hits, is there enough liquidity” to keep market makers and other behind-the-scenes players sufficiently interested to support trading on prediction markets? He doubts it.

To weather the coming drought, Hedgehog Markets is building a type of prediction market that is less tradeable, but in his view more enduring than Polymarket’s binary shares-based model for highly publicized events, which needs a lot of liquidity to work as designed.

Hedgehog focuses instead on the “long tail” of bettable events that have fandoms willing to put money on their favored outcome but aren’t too concerned about trading their position.

It’s more similar to sports betting experiences prevalent on DraftKings and FanDuel, where bettors take a gamble on odds and let it ride, than a stock market.

“There’s clearly people interested in sports betting. It’s all short-term, same thing with crypto: It’s a lot of memecoin, short-term trading,” DiPeppe said. “So how do we cater with a market type that fits this shorter-term time frame?”

Roll Your Own

Doing away with stock market-type trading gives Hedgehog more flexibility in engaging its user base, said DiPeppe. For example, users can spin up custom prediction markets, place their own bet on the outcome, and hope someone else takes them up on the opposite point of view.

(Polymarket allows community members to suggest markets in its Discord server, but the company decides which ones to publish.)

DiPeppe thinks the same mindset behind memecoin factory Pump.Fun’s success could pay dividends with custom prediction markets.

There, any community can create a token in seconds and release it into the world where people trade it for “fun.” He thinks there’s fun to be found with prediction markets too.

Custom prediction markets come with potential minefields. What happens when someone creates a betting market in which the outcome differs from the contemplated scenarios? (For example: a tie game where bettors only thought one team or the other could win).

There’s no clean way of resolving things when the prediction market is built atop a market maker or order book, according to DiPeppe. Even returning the pot 50-50 between opposing sides – a solution that might feel most fair – ends up rewarding those who bought in at, say, 20% odds, while punishing those who took 80%.

Hedgehog’s dispute resolution is cleaner, DiPeppe argued. A custom-made market that ends in purgatory can simply return the same amount of money to bettors that they originally put in, he said.

Another potential problem: what if insiders play their own market? Perhaps someone created a market asking whether, say, a presidential candidate will mention the word “potato” onstage at a debate? Such a market might catch some bets from people thinking it to be unlikely (or from people who think otherwise).

What if the candidate places a bet in that market, too? If they know what they’re going to say, then they could place a large bet based on the insider information. Would that not be insider trading?

Yes and no, said DiPeppe. Prediction markets are all about using trading to seek the truth. If someone who knows the truth trades on it, then other market participants, and bystanders among the general public, will become better informed.

“Anybody could launch their own NFT collection, anybody could launch their own meme coin. Will communities want to do the same thing?” with prediction markets, DiPeppe asked. He’s betting on it.

Updated: 8-29-2024

Polymarket Bettors Miss Out On $270K Due To Pavel Durov’s Early Release

Bettors were fairly sure the Telegram CEO would be released in September. His release on Wednesday tossed the market on its head.

* Bettors On Polymarket Were Largely Wrong About How Long Telegram CEO Pavel Durov Would Be Detained By French Authorities.

* Durov Was Released On Bail On Aug. 28, Earlier Than Many Bettors Anticipated.

French authorities are no longer holding Telegram CEO Pavel Durov, and as of Aug. 28 he was out on bail.

The decision took bettors on Polymarket, a crypto-based prediction market, by surprise, costing them a total of $270,000 in missed winnings.

Durov was formally indicted Wednesday and released on bail after he posted a 5 million-euro ($5.6 million) bond while agreeing to report to police twice weekly and to stay in the country.

The quick release contrasted with bettors’ overall sentiment that an extended detention was more probable. At one point, the chance of an August release was pegged in the mid-30%s while a release before October was priced 75%-90%.

The August relase probabilty climbed to 50% in the hours before French authorities announced he was out on bail.

Each bet comprises a “Yes” and a “No” side. Each share pays out $1 in USDC, a stablecoin, or cryptocurrency that trades at par with the U.S. dollar, if the prediction comes true, and zero if not.

In total, bettors missed out on $270,000 by betting “No” on an August release, and “No” for before October. Likely, bettors had their money on French authorities keeping Durov for as long as possible.

As a man of considerable wealth and multiple nationalities – including the United Arab Emirates, which does not extradite its citizens – Durov would have the means to flee the country, which is why bettors thought France would do all it could to keep him in detention.

On the other side of the trade, user Champ correctly forecast Durov would be released in August and before October, and was the largest holder of the “Yes” side of both contracts.

In total, Champ won $26,138 between the two contracts, meaning they took home $56,638 after the winnings were added to the value of the original bet.

Another contract gives Durov a 6% chance of fleeing France by mid-month, meaning bettors expect him to comply with the terms of his bail.

Despite Durov’s legal challenges being the talk of the crypto community this week, it won’t be center stage when Republican presidential candidate Donald Trump holds a live townhall in Wisconsin later Thursday.

Bettors are only giving a 14% chance he’ll mention Durov’s name during the event, compared to a 92% chance he’ll say “MAGA” and an 84% chance he’ll use the term “Border Czar.”

However, Trump can often be unpredictable.

In a recent interview with Elon Musk bettors wagered over $250,000 on the former president saying “Tesla,” causing the bet to peak at 79%. Instead, he refered to the carmaker only as “your cars.”

Updated: 9-2-2024

Donald Trumps Harris On Polymarket Once Again

Harris led Trump in early August and betting odds reached 50-50 on the marketplace last month but shifted to Trump’s favor over the weekend.

* Trump Pulled Ahead With A 51% Chance Of Regaining The U.S. Presidency.

* Traders Have Placed $99 Million In On-Chain Bets On Trump Winning The Election, With Over $95 Million Put On Harris.

Election punters on Polymarket are favoring Republican candidate Donald Trump once again as Democrat Kamala Harris’ odds slipped to 47% over the weekend from even odds earlier.

Odds of Trump winning the November elections surged to highs of 71% in July before tumbling to lows of 44% in August as incumbent Joe Biden said he would not contest before Harris was announced as the candidate. Her chances rose to over 55% in early to mid-August to emerge as a favorite.

Harris’ appeal has drifted lower in the past weeks among traders on Polymarket, while Trump’s has gradually climbed back over 50%. He is again in the lead after nearly two weeks of even odds.

Traders have placed $99 million in on-chain bets on Trump winning the election, with over $95 million put on Harris.

Harris’ odds have slipped amid outcry for a proposal to tax unrealized gains for people worth over $100 million. Meanwhile, Trump’s odds have increased as he promotes an upcoming decentralized finance project that could offer “high yields” for crypto users.

Updated: 9-6-2024

Kalshi Cleared To Offer Congressional Prediction Markets In Victory Against CFTC

With two months to go before the election, the U.S.-regulated platform may now get a sliver of the 2024 political betting bonanza that’s been dominated by crypto-based rival Polymarket.

Kalshi, a U.S.-regulated prediction market platform, won its federal lawsuit against the Commodity Futures Trading Commission over a plan to offer contracts on which party will control each house of Congress after the November election.

Although the CFTC could appeal, Kalshi, which had been locked out of this year’s election betting boom while the case was pending, can now grab a sliver of that action in the last two months before the election.

“We did it!” the company said in a notice on its website Friday. “U.S. election markets are coming to Kalshi.”

More broadly, the ruling represents a victory for advocates of prediction markets, in which traders bet on the outcomes of real-world events ranging from elections to album sales to temperature increases.

Prediction markets are popular in crypto circles, and although Kalshi does not use cryptocurrency, the crypto industry has been watching the case closely; VC firm Paradigm filed a friend-of-the-court brief supporting the plaintiff.

Last year, the CFTC forbade Kalshi from listing the Congressional control contracts, on the grounds that they would amount to unlawful gaming and would be “contrary to the public interest.” Kalshi then sued, calling the regulator’s decision “arbitrary [and] capricious.”

In a ruling handed down Friday, Judge Jia M. Cobb, of the U.S. District Court of the District of Columbia, sided with Kalshi.

“For the reasons stated in the Court’s forthcoming memorandum opinion, the Court GRANTS Plaintiff’s motion for summary judgment … and DENIES Defendant’s cross motion for summary judgment,” Cobb wrote.

“Defendant’s September 22, 2023 order prohibiting Plaintiff from listing its congressional control contracts for trading is hereby VACATED.”

Proponents say prediction markets beat polls and pundits as a method of forecasting events and gauging sentiment, because participants have skin in the game and so are incentivized to do thorough research and express their honest opinions.

This year’s prediction market breakout success, Polymarket, runs on crypto rails and is riding high on excitement about election betting. In August, the site logged over $470 million in volume, a record, according to Dune Analytics data; the lion’s share of that was traded on election contracts.

Polymarket is reaping the benefits of the U.S. election despite being barred from doing business with U.S. residents under a regulatory settlement with the CFTC. Bets on Polymarket are written into smart contracts on a blockchain and settled in USDC, a stablecoin, or cryptocurrency that trades 1:1 for dollars.

Kalshi, by contrast, does business only in the U.S. and settles trades in normal greenbacks. However, every contract it lists is subject to approval or second-guessing by the CFTC, which is why it had to take the regulator to court over the Congressional control contract.

Another fight looms, as the CFTC weighs a proposed rule to bar any of the entities it regulates from offering contracts on political contests, in part over concerns they would undermine the integrity of elections.

Updated: 9-7-2024

Are You Ready To Bet On U.S. Elections? A Judge’s Ruling Opens The Door

Prediction-market startup Kalshi prevails in its bid to list political contracts, beating the CFTC.

Get ready for legalized betting as soon as next week on whether Democrats will take back control of the U.S. House of Representatives in November.

A federal judge on Friday cleared the way for Americans to place bets on the outcome of congressional elections via a prediction-market startup, a victory that could potentially open the door to legalized wagers on U.S. elections.

Still, it remained uncertain over the weekend whether the political betting markets would go live, after regulators filed an emergency motion seeking a two-week delay while they considered an appeal.

In a one-page order, U.S. District Judge Jia Cobb of the District of Columbia sided with the startup, Kalshi, and threw out a 2023 decision by the Commodity Futures Trading Commission that had blocked Kalshi from listing its congressional-control contracts.

Kalshi will make its congressional-control contracts available to users for trading next week and will move quickly to list other kinds of political-event contracts, said Luana Lopes Lara, one of the co-founders of Kalshi, in an interview.

Hours after Cobb’s ruling, the CFTC filed an emergency motion asking her to stay the decision until Sept. 22, noting that Kalshi could list the election contracts as soon as Tuesday morning.

“Time is of the essence in the issuance of a stay,” the CFTC said. Cobb had yet to respond as of late Saturday morning.

Kalshi sued the CFTC last year, arguing that the regulator had overreached its authority when it blocked the contracts. The contracts in question would allow investors to wager on whether Republicans or Democrats capture the House or Senate in election years.

“Election markets are now legal in the United States for the first time in 100 years. Americans will finally be able to trade the election on a U.S.-regulated market,” the startup’s CEO and co-founder, Tarek Mansour, said in a statement.

Cobb, who was appointed by President Biden, didn’t immediately release the reasoning behind her ruling, saying it would be detailed in a “forthcoming” memorandum.

The CFTC complained in its emergency motion that it was in “the unenviable position of finding out that it has lost but without any explanation or reasoning.”

The commission said the public interest could be harmed even if election bets were allowed just temporarily and were then taken away by a successful CFTC appeal. It noted that the judge’s ruling paved the way for other trading platforms, besides Kalshi, to offer election bets.

“At a time when distrust in elections is at an all-time high, even a short listing of Plaintiff’s contracts…could harm public perception of election integrity and undermine confidence in elections,” the CFTC said.

In rejecting Kalshi’s contracts last year, the CFTC had argued that political-event contracts were a form of gambling, making them illegal under the federal laws that govern financial markets.

CFTC Chair Rostin Behnam had also worried that allowing the contracts could lead his agency to be drawn into complex, politically sensitive investigations of election manipulation.

Other critics of election betting have said that giving citizens a financial incentive to cast their votes for certain candidates would fundamentally warp elections.

Many states, including Nevada, ban election betting. The practice is legal in some other countries such as the U.K., where bookmakers do a brisk business taking bets on U.S. elections.

Supporters of Kalshi have argued that its proposed contracts would be safer for users than foreign venues for election betting, and that they would produce useful data for political scientists.

Friday’s ruling comes as bettors have placed hundreds of millions of dollars of wagers on the November presidential election on Polymarket, a crypto-based prediction market that is off-limits to Americans since it reached a 2022 settlement with the CFTC.

Polymarket has enjoyed a surge in trading volumes as its users have bet on the race between former President Donald Trump and Vice President Kamala Harris, while Kalshi’s volumes have lagged behind.

The court ruling allowing Kalshi to list election contracts could provide the startup with a boost against its offshore rival.

Updated: 9-8-2024

U.S. Election Betting Delay Would Be ‘Devastating’ To Kalshi, Firm Says

The prediction market site “has staked its future on … these markets,” it told a court, pushing back against the CFTC’s motion for a two-week wait.

Kalshi, the U.S. prediction market platform that just won a lawsuit against its regulator, said its future depends on being able to list election betting contracts while there’s still time before Americans cast their votes on Nov. 5.

In a court filing Sunday, the New York-based company, which does business only in its home country, pushed back against the Commodity Futures Trading Commission’s emergency motion to bar it from listing such contracts for another 14 days.

The motion is “meritless,” Kalshi said, and granting it would cause “irreparable harm” to the company.

“That delay—which the agency would assuredly try to parlay into another, then another, until it is too late—would be devastating for Kalshi, which has staked its future on this litigation and these markets,” the company told the U.S. District Court for the District of Columbia.

Last year, the CFTC forbade Kalshi from listing contracts on which party would control each house of Congress after the election.

Such contracts, the agency said, would amount to unlawful gaming and would be “contrary to the public interest.” Kalshi then sued, calling the regulator’s decision “arbitrary [and] capricious.”

In a ruling handed down Friday, Judge Jia M. Cobb sided with Kalshi but did not give her rationale, which she said she would spell out in a subsequent opinion. She did not say when that opinion would be published.

Kalshi triumphantly declared on its website: “We did it! U.S. election markets are coming to Kalshi.”

Hours later, the CFTC filed its emergency motion asking Cobb to stay her order for 14 days following publication of the opinion. Without knowing her reasoning, the agency said, it can’t figure out whether it should appeal the decision.

If granted, the stay would mean Kalshi wouldn’t be allowed to list election markets until late September at the earliest. The company, which settles trades in U.S. dollars, has been locked out of this year’s election betting boom.

“The Commission lost, fair and square, on the law,” Kalshi said in its Sunday filing. “It should not be allowed to snatch a procedural victory from the jaws of defeat by running out the clock.”

Kalshi is the only CFTC-regulated prediction market in the U.S. It lists contracts on a variety of events, ranging from whether U.S. students’ test scores will improve or worsen to how high bitcoin will rise this year. (To be clear: Trades are settled in dollars.)

PredictIt, an older U.S. site that also settles bets in fiat, lists election contracts under a narrow regulatory exemption. Polymarket, this year’s breakout success story in both prediction markets and cryptocurrency, is barred from doing business with U.S. residents under a settlement with the CFTC.

Even so, PredictIt and Polymarket have been “accumulating market share at the expense of law-abiding Kalshi,” the company told the court Sunday.

“[A]s Kalshi has waited for the litigation process to run its course, unregulated operations like Polymarket have taken advantage of that time to dominate the market,” Kalshi said.

“Further delays may make it impossible for Kalshi to meaningfully compete in this space.”

In a filing Monday, the CFTC called this claim “questionable … in light of Kalshi’s seemingly robust listing of hundreds of other non-political event contracts on its exchange.”

Noting that the proposed election contracts would allow positions up to $100 million, the regulator reiterated its concern that “election gambling poses threats to election integrity and the perception of election integrity.”

As for the accusation of stalling, the agency said requesting a stay is “a routine mechanism to allow the orderly administration of cases such as this one.”

The CFTC said it believes Kalshi “may intend to list the election contracts imminently, without further self-certification (or, apparently, any notification to the court in its response to the CFTC’s motion or otherwise).”

Self-certification is the process whereby entities regulated by the CFTC list products without the agency’s prior approval.

“The public has already been denied these benefits for over a year, while the CFTC’s unlawful order was in place,” Kalshi said Sunday. “And with the election now fewer than 60 days away, there has never been a more important time for those benefits to materialize.”

Better Markets, a lobbying group that opposed Kalshi’s plan, called the judge’s Friday ruling in Kalshi’s favor a “Dangerous Step Towards Allowing Gambling on U.S. Elections, Threatening Democracy and the Integrity of our Markets.”

Updated: 9-10-2024

Prediction Markets Are The Killer Blockchain App We’ve Been Waiting For

As markets continue to evolve and integrate with Web3 — from DeFi to gaming — we’re likely to see an explosion of creativity.

In 2024, the blockchain world is at a turning point. Although big institutions are starting to see the value in this technology, blockchain-native prediction markets are emerging as the game-changing crossover “killer app.”

The most exciting part is how these markets can provide accessible, relevant information about current events to everyone. This shift lets people tap into the “wisdom of the crowd” and play a role in shaping our understanding of what’s to come.

Rewarding Accuracy And Building Trust

In the book “Superforecasting,” the authors suggest that some people have a natural talent for making accurate predictions. And with Web3 — which is intended to return value in the Internet experience to the users, it’s now possible to recognize and reward these “superforecasters” with crypto incentives.

And then the potential integration of prediction markets with the broader DeFi ecosystem opens up a whole new realm of possibilities, like being able to use your prediction market positions as collateral in these protocols.

For instance, if you hold a position where the odds have moved in your favor on a Polymarket or Azuro prediction market — one where your prediction is currently on track based on market odds — this position could be seen as valuable collateral because there’s a real chance that it will pay out, giving it actual value.

It’s even conceivable to develop more sophisticated applications. For example, if you’re willing to lock in your position for three months, giving up the flexibility to cash out instantly, you’re showing strong confidence in your prediction.

This level of commitment is then rewarded — perhaps by earning rewards through a DeFi protocol.

And this is just the beginning. Web3 prediction markets are set to revolutionize everything from gaming to social media, opening up new ways to engage and create value across different platforms.

Picture This: You’re playing a game like Roblox, Minecraft, or any user-generated content (UGC) driven game. Now, imagine being able to set up a prediction market inside that game, allowing people to predict what you’re doing or what’s happening inside your UGC. The possibilities are endless.

This concept extends to streaming and social media as well. Imagine streamers having prediction markets in their streams, with viewers predicting outcomes in real-time.

For example, how many times will a streamer say a certain phrase? Who will win the next round? Will they beat their personal best score? These mini-games within games will transform user engagement and create entirely new revenue streams.

The Cultural Impact

Anything cultural is well positioned to become a topic for prediction markets. Just consider the excitement among dedicated fanbases, like the Beyhive or Swifties, betting on their favorite artist’s next big achievement.

Whether it’s predicting music chart rankings, movie box office numbers, weather forecasts, or even celebrity events, the possibilities are endless. And it’s not just limited to major cultural moments — niche interests and local events also have their place in this model.

The result is a vibrant and diverse tapestry of prediction markets that reflect the full spectrum of human interests and experiences. And, as a corollary, the expansion of information.

There are dozens of decentralized prediction markets already in operation, with some of the major ones being Azuro, Polymarket, and Betfolio.

If something gets skewed disproportionately to reality, there’s always someone who will pick up that opportunity. Let’s say someone buys a position at 50/50, because they believe one outcome is going to happen.

If significant money suddenly pours in overnight and the odds shift to 80/20 for the other side, with nothing fundamentally changing to justify this shift, they would buy the 20% position immediately because it’s such an attractive opportunity at that price.

The wisdom of the crowd would recognize this as a good opportunity. If you liked the position at 50%, you’d love it at 20%. This is how the market naturally rebalances itself.

As these markets continue to evolve and integrate with other aspects of Web3 — from DeFi to gaming — we’re likely to see an explosion of creativity and innovation. Don’t just watch from the sidelines! The future awaits your prediction.

Updated: 9-11-2024

Judge Says CFTC Exceeded Its Authority Halting Kalshi Election Bets

According to Judge Jia Cobb, having Kalshi offer contracts on “whether a chamber of Congress will be controlled by a specific party in a given term” was not unlawful.

A federal judge has granted partial summary judgment in Kalshi’s case against the United States Commodity Futures Trading Commission, paving the way for the prediction market to list bets related to elections.

In a Sept. 12 opinion filed in the US District Court for the District of Columbia, Judge Jia Cobb said that the CFTC “exceeded its statutory authority” by issuing an order halting Kalshi’s election markets.

The commission argued that gambling on the US political races could disrupt markets and potentially threaten election integrity.

“Kalshi’s contracts do not involve unlawful activity or gaming,” said Judge Cobb. “They involve elections, which are neither.

Although the Court acknowledges the CFTC’s concern that allowing the public to trade on the outcome of elections threatens the public interest, this Court has no occasion to consider that argument.”

Elections Aren’t “Gaming?”

The judge’s opinion suggested that Congress must issue an order authorizing the CFTC to block Kalshi’s activities. Under federal or state law, Judge Cobb said, Kalshi’s elections contracts “do not involve activity that is unlawful” or constitute “gaming.”

“Kalshi’s event contracts ask buyers to take a yes/no position on whether a chamber of Congress will be controlled by a specific party in a given term.

That question involves […] elections, politics, Congress, and party control; but nothing that any Party to this litigation has identified as illegal or unlawful activity.”

It’s unclear if the decision will immediately result in Kalshi offering users the ability to take positions and trade on US congressional elections. There are 54 days until US Election Day, with early voting in Pennsylvania expected to begin on Sept. 16.

“The Court’s opinion in Kalshi echoes the concerns I raised more than two years ago when the CFTC first embarked on a creative reading of its own rules and governing statutes in this matter,” said CFTC Commissioner Caroline Pham. “Oftentimes, the simplest explanation for what a law means is the correct one.

The Commission would do well to learn from this experience and respect the limitations of its authority.”

Judge Cobb initially issued a decision on Sept. 6 that would have allowed Kalshi to move forward with listing election bets. However, on Sept. 9, she stayed that order in response to an emergency motion from the CFTC. The case has been in limbo since that filing.

Crypto prediction platform Polymarket lists many contracts based on whether US Democratic presidential nominee Kamala Harris or Republican Donald Trump will carry individual states in the Electoral College or win the election outright in November.

At the time of publication, the platform and national polls showed the candidates in a virtual dead heat.

Updated: 9-11-2024

Young Consumers Turn To Prediction Markets vs Boring Blockchain Loyalty Reward Programs

Mini-DApps, microgames, and the burgeoning prediction markets sector appear to be the most popular methods for retaining engagement.

The number of blockchain loyalty rewards programs has increased significantly in recent years as both the Web3 and decentralized application (DApp) sectors have begun maturing. But the most coveted consumer demographic, young adults, have shown a clear preference for participate-to-earn paradigms with focused ecosystems.

Statistics show that participation in the majority of Web3 and cryptocurrency products in the past decade has peaked during periods such as airdrops or other limited incentive windows.

While there are numerous exceptions, the majority of projects that fail to gain traction with consumers in the first few months post-launch tend to trend poorly.

Loyalty Programs

Self-contained economies meant to incentivize consumers have been around since the advent of currency and competition. From earning airline miles with credit card purchases to earning gift cards with Microsoft’s pay-to-browse incentivization program, there’s little that businesses haven’t tried when it comes to customer retention programs.

However, their implementation throughout the blockchain and Web3 communities has been sporadic and inconsistent across the splintered ecosystems.

Many projects focus on cryptocurrency rewards that can be cashed out upon reception, reducing the incentivization to reinvest those funds, while others focus on rewards that only exist on the platform they were earned on.

Yet, in a recent roundtable discussion hosted by The Street’s Rob Nelson, a panel of insiders, including Paul Mikel, CEO and president of REVO Ride Share, Scott Lomu, CEO and president of Element United, and influencer Paul Cuffaro, cited tokenization and rewards as a primary driver of blockchain adoption.

The group discussed blockchain’s potential as a driving force for consumer loyalty through the lens of the technology’s implementation into the creator’s market.

However, as Cointelegraph reported, data from Consensys shows that influencers and freelancers make up a small percentage of the total number of people employed in the Web3 industry.

Micro-Experiences And Prediction Markets

It’s unclear whether current blockchain-based loyalty programs have led to measurable increases in user onboarding. Most firms don’t release information related to the efficacy of their marketing efforts.

However, an analysis of the most successful projects currently trending as of September 2024 shows that mini-dApps, Telegram games, click-to-earn games, and prediction markets are showing explosive growth relative to traditional loyalty programs.

Simple experiences where incentivization is invisible or seamlessly integrated into user interfaces appear to be gaining the most traction with the largest demographic in the Web3 and cryptocurrency communities, those born after 1981.

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