I’ve been thinking a lot about prediction markets lately. And honestly, I keep running into people who really don’t like them. Not just mild skepticism, more like “these should be banned” or even outright illegal. That reaction kind of bums me out.
I’ve been into the idea for a long time, even before there were any big platforms. Back when it was mostly just theoretical, before Polymarket, Kalshi, all that, I thought it was a really elegant concept. It just made sense. We already know markets can be pretty good at aggregating information. The stock market, for example, does a decent job pricing in everything people know (or think they know), and that usually leads to pretty accurate valuations. Way better than small private markets where fewer people are involved and less information gets reflected.
So if you start from the basic problem, “we want to predict the future,” it feels natural to look for systems that are good at combining lots of information. Prediction markets fit that really well. They’re kind of like a general-purpose forecasting tool. You can point them at almost anything.
One example I really like is weather markets. Kalshi has some live ones where you can predict things like temperature or whether it’ll rain on a specific day. That’s a case where prediction markets actually feel useful in a very direct way. Everyone cares about the weather. You’re planning a weekend, a trip, even just tomorrow, having a solid sense of what’s coming matters.
Sure, you can check a weather app or watch the forecast. And they’re usually fine. But the people trading in a weather prediction market are pulling from all of that too, plus their own models, their own insights, maybe even niche data sources. They’re constantly updating their beliefs because there’s money on the line. And that pressure forces information into the price.
Over time, the people who are actually good at predicting, like really good, end up with more influence because they win more and can trade more. So the market kind of self-selects for accuracy. The end result is a price that reflects a very informed, constantly updated probability. In theory, it’s about as good an estimate as you can get.
That’s kind of amazing, if you think about it. A single number that summarizes everything people collectively know (and believe) about some future event. It feels like a genuinely powerful tool. Which is why it’s frustrating to see people want to shut it down entirely, it feels like throwing away something valuable.
Now, to be fair, there are criticisms.
One that comes up a lot is insider trading. People don’t like the idea that someone with privileged information could profit off it. And yeah, I get why that feels unfair, especially since we regulate that heavily in stock markets.
But prediction markets aren’t really about fairness in that sense. They’re not trying to give everyone an equal shot. If that’s the goal, there are plenty of games for that, go play roulette or something. The whole point here is accuracy.
From that perspective, insider trading isn’t a flaw, it’s kind of the point. If someone knows something the market doesn’t yet reflect, you want them to trade on it. That’s how the information gets incorporated into the price. It actually makes the market better as a forecasting tool.
Another criticism is that this is basically just gambling with extra steps. Especially with things like sports or politics. And yeah, I think there’s something to that. Gambling can be a real problem for some people, and a lot of these markets, especially sports, do look a lot like betting.
Honestly, I don’t think sports prediction markets add much value. Predicting who wins a game doesn’t really matter in any meaningful sense. It’s entertainment. So if people want to clamp down there, I’m not too bothered by that.
Politics is a bit more nuanced. There’s arguably some real value in forecasting elections. Markets can sometimes pick up on signals that polls miss. But even then, I could see the case for tighter rules or guardrails.
Where I think we’d really lose something is in the more practical, information-heavy markets, like weather, economic indicators, maybe even things like supply chain risks or disease outbreaks. Those feel genuinely useful. They help people make decisions.
So yeah, I don’t think prediction markets are perfect. But as a tool for aggregating information and forecasting the future, they’re kind of incredible. It would be a shame to throw that away entirely.
Kyle Piira 
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