Polymarket and Kalshi surge as billions trade on prediction markets

Polymarket and Kalshi, online prediction markets where users wager on events from Iran's political future to celebrity wedding dates and election outcomes, have surged in prominence and attracted huge trading volume. Donald Trump Jr. is an adviser to both firms. The platforms sell yes-or-no contracts priced between $0 and $1 that move like stocks and pay out when an event occurs; unlike conventional sportsbooks, the sites match buyers and sellers and earn revenue from trading fees.

Nearly $12 billion was traded on Kalshi and Polymarket in December, up more than 400 percent from a year earlier, according to data from Piper Sandler. The companies have raised large sums from investors, with Kalshi valued at $11 billion after new financing and Polymarket at $9 billion after a fundraising round, and their odds have been featured in mainstream media and at events such as the Golden Globe telecast.

Their rise has prompted legal and integrity concerns, including fears about the spread of gambling, market manipulation and insider trading. Regulators fined Polymarket $1.4 million in January 2022 for operating without proper registration, the company was at one point barred in the United States and federal agents later raided its founder's apartment during a criminal probe; the Justice Department subsequently dropped that investigation.

Key Topics

Tech, Polymarket, Kalshi, Prediction Markets, Donald Trump Jr, Insider Trading