‘Fake and dangerous product’: The forecast markets’ wildest week yet

Tarek Mansour, CEO of Kalshi, posted a video on Wednesday showing six men dressed in casual clothes doing push-ups on the sidewalk. “This is how the Kalshi Q1 board meeting ended,” he wrote on the X. Board members laugh and smile in the video after the impromptu cardio session, and the mood is jubilant. The next day, it became clear that the team had good reason to celebrate: Calci had just raised $1 billion at a valuation of $22 billion, making the company’s value on paper twice what it was just a few months ago.

The funding round represents a bright spot during one of the most turbulent weeks for the prediction market industry to date. In just the past five days, the state of Nevada has temporarily banned Calcci through a temporary restraining order, and the state of Arizona has filed criminal charges accusing it of running an illegal gambling business; An Israeli reporter said he received a torrent of threats from Polymarket traders angry about how the story he wrote affected their bets; Polymarket scored a major deal with Major League Baseball, establishing itself in the world of professional sports; US Senators have introduced legislation to ban certain types of markets offered by the industry, including any type of markets that involve “government actions, terrorism, war, assassinations, and events in which the individual knows or controls the outcome.” It’s the latest in a series of bills aimed at putting guardrails around the forecasting industry.

Senator Chris Murphy, a co-sponsor of the bill and one of the industry’s most outspoken critics, said in an interview with WIRED that prediction markets are a “fake and dangerous product” and represent “a whole new source of astonishing corruption.”

“Calci already prohibits insider trading and markets directly linked to death and war,” says Elizabeth Diana, a Calci spokesperson. “As a US-based exchange, we support regulators and policymakers on both sides of the aisle in their efforts to keep these markets safe and responsible in America.” Polymarket did not respond to requests for comment.

Current law gives the Commodity Futures Trading Commission, the agency that oversees prediction markets, the authority to ban offers related to assassinations, war, terrorism, and other topics deemed contrary to the public interest. Some prediction markets are already moving away from these categories. But not all of its users understand precisely where the lines are drawn, which created a messy situation when some assumed that the market over the fate of Iran’s supreme leader would trigger a compensation payment if he “left office” by killing him.

Meanwhile, Polymarket, which operates largely outside the US, offers many war markets – but legislation is unlikely to impact these offerings. The platform currently offers a market on whether Israeli Prime Minister Benjamin Netanyahu will “exit” on certain dates; Someone recently bet $177,000 that he would be out by March 31. Polymarket will likely push the market to “yes” and allow its bettors to profit if Netanyahu dies, just as it did when Khamenei was killed.

One reason Senator Murphy is so passionate about prediction markets is that he sees them as vectors for insider trading. For example, the Israeli government accused two of its citizens of leaking classified information by linking Polymarket bets to the war in Iran. The Connecticut lawmaker suspects that other deals related to the conflict may have been carried out by members of Trump’s inner circle with advanced knowledge of military operations. “It is horrifying to think that there are employees inside the operating room pushing the United States into war, not because it is good for our security, but because they will make $100,000 from it,” he says.