Are prediction markets democratizing information or gamifying war?
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What are prediction markets and how do they work?
Who will be the Democratic presidential nominee in 2028? Will the price of gold be at the end of the week? Who will win the World Cup? All of these are relatively benign bets you can make today, but there are other bets that maybe aren't so benign, like will Venezuelan President Nicolas Maduro be removed from office by the end of January? That well-timed bet was made in the hours before the US captured and extracted Maduro, netting the anonymous investor $400,000.
Hello and welcome to USA Today's The Excerpt. I'm Dana Taylor. Today is Wednesday, February 11th, 2026. Are prediction markets democratizing information? As some argue, are we monetizing reality in a way that incentivizes perverse motives?
What was the significant bet on Nicolas Maduro's ouster?
Here to help me dig into how prediction markets work and the risks they pose both financially and politically is Alex Goldenberg, fellow at Rutgers University. Alex, thank you for joining me. My pleasure. I want to start with a bet that really made the world take notice of political prediction markets, and it's the one that was made on the ouster of Maduro. What are prediction markets and what happened with this Maduro bet?
Prediction markets work great for a lot of things, election forecasting, technology launches, corporate earnings. But when you apply them to military operations, you can create risks that are fundamentally different. That's what got me writing about this. We now have, we'll get into more detail on this, I hope, Ukrainian volunteers, Russian military bloggers, and potentially American security clearance holders now converting potentially insider knowledge of military operations into profit through anonymous crypto wallets.
How do prediction markets impact military operations?
This isn't theoretical anymore. As you mentioned, 2 a.m. local time on January 3rd, U.S. forces captured President Nicolas Maduro in an incredibly complex and dangerous attack, now known as Operation Absolute Resolve. But hours earlier, a newly created PolyMarket account, had invested $30,000 betting on Maduro's exit. And by that morning, that position had netted roughly $400,000 in profit, which is a 1200% return in less than 24 hours on a military operation. And the timing suggests that the trader had advanced knowledge of this military operation. And this isn't the first time. In October, someone placed a $68,000 bet on the Nobel Peace Prize winner hours before the announcement.
What are the risks of insider trading in prediction markets?
And while prediction markets theoretically prohibit insider trading, their design creates powerful incentives to monetize non-public information. And the platforms themselves often lack effective enforcement mechanisms, especially those that operate through pseudonymous crypto wallets like PolyMarket, for example. We likely will never know if the person who made $400,000 on the Maduro operation held a security clearance.
As you said, this wasn't the only national security bet that's caused some concern in political circles. There were some big bets made in November by a group of traders over a battle in eastern Ukraine. What was the bet and why has this alarmed the foreign affairs community?
So in November, someone manipulated the frontline map that Polymarket uses to settle Ukrainian territorial bets. They fabricated Russian advance time precisely to trigger payouts and then erase the evidence after the settlement. But that's not really what alarms me. Someone making money off of military advancements.
What concerns arise from betting on military outcomes?
What really alarms me is the incentive structure that we've created. Picture this. Polymarket has markets on village level territorial control, specific train stations, tactical movements in Ukraine. And think of Ukrainian soldiers who earn around 500 a month. I think Russian soldiers earn around 2000 a month. A $5,000 bet, which is entirely possible on these markets, could represent a 10-month salary for a soldier. Now imagine you're an officer making a tactical decision. Do we defend this position or do we fall back? That should purely be a military calculation. But now there's a potential financial dimension that we're introducing.
How do prediction markets influence public perception?
If you or subordinates can access these markets...
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Chapters
8 chapters
1
What are prediction markets and how do they work?
0:03–0:57
2
What was the significant bet on Nicolas Maduro's ouster?
0:57–2:02
3
How do prediction markets impact military operations?
2:02–2:53
4
What are the risks of insider trading in prediction markets?
2:53–4:00
5
What concerns arise from betting on military outcomes?
4:00–4:44
6
How do prediction markets influence public perception?
4:44–5:25
7
What are the mental health implications of gamifying war?
5:25–6:08
8
How should the media handle prediction market data?
6:08–17:04
Speakers
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