Insiders Are Cashing In on Prediction Markets
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What are prediction markets and how do they work?
Shortly before the Super Bowl, someone went on Polymarket, that site where you can bet on everything from sports to politics to the weather, and placed 19 very specific bets. I sat down with our colleague Keelan Ostroff to take a look at that person's account. All the trades on Polymarket are public, but users can be anonymous. I want you to just walk us through what we're looking at here. This is the guy who's the Super Bowl guy.
Yeah, so this page is the page of someone who bet very, very well on who would be performing at the Super Bowl halftime show.
The person bet around $19,000 that Lady Gaga would have a surprise performance. They bet $3,000 that Cardi B would, too. They bet $10,000 that Travis Scott would not perform. And they bet $200 that the headliner, Bad Bunny, would open with the song, Titi Me Pregunto, And 17 of those 19 bets were correct. The person won almost $17,000.
Yeah, and scroll up because I'm curious at one more thing. So this shows that the first trades that they made were right before the Super Bowl. So they had not traded on anything before this. And if you scroll down, you'll notice that there's no other trades after the Super Bowl ones. So there's no other types of markets that they've traded on.
So based on what you are seeing here on this person's account, what can you deduce about what's going on here?
So they are either a really, really lucky trader, or they knew something ahead of time.
As prediction markets explode in popularity, bets like these, from people who appear to have inside information, are getting a lot of attention and raising a lot of eyebrows.
People have the ability to put money down on things they couldn't historically, and it's way more accessible than it's ever been. And so you have people who can just take their inside information and make a ton of money off of it in a way that you've never really had before.
Welcome to The Journal, our show about money, business, and power. I'm Ryan Knudson. It's Tuesday, February 17th. Coming up on the show, prediction markets are taking off and insiders are cashing in. The concept of prediction markets has existed for years. The two most popular ones today are Polymarket and Kalshi. All Polymarket trades are done in crypto, while you can trade on CalSheet in dollars. And we should say here that Polymarket has a data partnership with Dow Jones, the publisher of the Wall Street Journal. These days, my social media algorithm is full of videos about these two companies.
They're literally letting people bet on elections, natural disasters, even inflation. On Polymark, you can bet if this speech is going to go over or under 65 minutes. You have sports, you have CS.
How did a user profit from Super Bowl performance bets?
Where will Giannis be traded? Anyone jailed over Epstein? Iranian Supreme Leader out. Will the U.S. acquire part of Greenland?
All right, so I've got the Polymarket website up to its homepage here, and I'm seeing you can bet on politics, sports, crypto. You can bet on how many times Elon Musk will tweet in a given time period, what the next jobs report will show, who's going to win the most medals at the Summer Olympics. There's a ton of stuff on here.
Yeah, so polymarket, especially in Kalshi to some degree, you can bet on, like, everything. And so there's some markets that kind of make no sense and are kind of almost just there as a joke. Everyone's favorite market is the Jesus market, which you can bet whether Jesus Christ will return by the end of 2027. If he doesn't come by 2027, they're going to make money on that prediction. I don't know what the odds are right now, but the last time I looked, it was like a 95% chance that he won't return, which implied like a 5% chance that he will.
The second coming of Christ aside, these prediction markets have actually been pretty accurate when it comes to elections and economic indicators.
So take the election, for example, the 2024 presidential election. The polls were very close between Donald Trump and Kamala Harris, with the slight exception of on Polymarket, where the people who were putting down money were betting more than the polls that Donald Trump would win.
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