How prediction apps like Polymarket are redefining gambling

Core Insights - Prediction markets have evolved from historical betting practices to modern platforms allowing individuals to wager on future events, with significant growth in trading volumes and mainstream acceptance [4][9][10] Group 1: Definition and Functionality - Prediction markets are exchanges for trading event contracts that pay out based on the outcome of specific real-world events, typically structured as binary "yes/no" positions [6][7] - Market prices reflect the collective probability assigned to outcomes, with trading volumes spiking around significant political and macroeconomic events [7] Group 2: Industry Growth and Main Players - Kalshi and Polymarket are the leading platforms in the prediction market space, with Kalshi operating under a federally regulated U.S. exchange model and Polymarket focusing on global access [8][9] - The average daily trading volume for Polymarket is reported at $18.3 billion, while Kalshi's is $285 million [13] Group 3: Legal and Regulatory Landscape - The rapid growth of prediction markets has led to regulatory challenges, with concerns over legality, potential insider trading, and influence on media and statistics [4][14] - Kalshi's legal victory against the Commodity Futures Trading Commission (CFTC) has allowed for the expansion of event contracts into various sectors, including crypto and sports [11][12] Group 4: Controversies and Criticisms - Concerns about insider trading have been highlighted by incidents such as a user winning over $400,000 by betting on the ouster of Venezuelan President Nicolás Maduro shortly before his capture [15] - Critics argue that politically based contracts can distort elections and that prediction markets may circumvent traditional gambling regulations [19][20] Group 5: Future Developments - The Trump family's involvement in prediction markets, including Donald Trump Jr.'s advisory role and the planned launch of a prediction market by Truth Social, indicates growing interest and potential for further market expansion [23][24]