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March 31, 2026

Prediction Markets: The New Paradigm Nobody Knows What to Call it Yet

Something genuinely new is happening and it seems nobody knows how to describe it. Not the NFL, not the DOJ, not Congress, not the public knows exactly what to do with it yet.

I get it, when a new category arrives before anyone has built the framework to contain it there’s mania, uproar, irrationality, speculation, criticism…and more.

Are prediction markets are gambling? Is it investing? Is it sports betting? Is it futures trading? Is it intelligence gathering?

Do they borrow from all of those worlds and fit cleanly into none of them? Or do they borrow from all four of these worlds and botch everything?

Are they trying to be a jack of all trades master of none? Or master of one trade while butchering others?

You put real money behind a perspective. A price forms. Many people put a lot of money on an outcome, new perspectives form. The prices tells us something about what the crowd believes, at least to the extent to which they’ll put money behind it.

The argument is no other opinions carry as much weight other than those with skin in the game… makes sense, right?

But does it stop there?

Are prediction markets a cultural phenomenon set to alter the fabric of reality?

Or is it just a new financial instrument trying carving its way in the financial system?

The good news is we’re in this together trying to figure it out.

And as a writer, I get to use this to think through how to navigate the collision between that new thing and the existing institutions trying to classify it.

This has been truly an interesting week in the prediction markets.

America’s Pastime Meets America’s Future

Major League Baseball signed a partnership with Polymarket and the CFTC to protect prediction market integrity.

The league sees this as an opportunity, a new way for fans to engage with the game, with a federal regulator at the table to keep it clean. CFTC Chairman Mike Selig announced it publicly and promised similar partnerships with other leagues soon.

Pretty straightforward, right?

Yet, the NFL sent a letter asking prediction market operators to remove nearly 20 categories of contracts it deems problematic…

Whether a kicker misses a field goal. Whether a quarterback's first pass is incomplete. Whether Jeff Bezos attends the Super Bowl. The league's position: these markets can be manipulated by a single person and we want no part of that.

MLB said yes. The NFL said not so fast.

So what gives?

Same product. Same week. Seemingly opposite reactions. Paradigm shifts are messy. Different institutions processing the same new thing at different speeds and landing in completely different places. We all have to have an enemy right? Or is it appropriate responses to structural limitations?

Meanwhile, federal prosecutors in Manhattan met with Polymarket to explore whether certain well-timed bets violated insider trading laws. The specific trade under scrutiny: someone who bet on the capture of Venezuelan leader Nicolás Maduro at exactly the right moment.

Jay Clayton, the US attorney for the Southern District of New York, had already telegraphed the move at a securities law conference. "Because it's a prediction market doesn't insulate you from fraud," he said.

Democratic lawmakers wrote a letter to the Trump administration demanding clarity on whether federal employees can use nonpublic information to trade prediction markets. Arizona filed the first criminal charges against Kalshi, alleging it operates an illegal gambling business. Texas wants to close the loopholes. California banned state officials from trading on insider knowledge.

All of this happened near the same time Kalshi posted four rules on X — we ban insider trading, no death markets, we're not the house, we operate under US law…

It racked over a million views.

Are they posturing? Or are they communicating principled leadership? Is it routine PR? Or trying to define what it is before regulators define it for them.

Probably some of both.

Do we absolutely need markets on Jesus Christ returning in 2026? Or is it a cash grab?

Who makes these events anyway? Do they sit around a table and ask “Who’ll wager on this stuff anyway?”

Or are they, in a more charitable way, trying to design questions that surface real public opinion and highlight risks ordinary people might one day be able to hedge around?

Who knows. What happens if state gaming commissions might still get their way and wipe prediction markets off the map. It could happen. Then what would we write about?

Might make for a boring newsletter!

Sure, I get it, probably not what you expect from a “prediction market” newsletter: calling into question the plumbing and growth of prediction markets themselves. I’m not sponsored by Polymarket, Kalshi (nor do I want to be, I’ve heard horror stories about one of them. Not naming names.)

But these conversations aren’t over. That’s why this thing exists. Figuring how to make sense of prediction markets in world where things are changing at breakneck speed.

Let’s be honest, we can’t ignore the fact that not all events are equal.

The Absurdity Is Real. Maybe that’s the Point?

Have you seen the Citrini scenario?

Kalshi is running a market ($14.7 million in volume, currently sitting at 33%) on whether the following occurs before July 2028: unemployment exceeds 10%, the S&P 500 drops more than 30%, home values collapse more than 10% year-over-year in at least one major city, the labor share of GDP falls below 50%, or CPI turns negative.

That’s a pretty awful scenario.

You need three of the five to trigger a Yes.

The contract is based on a viral essay by Citrini Research called "The 2028 Global Intelligence Crisis" that sketches a chain of AI-driven economic stress outcomes. It is simultaneously the most macro-aware and most absurdist market currently trading.

The article opens with “What follows is a scenario, not a prediction.”

Yet, Kalshi is predicting it?

The comment section under the event… One commenter put it perfectly: "Dudes will say parlays are a waste of money then buy Yes."

Another got closer to the real issue: "If you win voting yes you're probably still going to be fckd." If unemployment hits 10%, the S&P drops 30%, and home prices collapse simultaneously…the prediction market payout is the least of your problems.”

He’s right. Remember that stat in The Big Short, when Brad Pitt’s character Ben Rickert says, “for every 1% unemployment goes up, 40,000 people die”?

It’s salacious, but it’s roughly based on older economic research that linked a 1‑percentage‑point rise in unemployment to something on the order of tens of thousands of excess deaths per year in the U.S., often cited around 37,000–40,000.

More recent back‑of‑the‑envelope work using updated population and mortality data can land a bit higher, around 47,000 extra deaths per 1‑point increase in the annual unemployment rate, but these are model‑based estimates, not literal body counts.

The underlying mechanisms are things like higher suicide rates, stress‑related disease, reduced access to healthcare, and other knock‑on effects of job loss, not unemployment “killing” people directly.

The point stands, in that sense, what’s the real difference? And is it the first time we’re seeing this?

Maybe, but let’s say the week before a jobs report a hedge fund sells Treasury futures because it expects unemployment to spike, isn’t that also — in a very loose, roundabout way — a leveraged bet on human misery?

We don’t talk about it that way, because the trade is framed through rates, curves, and credit spreads.

But the economic reality underneath is the same: when the labor market deteriorates, real people get hurt. And it stinks. And obvs, betting on human misery isn’t cool.

Yet, prediction markets have a way of turning anxiety, narrative, and genuine macroeconomic uncertainty into a price. (Among other things).

Whether that price is “wisdom of the crowds” or “popular delusions” depends entirely on whether the crowd is aggregating independent information or just echoing a compelling story.

Sidebar: this is an interesting read on how the crowds lost their wisdom….

The Citrini scenario seems like a decent stress test of the whole concept.

Is it at the level of absurdity of Jesus Christ returning in 2026? Probably not.

Does it tell us something about how people perceive the economic future of the world? Absolutely.

Not every market is clean. Not every contract has a sharp resolution rule and a motivated crowd of well‑informed traders on both sides.

Kalshi’s monthly volume went from near zero in 2023 to $10‑billion‑plus in January 2026 and Polymarket is still exploding. Prediction markets are simultaneously being embraced by baseball, investigated by the DOJ, sued by Arizona, and traded by millions of people who can’t quite agree on whether they’re gambling, investing, or something else entirely.

The good news is we’re on this journey together. Trying to make sense of it all.

And as a writer, again, it helps me think through the nuances, and the information about where people are putting their money.

Not all markets are rational. Not all contracts are clean. Rules get confusing, and the crowds jump to conclusions. Not all odds are worth trading (obviously). And there’s a reason why I rarely (if ever) write about sports. Welcome to the Black Parade.

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