The American publication More Perfect Union (MPU) has released a video investigation into prediction markets, prompted by Polymarket's proposal to integrate its odds into MPU's reports.
Instead of collaborating, the journalists scrutinized Polymarket's business model and the public statements of its CEO, Shane Kaplan. They concluded that these prediction platforms exploit Americans' economic anxieties under the guise of "democratizing finance."
Prediction Accuracy Below Claims
The authors referenced a study from Vanderbilt University regarding the 2024 U.S. elections. The findings indicated that Polymarket's prediction accuracy was 67%, while Kalshi's was 78%. In contrast, the older platform PredictIt achieved a much higher accuracy of 93%.
The journalists reminded readers that Kaplan had previously given an interview on 60 Minutes, claiming that prediction markets are "the most accurate tool humanity has at the moment."
The article also mentioned the February U.S. jobs report, where market participants predicted an increase of 60,000 jobs, but the actual difference from the final figure reached 150,000.
Insider Trading as Part of the Model
Economist Robin Hanson, a proponent of modern prediction markets, stated in a video that insider trading on these platforms is common.
U.S. Senator Chris Murphy commented to MPU that prediction markets related to government decisions are inherently unfair:
"All bets on government actions are rigged because someone in the government knows the outcome. Many other bets are also rigged — a small circle of influential people knows the result in advance."
Murphy believes that contracts where thousands of people already know the outcome should not be traded at all.
In March, Kalshi and Polymarket announced new measures to combat insider trading. Experts interviewed by MPU expressed doubt that the platforms could monitor tens of thousands of potential insiders across all types of markets, from video game releases to Spotify streaming statistics.
0.04% of Traders Capture 70% of Profits
The publication provided data showing that 0.04% of traders earn about 70% of the profits in prediction markets. According to a report from Citizens Bank, clients of these platforms lose more money in the first three months of trading than users of traditional sportsbooks.
Journalist and author of the U.S. gambling industry newsletter The Closing Line, Dustin Gouker, noted that 85-90% of Kalshi's volume comes from sports, while Polymarket's figure is around 40%. Gouker described the situation as gambling, regardless of how the platforms label it.
Regulation and Lobbying
Federal regulation through the U.S. Commodity Futures Trading Commission (CFTC) exempts platforms from local taxes and player protection requirements. In contrast, in New York, bookmakers pay a 51% tax and are required to implement tools to combat gambling addiction.
This inequality has already sparked conflict with state authorities — Kalshi has faced lawsuits from over a dozen states demanding that its operations be recognized as unlicensed gambling. However, the CFTC defends the status quo, and Donald Trump Jr. serves as a strategic advisor for both Polymarket and Kalshi.
In February, Polymarket opened a free grocery store in New York. MPU journalists visited the location during filming and viewed the initiative as an attempt to draw attention to the gambling platform.