From time to time I see speculation about prediction markets. I’m generally cautious about how effective they are. I spent some time with OpenCode and it produced the following from Kalshi’s API.
- About 80% of contracts or volume are for sports. Politics is maybe 2% and 2 Billion USD.
- Most of the money is in a limited number of contracts - about 90% of politics bids are under a million dollars in volume. So, be cautious of claims that a prediction market is a form of insurance or hedging - the numbers just aren’t big enough. Also, smaller contracts about both likely less effective and easier targets to manipulate.
Looking at the Prediction market FAQ its interesting to see that we now have both insider trading and people making contracts happen or not. The first of these is probably good for the market - it provides information - but not good for society or the people involved. Both might make people more cautious - you’re betting against someone who knows more than you or is willing to act.