Each contract price shows what the crowd thinks will happen. If a contract trades at 70 cents, the market believes there is a 70 percent chance it will happen. Simple. Clear. Instant.

Related: Prediction Market ETFs Could Be on the Way. Here’s What You Need To Know About Them

Why Wall Street Suddenly Cares

For years, big investors relied on analysts and economic models. Now many of them check prediction markets too. Some hedge funds even look at these odds before making trades.

Researchers connected to the Federal Reserve found certain prediction markets can forecast things like inflation and growth almost as well as traditional tools. That got attention fast.

One investor explained it simply: people may not understand complex charts, but they understand odds.

Government Support Is Fueling the Boom

The industry is growing even faster because regulators are stepping in. The Commodity Futures Trading Commission has publicly supported prediction markets in legal fights with states trying to ban them.

Its chairman Michael Selig argues these platforms act more like financial markets than casinos. The administration of Donald Trump has also backed them, signaling that federal regulators may protect the industry from state shutdown attempts.

That support matters. Regulation often decides whether a financial product explodes or disappears.

Industries Are Starting To Feel Threatened

Prediction markets are already shaking up other sectors.

• Some betting company stocks fell sharply as investors feared competition
• Polling firms worry these markets could replace surveys
• Media companies are experimenting with prediction data to improve coverage

Why? Because these markets combine huge amounts of information into one number. That number becomes a live forecast.

But There Are Real Risks

Even fans admit prediction markets are not perfect.

Prices can swing wildly if rumors spread.
Wrong information can distort odds.
Contracts can lose nearly all value overnight if predictions fail.

Critics also say many of these platforms still look a lot like gambling, just with financial language.

The Big Picture

Prediction markets are no longer a curiosity. They are becoming a new layer of the modern information system. Investors watch them. Regulators defend them. Companies fear them.

If they keep growing, they could change how people understand the future itself.

And right now, that shift is happening fast.

Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.

The post Are Prediction Markets the Future of Finance and News? first appeared on Finblog.

At least three firms, Roundhill Investments, Bitwise Asset Management, and GraniteShares, have submitted applications to the US Securities and Exchange Commission seeking approval for ETFs that would hold event contracts based on US election results. These derivatives typically pay out based on binary outcomes such as which party wins control of Congress or the presidency.

From Niche Betting Tool to Institutional Product

Prediction markets, once seen as speculative or niche, have surged in popularity thanks to platforms such as Kalshi and Polymarket, where traders can buy contracts tied to events ranging from economic data releases to political outcomes.

The proposed ETFs would effectively package those contracts into regulated investment vehicles, potentially making them accessible to institutional investors in the same way crypto ETFs helped legitimize digital assets.

Bitwise CIO Matt Hougan said prediction markets may be on a “similar journey” to crypto, suggesting ETFs could become a milestone in their acceptance as investable assets.

Wall Street Wants In

Major derivatives and trading firms are already exploring the space:

• CME Group partnered with FanDuel on a prediction trading app.
• Cboe Global Markets is reportedly discussing binary-style contracts with brokerages.
• Tradeweb Markets has partnered with Kalshi to distribute prediction-market data to institutional clients.

Analysts say the push reflects growing demand for simple, event-driven financial instruments that function more like wagers than traditional investments.

High Risk, Binary Outcomes

Unlike stocks or bonds, these products could lose nearly all their value if the predicted event does not occur. Regulatory filings note that funds betting on a particular election outcome would “substantially lose” value if the opposite result happens.

Some proposed structures would close after contracts settle, while others would roll into new event contracts tied to future elections.

If regulators approve them, prediction-market ETFs could mark a major shift in investing, blending finance, forecasting, and speculation into a new asset class that Wall Street increasingly wants to offer.

Related: ETF Edge: Missed the 2025 Global Rally? Why International Stocks Still Offer Opportunity in 2026

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Bank of Japan to Begin Selling $534B in ETFs, What It Means for Markets and Crypto

Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.

The post Prediction Market ETFs Could Be on the Way. Here’s What You Need To Know About Them first appeared on Finblog.

Why Traders Are Switching

Former trader Andrew Courtney says prediction markets appeal because they eliminate the complexity of traditional derivatives. Instead of analyzing price movements, timing, and strike levels like options traders must, users simply choose whether an event will happen.

For example:

• An options trader betting on unemployment must analyze assets tied to labor data.
• A prediction trader can directly buy a contract such as “Will unemployment exceed 4.2%?”

The contract settles quickly once official data is released.

Simpler but Riskier

Critics argue the format resembles gambling because traders lose their entire stake if they are wrong. Unlike options, there is no partial payoff. Still, users like Chicago investor Zach Powers say the clarity is a benefit, calling the system “an organized way of telling the truth.”

Regulated US platforms fall under oversight from the Commodity Futures Trading Commission, which can block contracts tied to illegal or harmful events.

Legal and Industry Response

Kalshi is currently fighting a legal case against Nevada regulators who argue it should be licensed as a gambling operator. The company maintains its contracts are financial instruments, not bets.

Meanwhile traditional exchanges are adapting. Cboe Global Markets is exploring new “all-or-nothing” options that mimic prediction-style contracts, allowing traders to wager on simple outcomes such as whether the S&P 500 closes above a set level.

Retail broker Webull has also launched contracts tied to bitcoin prices, economic data, and even entertainment events, reflecting rising demand for quick, speculative trades.

Market Trend

Short-dated options traders, known for high-risk bets that expire within hours or days, appear especially drawn to prediction markets. Industry executives say both products serve the same audience: traders seeking fast, low-cost speculation.

Prediction markets are emerging as a rival to options trading, offering simplicity and speed. Whether they become a lasting financial tool or remain a speculative niche may depend on regulation and investor appetite for risk.

Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.

Related: Prediction Markets See Nearly 80% Chance of New Shutdown

The post Why risk-loving options traders are turning to prediction markets first appeared on Finblog.

This is no longer political noise. It is a forecast driven by real legislative gridlock, and markets are already starting to react.

Here is what is driving the risk higher, why the timeline is so tight, and what it could mean for investors and crypto.

Why shutdown odds are surging

At the center of the crisis is a standoff over funding for the Department of Homeland Security (DHS).

After another fatal shooting by a federal border officer in Minneapolis, Senate Democrats unanimously decided to block DHS funding unless strict limits are placed on immigration enforcement agencies such as ICE and Border Patrol.

Senate Minority Leader Chuck Schumer said Democrats will not provide the 60 votes needed to pass the spending bill because it fails to rein in what he called “unchecked abuses of power.”

Republicans hold only 53 Senate seats, meaning just a few Democrats withholding support is enough to derail the entire package.

Independent Senator Angus King said he opposes a shutdown but cannot back DHS funding under the current terms. Other Democrats, including Catherine Cortez Masto and Chris Murphy, have called for separating DHS funding so the rest of the government can stay open.

So far, Republican leaders have shown little willingness to split the vote.

Time is extremely tight

The clock is now working against Congress.

A major snowstorm delayed Senate voting until Tuesday evening. Congress plans to begin recess midweek. And if no deal is passed by midnight Friday, several major agencies including Health and Human Services, Education, and Transportation will face partial shutdowns.

House Speaker Mike Johnson said lawmakers may need to be recalled if the Senate amends the bill, warning that tough issues cannot be avoided by sending Congress home.

Prediction markets are reacting fast.

Polymarket now shows a 78% chance of a shutdown before the end of January, up from less than 10% just days ago. Trading volume on shutdown contracts has reached about $7.5 million. Kalshi shows similar probabilities.

What a shutdown really does

A shutdown is not just government offices closing.

In last year’s 43 day shutdown:

• Hundreds of thousands of federal workers worked without pay or were furloughed
• Government services and contract approvals stalled
• Travel disruptions increased and economic activity slowed
• Business confidence weakened as uncertainty spread

Those effects show up quickly in delayed data, slower approvals, and rising market stress.

Markets price risk early

Historically, markets do not wait for the shutdown to happen.

This is how it usually unfolds:

• Bond markets react first as Treasury risk premiums rise
• Stocks wobble next as growth expectations fall
• Crypto moves fastest as traders hedge political and liquidity risk

That pattern may already be starting.

Late Sunday, the crypto market lost around $100 billion in six hours. Bitcoin fell more than 3%, Ether dropped over 5%, and more than $360 million in leveraged positions were liquidated, mostly long positions.

Why crypto feels it first

Crypto trades 24 hours a day and reacts quickly to political stress and liquidity shifts.

In a shutdown scenario:

• Economic data releases are delayed
• Investor risk appetite falls
• Liquidity tightens near month end

When traders start preparing for risk, crypto usually moves before stocks and bonds.

Prediction markets are now warning that a shutdown by January 31 is a real and rising risk.

With DHS funding blocked, votes delayed by weather, and Congress days away from recess, the path to a deal is narrowing fast.

For markets, especially crypto, the message is clear:
Political risk is rising, volatility is coming, and markets may price the shutdown before Washington acts.

Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.

Related: US Shutdown Fears Hit Markets as Crypto Loses $100 Billion

What to Watch This Week in Markets: Fed Day, Big Tech “Show Me” Earnings

The post Prediction Markets See Nearly 80% Chance of New Shutdown first appeared on Finblog.

When an Earnings Call Becomes a Betting Jackpot

During Thursday’s Q3 earnings call, Armstrong paused mid-discussion to mention several key crypto terms — “Bitcoin, Ethereum, blockchain, staking, and Web3” — all of which were listed in ongoing Kalshi and Polymarket prediction markets that speculated on which words he’d say.

His impromptu comments instantly resolved the bets to “Yes” across both platforms, handing out roughly $80,000 on Kalshi and $3,900 on Polymarket in winnings.

“I was a little distracted because I was tracking the prediction market about what Coinbase will say in their next earnings call,” Armstrong joked. “Just want to make sure we get those in before the end of the call.”

“Spontaneous,” Armstrong Says — But Market Shock Follows

The Coinbase CEO later clarified the incident on X (formerly Twitter), saying it was completely spontaneous after someone from his team dropped a link to the market in their internal chat.

“lol this was fun — happened spontaneously when someone on our team dropped a link in the chat,” Armstrong posted.

While most traders celebrated, others raised questions about the ethics of participating or responding to markets tied to corporate communication, even if done jokingly.

Prediction markets are designed to crowdsource probabilities around real-world outcomes — but as this incident showed, a single insider remark can instantly distort results, blurring the line between fun and fairness.

Crypto Fans Loved It

Reaction online was overwhelmingly amused.
On Polymarket, one user wrote:

“HAHAHAH THE GOAT BRIAN.”

Another added:

“Thanks for the free money, boss.”

Kalshi traders similarly thanked Armstrong for the “gift,” with many calling it one of the most entertaining corporate moments of 2025.

Coinbase Q3 Results Overshadowed by Viral Moment

The buzz came after what was otherwise a solid earnings report for Coinbase.
The company posted $1.9 billion in revenue, up 55% year-over-year, and $432.6 million in net income — marking another profitable quarter amid a broader crypto rebound.

Coinbase also increased its Bitcoin holdings by 2,772 BTC, bringing its total to 14,458 BTC, according to BitcoinTreasuries.net, putting it back among the top 10 corporate Bitcoin holders globally.

Market Manipulation or Just Humor?

While most interpreted Armstrong’s move as lighthearted, some legal and trading experts noted that this kind of action — however innocent — highlights a potential gray area for companies as prediction markets become more mainstream.

Unlike traditional stock or options markets, Kalshi and Polymarket allow users to wager on real-world outcomes, from political events to corporate behavior.
That opens new ethical questions if insiders — or their spontaneous remarks — directly influence those results.

Coinbase’s Q3 earnings call may have closed with a laugh, but it also exposed how easily crypto’s playful culture collides with real financial consequences.
In a market where memes move billions, even a CEO’s offhand comment can become an $84,000 event.

Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.

The post Coinbase CEO’s Spontaneous Remarks Trigger $84K in Prediction Market Bets first appeared on Finblog.

Robinhood has reached a major milestone in the fast-growing world of prediction markets, with more than 4 billion event contracts traded all-time, according to CEO Vlad Tenev. The company logged over $2 billion in contracts during the third quarter alone, underscoring the surge in retail and institutional interest in event-based trading.

The milestone comes as competition intensifies. Kalshi recently overtook Polymarket, now controlling nearly two-thirds of the market’s trading volume, thanks to its US-regulated model. According to Dune Analytics, Kalshi processed over $500 million in weekly trading between September 11–17, maintaining $189 million in open interest. Polymarket, by comparison, generated $430 million with $164 million in open interest.

The shift marks a dramatic reversal from late 2024, when Polymarket held 95% of market share, highlighting how quickly regulated platforms are gaining traction.

Industry voices argue prediction markets are drawing users because they offer a direct way to bet on real-world events — from elections to economic data releases — while also generating some of the most accurate signals on probabilities.

Robinhood’s 4-billion milestone reinforces its push to expand beyond stocks and crypto, positioning event contracts as a mainstream product. But with Kalshi tightening its grip on market share, the next stage of competition will test whether Robinhood can keep pace.

Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.

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The post Robinhood Prediction Markets Cross 4 Billion Contracts, $2B in Q3 Alone first appeared on Finblog.

• Market Efficiency: According to Eric Zitzewitz, an economics professor at Dartmouth, prediction markets tend to be efficient because they draw on the collective predictions of participants who are financially incentivized to guess correctly, minimizing biases like virtue-signalling.
• Range of Predictions: Users can place bets on a variety of outcomes, from political events to celebrity relationships, reflecting both popular and niche interests.
• Impact of Significant Bets: The influence of major bets, such as a single investor placing millions on a particular outcome, raises concerns about potential market manipulation. However, Polymarket’s CEO, Shayne Coplan, argues that such actions are balanced by the market’s overall dynamics, where there are always counterparties with opposing bets.
• Accuracy and Limitations: Historical data suggest that prediction markets have been quite successful in forecasting U.S. election results. For example, between 1884 and 1940, the favoured candidate in these markets won 11 out of 15 times. Yet, like all predictive tools, these markets have their limitations, as seen with incorrect predictions regarding Brexit and the 2016 U.S. Presidential Election.
• Comparative Reliability: While prediction markets offer a real-time amalgamation of all bettors’ views, they differ from traditional polling methods, which might represent the methodology of a single entity or analyst. As Zitzewitz notes, the markets integrate numerous individual perspectives, each weighted by the confidence (and financial backing) of the bettors involved.

Prediction markets provide a unique and often effective mechanism for forecasting outcomes by leveraging financial incentives and collective intelligence. Despite occasional inaccuracies, these markets offer a dynamic and direct reflection of how participants view the likelihood of various future events, standing as a robust alternative to traditional polling and expert analysis.

The post How prediction markets saw something the polls and pundits didn’t first appeared on Finblog.