Prediction markets fuel American’s appetite for speculation

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Prediction markets are having their moment. Almost every day, I see posts on X regarding the presidential election and who has the better odds of winning.

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Supporters say the platforms are better at predicting the election than polls, but they also seem to have several potential flaws.

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For starters, prediction markets don’t necessarily follow the “wisdom of crowds.” A handful of big bets appear to be significantly moving the market. Since Sept. 1st, on Polymarket, the largest U.S. prediction market, nearly half of the total purchase volume has come from 0.7% of accounts.

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Last week, Fortune also ran an exclusive story on how analysts at two crypto firms found evidence that prediction markets were rife with “wash trading” and discrepancies with trading volume figures. Wash trading is a form of market manipulation where shares are bought and sold, often simultaneously and repeatedly, to create a false impression of volume and activity.

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The potential flaws underscore the untested nature of these platforms and America’s lottery-like demand for speculating on anything.