BERKELEY, CALIFORNIA — Prediction markets are facing increased scrutiny due to an observable shift toward sports betting, with platforms like Kalshi and Polymarket drawing attention for their focus on sports outcomes. University of Michigan professor Justin Wolfers, a co-author of a 2008 paper on prediction markets, stated, "This is not the future any of us were hoping for."

Sports markets and sports-heavy parlays comprised approximately 84% of Kalshi's total trading volume over the past month, amounting to about $18.5 billion, according to data from research firm TickerTracker. For Polymarket's U.S.-facing site, sports-related markets accounted for about 99% of its total trading volume, or $2.1 billion, during the same period. Since July 2024, sports accounted for roughly 80% of trading volume on Kalshi and 39% on Polymarket.

Kalshi spokesperson Jacki McGavick stated that Kalshi's model differs from traditional sports betting, explaining, "Kalshi is different from sports betting from the way our exchange operates on a structural level, which has significant effects on our products and business model." McGavick added that Kalshi operates like a stock market where customers trade against each other, unlike casinos where participants play against the "house." "Unlike a casino, Kalshi doesn't win when our customers lose," McGavick said.

David Bensoussan, who organized a session on strategies for mastering markets around world events and politics at the Manifest festival, questioned the shift to sports, asking, "The truth-seeking mechanism that prediction markets can have in terms of predicting things and making the population more informed—what on Earth does that have to do with sports?" Bensoussan has earned $1.6 million in profits on prediction market platforms. Kalshi held a session on sports markets at the Manifest festival last year. Kalshi released an advertisement featuring Timothée Chalamet on June 11.

A 2008 paper titled "The Promise of Prediction Markets," published in the journal Science by 19 economists, including Wolfers, argued for freeing prediction markets from unnecessary government restrictions. This paper did not suggest prediction markets would include contracts on sports event outcomes and proposed capping individual wagers at a modest sum, such as $2,000 per year. Researchers writing in the journal Science in April raised public health concerns about prediction markets due to their gambling-like design and suggested they could be used for democratic manipulation. State-level lawsuits are currently seeking to ban prediction markets, citing consumer protection concerns.

Polymarket had predicted Donald Trump to win the 2024 U.S. presidential election. The Manifest festival for prediction markets took place at Lighthaven in Berkeley, California. Kalshi and Polymarket did not sponsor the festival this year. The Iowa Political Stock Market, now known as the Iowa Electronic Markets, was launched by University of Iowa economists Robert Forsythe, George Neumann, and Forrest Nelson.