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’Tis the season for holly, cards — and predictions. As the tumultuous year that is 2025 draws to a close, a well-worn ritual is under way: pundits are issuing solemn forecasts for 2026 on inflation, geopolitics, stock markets and more.
Now, however, there is a new twist: amateurs are jumping into this game too. One particularly striking trend in America is an explosion in the online prediction markets, including sites such as Kalshi and Polymarket, that let anyone place bets on the future.
Indeed over the past two years, activity on these platforms has risen 130-fold, from less than $100mn a month in early 2024 to more than $13bn. Yes, really. And this seems set to continue: the Citizens Financial Group predicts a fivefold increase in prediction companies’ revenues between now and 2030.
Unsurprisingly, new entrants are rushing in, including the likes of Coinbase, Gemini, FanDuel, Robinhood and Truth Social, sometimes backed by mainstream players such as the New York Stock Exchange.
And the range of predictions on offer (that is, available to bet on) is bewildering. The long-standing stalwarts of sports, elections and economic data dominate. But bets are also available on the Oscars, Taylor Swift’s musical career, US President Donald Trump’s political longevity, Covid threats and tech wars. To cite just one: almost $15mn worth of prediction bets have been made on Kalshi around whether Google’s Gemini AI model will eclipse Elon Musk’s Grok — Gemini has a roughly 95 per cent chance of victory.
Call this the casino mentality of 2025. Or to put it another way, our modern age is no longer just being shaped by the three P’s of populism, protectionism and extreme patriotism (aka nationalism) — there’s another P, namely prediction mania, as well.
Why? One reason is a legal change. Until recently, it was hard for prediction platforms to operate in America due to a confusing patchwork of state gambling laws. However, Kalshi (and others) have recently won court victories around this and now operate under the purview of the Commodity Futures Trading Commission.
This still raises unresolved legal questions, as recently noted by none other than Jay Clayton, former head of the Securities and Exchange Commission and now US attorney for the Southern District of New York. But the White House seems willing to tolerate this, given its deregulatory bent (and the involvement of Trump’s circle in entities like the social media platform Truth Social).
A second explanation is cultural. During the 2020 Covid lockdown, financial “gamification” proliferated as platforms such as Robinhood made it easier to invest or speculate online. This has probably been intensified by the profound political malaise and rising economic nihilism among Gen Z.
However, the third — and, in my view, most notable factor — is a shift in trust patterns. We are often told by pollsters that trust is collapsing in the west today. However, this is only half true: while faith in traditional authority figures and institutions is wilting, people are increasingly acting as if they view their online and real-life peer groups as a key source of guidance.
One sign of that is the rise of online rating systems that score — and shape — consumer choices. Another is the growing reliance on social media over legacy “experts”. A third is the rise of bitcoin. The key point, then, is that trust is migrating from the vertical to the lateral axis.
Some people hate this — particularly the old elites who feel threatened. And the shift creates huge risks. Peer-to-peer platforms can sometimes be manipulated by shadowy figures — the new elites, if you like. Lateral trust can be abused.
Another issue is that releasing predictions can sometimes create dangerous perception feedback loops, particularly when combined with cyber tribalism, polarisation and misinformation. And if gambling becomes easier, more people may get addicted and/or suffer losses, hurting the vulnerable.
However, to my mind, there is also a huge potential benefit from the rise of prediction platforms: more democratisation in the forecasting business. This not only provides a counter to elite gatekeepers, but it can sometimes deliver better analysis too. The 2024 US election is a case in point: online prediction platforms provided better forecasts than pollsters or many media pundits.
In any case, whether you love or hate this casino culture, it seems unlikely to disappear anytime soon. Not least because the spread of artificial intelligence platforms seem to be both reflecting and intensifying this shift in trust patterns. That is because AI creates the impression (or illusion) of rising personal agency, and AI bots are often adopted as part of our online “crowd”.
So let us pray that in 2026, the CFTC and other regulators take their jobs seriously, and combat deliberate predictions manipulation. Market discipline probably cannot do this alone — whatever libertarians say.
And let us all remember that while blind trust in elite technocrats is dangerous, it is also risky to assume crowds are always wise. We need both, since the least bad way to survive perilous times is to create checks and balances — whether in politics, media, finance or forecasting.
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