When might the United States launch an intervention in Venezuela? When could Venezuela start supplying oil to the U.S.? Is there a possibility of Colombia being targeted next?
This week, a surge of bets has emerged on these topics on prediction markets following the recent U.S. military action in Venezuela that led to the removal of President Nicolás Maduro.
The substantial amounts of money being exchanged have brought attention back to prediction markets, which have rapidly gained popularity from small startups to prominent companies in recent times.
But how do prediction markets operate, and what are the regulations governing them? Here’s a breakdown of the key points.
How Prediction Markets Function
Typically, bets on prediction markets involve binary outcomes, such as yes/no or higher/lower predictions.
For instance, on platforms like Polymarket, users can place bets on a wide range of events, from the likelihood of specific movies receiving Oscar nominations to the future of the Iranian government or the highest temperature recorded in Toronto on a specific day.
“The ultimate goal is to make everything financially tradable and create an asset out of any difference in opinions,” stated Tarek Mansour, the CEO of Kalshi, a prediction market, during a conference in late 2025.
Among the various prediction market platforms, Polymarket and Kalshi stand out as major players. The total value of bets placed on the top five prediction markets has surged significantly, as reported by crypto firms Keyrock and Dune. Monthly bets on these markets have escalated from $100 million US in early 2024 to over $13 billion US.
Is it Gambling, Financial Trading, or News?
Unlike sports betting platforms, prediction markets do not have a central authority known as the “house.” According to gaming analyst Dustin Gouker, who runs the Event Horizon newsletter focusing on prediction markets, in sports betting, entities like DraftKings and FanDuel act as the house. In contrast, in prediction markets, losses are incurred against other individuals or market makers.
Regarding the revenue model, Kalshi spokesperson Elisabeth Diana informed CBC News via email that prediction markets generate income through small transaction fees.
However, Gouker emphasizes that functionally, there is minimal distinction. “Strip away the technicalities, and it boils down to people betting against each other. The identity of the counterparty does not negate the fact that it involves betting.”
Moreover, prediction markets claim to offer valuable insights as the bets reflect public opinions based on available information, embodying a “wisdom of crowds” concept, as noted by Gouker.
Major news outlets like CNN, CNBC, and Dow Jones have established partnerships with Kalshi or Polymarket to integrate prediction market data into their content.
Regarding regulation, prediction market platforms are treated as financial products and fall under the oversight of the Commodity Futures Trading Commission (CFTC) in the United States.