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Commentary: Betting on war? Why prediction markets like Kalshi and Polymarket are a problem

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Commentary: Betting on war? Why prediction markets like Kalshi and Polymarket are a problem

Who hasn’t had the experience of hearing some know-nothing proudly display his ignorance — whether in a bar, on a crowded plane or on Joe Rogan’s podcast?

Increasingly, thanks to the explosive growth of prediction markets such as Kalshi and Polymarket, every misinformed or malinformed blowhard has an arena to capitalize on his or her pontifications by placing bets on whether they will come true.

So do well-informed experts and, more troubling, insiders with the ability to manipulate the betting markets that are proliferating so rapidly.

Kalshi is replacing debate, subjectivity, and talk with markets, accuracy, and truth.

— Kalshi CEO Tarek Mansour, claiming that his marketplace has a window on the wisdom of crowds

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Many people object to users’ ability to bet on death and destruction — such as the assassination of foreign leaders or the outbreak of war. The Biden administration was preparing regulations forbidding such wagering, but its initiative was canceled by the Trump administration.

The prediction market’s critics raise two more concrete concerns about its growth: It’s vulnerable to manipulation by anonymous insiders, and it risks exacerbating problem gambling, especially among young men who are among the targets of the companies’ promotional pitches.

Before diving deeper into these and other consequences of the explosion in event betting, a few words about how these markets work.

Put simply, they pose questions that can be reduced to simple choices of “yes” or “no”; the choices made by users are updated in real time.

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Among the bets currently designated “trending” on the Kalshi website, for instance, is the identity of the next Democratic presidential nominee.

California Gov. Gavin Newsom leads the pack with 27% of bettors wagering that he’ll get the nomination; their counterparties are betting that it will be someone else. Newsom bettors put up 27 cents per dollar of their wager — $2.70 for a $10 bet; naysayers put up 74 cents. If Newsom wins the nomination, his bettors will collect the full dollar. If he doesn’t, they lose their stake.

These markets have taken the world by storm, with Kalshi and Polymarket combined accounting for more than 80% of the action. Both firms are privately controlled, but their valuations among venture investors are robust.

In December, Kalshi raised $1 billion from a clutch of venture investing firms on terms that valued it at $11 billion. More recently, both platforms have been seeking investments at valuations approaching $20 billion each.

That may not be an implausible goal. Prediction markets are estimated to be collecting some $13 billion a month in bets, and one research firm recently predicted that the sector could reach a trading volume of $1 trillion by the end of this decade.

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News and sports-betting firms have lined up for a piece of the action. In December, Kalshi signed a deal with CNN giving the cable news channel access to its betting data and providing for a “Kalshi-powered real time news ticker” that will run on the CNN screen Kalshi also reached a deal to become the National Hockey League’s “official prediction market partner.”

Dow Jones, the publisher of the Wall Street Journal, made Polymarket its official prediction market partner in January, ostensibly to provide readers “real-time insight into collective beliefs about future events,” as Dow Jones Chief Executive Almar Latour stated in announcing the deal. In October, Polymarket received a $2-billion investment from Intercontinental Exchange, the parent of the New York Stock Exchange and other trading floors.

The sports betting firms DraftKings, FanDuel and Fanatics have also announced plans to add prediction markets to their offerings.

Any juggernaut like this is bound to attract a backlash. In this case, it has come from states that have legalized sports betting, such as Nevada, and are worried that the prediction markets could cannibalize their legal offerings and evade their gambling regulations. Indeed, most of the betting on the prediction sites is sports-related.

The prediction firms have found a friend in the federal government, specifically the Commodity Futures Trading Commission. During the Biden administration, the CFTC sued Polymarket for illegally offering prediction trades. Polymarket paid a $1.4-million penalty and agreed to subject itself to CFTC oversight.

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Trading on Polymarket is still illegal in the U.S., but users have been accessing the platform via virtual private networks that obscure their location. Polymarket is working on acquiring a U.S. license from the CFTC. Kalshi is operating legally under CFTC regulations.

Last year, the Trump administration dropped CFTC investigations of the prediction business. The agency’s Trump-appointed chairman, Michael S. Selig, has been outspoken about fighting back against the states. “The CFTC will no longer sit idly by,” he wrote in a Wall Street Journal op-ed last month, “while overzealous state governments undermine the agency’s exclusive jurisdiction over these markets by seeking to establish statewide prohibitions on these exciting products.”

As it happens, Donald Trump Jr. has taken advisory positions with both Kalshi and Polymarket and invested in the latter.

Neither firm responded to my questions about the demographics of their customer base, the problem of insider trading, or my request for them to validate their claims of accuracy. The White House responded to my questions about whether Trump Jr.’s involvement with the firms raised ethical issues by stating that “the only special interest guiding the Trump Administration’s decision-making is the best interest of the American people.” White House spokesman Davis Ingle also told me by email that ethics rules “prohibit use of non-public government information for personal gain.”

That brings us to the prediction firms’ chief argument on their own behalf. They assert that their markets are better than traditional opinion polls at discovering what people really think — that in effect they are monetizing “the wisdom of crowds.”

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Polymarket is “the most accurate thing we have as mankind right now, until someone else creates some sort of a super crystal ball,” Shayne Coplan, who founded the platform in 2020 after dropping out of New York University, told “60 minutes” in November.

“Kalshi is replacing debate, subjectivity, and talk with markets, accuracy, and truth,” its chief executive, Tarek Mansour, who founded the platform in 2018 with a fellow MIT graduate, said at the time of its $1-billion funding round.

The wisdom-of-crowds argument presupposes that the masses possess some recondite knowledge that can be unlocked by allowing individuals to express themselves as part of an anonymous mob. Kalshi’s management dresses this argument up as “democratizing finance through innovation. … Imagine transforming your insights and predictions about the future into tangible assets. That’s the reality we’re offering.”

The idea that everyone’s opinion about anything is an asset just waiting to be exploited suggests that we’re no longer talking about the wisdom of crowds, but the wisdom of you, the individual bettor.

The markets’ record suggests that claims of accuracy are oversold. Just after the close of the voting last week in the Texas GOP Senate primary, for example, Polymarket declared Texas Atty. Gen. Ken Paxton the clear winner, based on an 83% vote on its platform. When the real votes were counted, however, Paxton was so close to incumbent Sen. John Cornyn — 42% to 41% in favor of the latter — that the two were forced into a May 26 runoff election.

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It’s true that traditional opinion polls have lost some accuracy, in part because the advent of mobile phones has made it hard for them to reach respondents by phone at home. But the key question raised by the wisdom-of-crowds argument of the prediction firms is: Who is the crowd? Some of the prediction questions offered by the sites are so thinly traded that they’re vulnerable to manipulation.

One example arose during the third-quarter earnings investor call for cryptocurrency firm Coinbase on Oct. 30. CEO Brian Armstrong closed the call by reading out a series of terms — “bitcoin, ethereum, blockchain, staking and web3.” He had learned, he said, that all those terms were cited in “mention” markets on Kalshi and Polymarket — markets in which bettors can wager on whether a speaker at a given event will utter certain words. Armstrong’s remark made winners of anyone who bet that he would use those words.

Coinbase told me by email that Armstrong wasn’t trying to resolve those bets, but spoke in “a lighthearted, offhand way,” and that Coinbase prohibits “employees, including executives, from participating in prediction markets” that are related to “confidential activity involving the company.”

Perhaps more troubling is a series of anonymous bets related to the U.S. government’s foreign policy initiatives — such as bets on Polymarket that Venezuela President Nicolás Maduro would soon be out of office, placed in January just before the U.S. captured Maduro, netting the bettor a profit estimated at $400,000.

Another anonymous user trading on Polymarket as “Magamyman” netted a profit of more than $630,000 with a series of fortuitously timed bets forecasting the U.S. and Israeli attacks on Iran, including a $123,300 profit on a bet that Ayatollah Khamenei would be “out” as Iran’s leader by March 30. Khamenei was killed in the first wave of attacks on Feb. 28.

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Kalshi, for its part, has penalized two users a total of about $6,000, including a onetime GOP candidate for California governor, for allegedly manipulating its markets. Kalshi says it opened 200 investigations of possible market manipulation over the last year. Yet it’s unclear whether insider trading in the prediction market is actually illegal, as is insider trading in the securities markets.

Put it all together, and the question remains whether the growth of the prediction market is a healthy development for sports, politics, society or the bettors themselves — especially as their betting patterns get treated as “news” with an unvalidated claim to accuracy. But you might be able to turn a profit by wagering that the prospect is dismal.

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Gas is $10 a gallon at a Big Sur station. The owner explains why his prices can’t go higher

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Gas is  a gallon at a Big Sur station. The owner explains why his prices can’t go higher

The owner of Gorda by the Sea, the lone gas station for several miles in any direction from this remote, scenic hamlet in Big Sur, is charging $9.99 for a gallon of gas because, well, that’s as high as the digital numbers on the gas pumps allow.

“The software only goes to $10,” said Leo Flores, owner of the gas station and mini-market. “I know, sometimes someone wants to make a good story because of it, but we have to tell you why.”

As the lone gas station for at least 12 miles along Highway 1, the service station often prompts drivers to gasp or clutch their wallets at the sight of a $9.99 price tag for a gallon, but Flores insists he’s not trying to price-gouge his customers. In fact, he’s worried that if gas prices go much higher, it might put him out of business.

“People think you make money, but I’m not,” he said in an interview with The Times.

Motorists across the country have been griping since gasoline prices began to surge last month after the start of the U.S.-Israeli war on Iran, which restricted the flow of oil from key oil-producing countries. Flores’ business is an example of how sky-rocketing fuel prices are having ripple effects throughout the economy.

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The isolated gas station has been featured in the news in the past for its high prices, but Flores, who has owned the station for the last 30 years, said there’s a simple reason why the cost is so high.

“We run this place on generators,” he said. “The generators run on five to six gallons of gasoline every hour.”

It’s not just the gas station that runs on generators, he said. The small oceanside community surrounding the gas station — the mini-market, the cafe, the hotel and nearby cabins — is owned by Flores and runs on generators because there is no access to an outside electrical plant.

“When I explain why to people, they’re happy to pay what I ask them,” Flores said. “It costs me more to make my own electricity.”

According to AAA, as of Friday the national average cost of a gallon of regular gas is up to $4.09, and in California it’s $5.86. In Los Angeles County it’s even higher — about $6 a gallon. At gas stations around Gorda by the Sea, the average cost also sits at $6, according to AAA.

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Flores said he has considered using solar panels to generate electricity, but the initial cost is high. To raise his gas prices any higher, he’d have to buy new pumps, an investment he’s not sure he could afford now.

High prices are not his only worry. The entire hamlet can operate only if Flores’ regular gasoline deliveries make it through on Highway 1 every two weeks.

When the highway shut down for three years because of landslides starting in 2023, he said, he struggled to get gas deliveries to run his generators and survived on only 10% to 20% of the business he normally sees. He barely made it, he said, until the highway reopening in January.

“It’s a big deal,” he said. “If the highway is closed in both directions, I’m screwed.”

Flores complained that no one pays attention to his struggles when Highway 1 closes, but it’s another story when gas prices spike.

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“Why when the highway opens and I raise the price everyone points at me like I’m the bad guy?”

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President Trump bashed State Farm on social media: Why it didn’t come out of the blue

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President Trump bashed State Farm on social media: Why it didn’t come out of the blue

Victims of the January 2025 wildfires unhappy with how insurers have handled their claims have filed lawsuits, protested and complained to local and state officials.

This week, they got support from an unexpected ally: President Trump.

“It was brought to my attention that the Insurance Companies, in particular, State Farm, have been absolutely horrible to people that have been paying them large Premiums for years, only to find that when tragedy struck, these horrendous Companies were not there to help!” Trump posted on Truth Social.

He also asked U.S. Environmental Protection Agency Administrator Lee Zeldin to give him a list of insurers that “acted swiftly, courageously, and bravely” to fulfill their legal obligation and another list of those that were “particularly bad.”

State Farm, California’s largest home insurer, is under investigation for how it has handled January 2025 wildfire claims. In a statement responding to the president’s post, it said it has received 13,700 claims, paid out $5.7 billion and expects total payments could reach $7 billion.

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“Our leadership position in the California homeowners insurance marketplace means State Farm General Insurance Company — the State Farm company that provides homeowners insurance in California — insured more people impacted by this disaster than anyone else,” its statement read.

Tuesday’s post had its origins in a Feb. 4 visit that Zeldin and Small Business Administrator Kelly Loeffler made to the Los Angeles area, where they met with L.A. Mayor Karen Bass, Los Angeles County Supervisor Kathryn Barger and Pacific Palisades fire victims, among others.

The visit was prompted by Trump’s criticism of the slow rebuilding process and by a Trump executive order allowing victims of the Los Angeles wildfires to rebuild without having to deal with “unnecessary, duplicative, or obstructive” permitting requirements.

Aerial image of a neighborhood along Rambla Vista in Malibu taken in December.

(Allen J. Schaben / Los Angeles Times)

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1 A view of destroyed beach-front properties remaining construction-free

2 Aerial image of the remnants of an oceanfront neighborhood

1. A view of destroyed beachfront properties remaining construction-free after the Palisades fire destroyed them last year in Malibu. 2. Aerial image of the remnants of an oceanfront neighborhood in Malibu taken in December after the massive Palisades fire destroyed hundreds of homes and businesses last year. (Allen J. Schaben / Los Angeles Times)

At the time of the order, Bass dismissed it as a “meaningless political stunt,” saying the president has no authority over local permitting but could assist by speeding up Federal Emergency Management Agency funding.

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The American Property Casualty Insurance Assn. industry trade group, in its response to Trump’s post, continued to point fingers at the government. It noted the fires were the third-worst natural disaster in American history in terms of insured losses, at $40 billion.

“Permitting can be a frustrating process, and it can always be improved,” it said in a statement. “Los Angeles has been approving permits three times faster than it was before the fire. However, permit issuance continues to lag.”

Barger, whose district includes the Eaton fire zone in and around Altadena, said this week that she defended the local permitting process to Zeldin. But said she also pointed out complaints about how insurers, and State Farm in particular, have handled claims.

“Many people feel that the insurance industry has let them down, and the number one company that we hear about is State Farm,” she said. “Obviously, Administrator Zeldin met with the president and outlined what I told him.”

Bass, who also spoke on the phone with Trump last month, issued a statement saying she “recently requested that the President intervene with the insurance companies to ensure they pay claims so that survivors can afford to rebuild.”

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“I want to thank President Trump and EPA Administrator Zeldin for taking action and working alongside us to help survivors get the support they need and deserve,” she said.

A White House official said Friday that the EPA was working to produce the list of insurers “as quickly as possible for the president” and the “best way for insurance companies to help is to immediately pay out what they owe so victims can rebuild their lives.”

An aerial view of construction crews rebuilding homes that were destroyed

Construction crews rebuild homes that were destroyed in the Eaton fire in Altadena on March 20.

(Allen J. Schaben / Los Angeles Times)

“Administrator Zeldin, on behalf of the president, is going to hold insurance companies accountable to the great people of California,” the official said.

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The federal government has played a large role in the recovery, including leading the debris cleanup and, as of February, approving 12,600 Small Business Administration loans to fire victims totaling $3.2 billion.

However, a 1945 federal law, the McCarran-Ferguson Act, delegates authority to regulate the insurance industry primarily to individual states.

Joy Chen, executive director of Eaton Fire Survivor’s Network, which represents thousands of fire victims across Los Angeles, said her group believes the federal government has a larger role to play.

“President Trump has the opportunity to restore accountability to this broken system. Federal agencies have the tools to act,” said Chen, who has been sharply critical of State Farm’s claims practices and how California Insurance Commissioner Ricardo Lara has handled complaints against the company.

She specifically called for the Federal Trade Commission to examine “deceptive sales practices” that have left Americans underinsured and for the Department of Justice to investigate “industrywide claims practices that delay, deny or underpay payments owed to policyholders.”

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Lara has defended his treatment of the company, noting regulators opened a probe of State Farm’s claims practices last year.

Martin Grace, a University of Iowa business professor and expert on insurance regulation, said that aside from the “bully pulpit” Trump exercised in his social media post, the federal government’s hands are largely tied.

“He can browbeat people, and Trump’s good at that. And I think the federal government, at one level, only has that. Now, Congress and the president together could say, ‘Listen, we don’t like what the states are allowing insurers to do, and we’re going to change the regulatory system,’” he said.

Grace noted that there was an insurance industry solvency crisis in the 1970s and 1980s that led to a 1990 Congressional report and federal pressure for improved state-level regulation, which was undertaken.

“Congress basically said, ‘Get your act together, or we’re going to take [regulation] back.’” And so the states got together and did a much better job on that,” he said.

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Los Angeles attorney Richard Giller, who represents plaintiffs in lawsuits against insurers, said that the federal government could still take steps to improve the market.

Those might include establishing a federal reinsurance program that shares natural disaster risks with insurers, or covering the risk itself similarly to how the National Flood Insurance Program works.

“The catastrophe insurance industry in California is incredibly broken and needs some serious repair,” he said.

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Video: Skilled Foreign Workers Think About Leaving the U.S.

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Video: Skilled Foreign Workers Think About Leaving the U.S.

These highly skilled, highly educated foreign workers have been documenting the challenges of trying to build a career in the U.S. “If I don’t find a job, I have to leave the country.” “I sent out 907 applications.” “Have I ever truly relaxed in America?” They need an H-1B visa, which is given through a lottery system that allows U.S. companies to hire highly skilled international professionals for up to six years, in industries like tech and medicine. But the Trump administration has made changes to the program, requiring companies to pay a high fee and enforcing new rules that prioritize higher-paid foreign workers, in an effort to make more jobs available to Americans. This has forced some foreigners to rethink their career plans. “I think the U.S. is still the golden standard.” Wen-Hsing Huang came to the U.S. from Taiwan in 2022 for the tech scene, and was hired by Amazon on an H-1B visa. “I want to use my talents to change the world, and I think the United States was the best platform to do that.” Ananya Joshi came from India to attend a master’s program in Chicago in 2022. “So it was actually my my father’s dream that I had inherited because my father couldn’t go because of his financial situation.” Haina, a Chinese national, fell in love with the U.S. while studying in New York. She got her H-1B in 2022. “I remember there were a lot of companies, they would be able to sponsor.” Haina said she’s experienced a recent shift, where it has become harder to find companies that sponsor H-1B visas. “This time when I was job searching, I didn’t realize it could be a deal breaker. I just had my second interview of 2026, and it was a pretty short call.” (Recruiter) “I don’t think we’re eligible or able to do sponsorship for this role at the moment.” “They don’t even really get to know if I’m qualified, am I experienced, or anything. The decision is already made at that point.” “Please, please make sure that the company you’re about to work for has experience handling international hires.” Joshi said a start-up she interned with during grad school rescinded their promise to sponsor her H-1B visa. “Ask for everything in writing. And then there were jobs that were contract jobs. They would just reject me. They would only need people with a green card or a U.S. citizenship.” Even with an H-1B and a six-figure salary, Huang said he felt himself becoming anxious, as tech layoffs ramped up and Trump’s immigration policies kept changing. “I woke up every morning with this knot in my stomach, because my entire life depended on the policy I couldn’t control. The United States seems not very welcoming to immigrants that contribute to this country.” “The signals are, like, pretty clear at this point. They want to make this H-1B, is, like, risky and also, like, harder.” Hello, everyone.” Despite that, Haina says she’s determined to keep looking for a job until she’s forced to leave the country. “The pressure about where I’m going to be in the next of my career or, like, my life. I sort of like lost the ability to enjoy my life or just be happy.” “So I had to leave the U.S. Of course, I expanded my search beyond the U.S. Found a job in Germany.” Joshi packed up her life and started a new role with a European biotech firm in January. “I think I left at a good time, because there would have been more stress. I would have been stuck in a loop.” “It’s an endless cycle of anxiety.” After quitting his job at Amazon, Huang is now back in Taiwan, planning to launch his own company. “To bet on building an A.I. company that gives me complete control over my time, location and future. Staying in the United States is no longer the only way to achieve my American dream.”

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