Business
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
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.
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.
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.
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.”
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.
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.
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.
Business
Snap sued by parents of girl who was raped by man she met on Snapchat
Social media company Snap is being sued by the parents of a girl who was raped when she was 12 years old by a man she met on disappearing messaging app Snapchat.
The 111-page lawsuit, filed this week in a Missouri Circuit Court, alleges that Santa Monica-based Snap “enabled and facilitated the grooming, exploitation, and sexual abuse” of the minor who is referred to as “J.F.”
The company failed to disable or warn users about “dangerous” features that predators use on the app to find and abuse their victims, according to the lawsuit.
Missouri resident Gabriel Joel Valentin-Rios, who was 25 years old at the time, raped the girl in September 2021 after she sneaked out of her house, the lawsuit alleges. The parents are also suing the attacker, who pleaded guilty to sexually assaulting the girl and is serving 18 years in prison, according to the Social Media Victims Law Center.
The center and the Holland Law Firm announced Thursday they filed the lawsuit on behalf on the victim’s family.
“This assault did not happen in a vacuum — it happened because Snapchat’s product design made it easy for a predator to reach and manipulate an unsuspecting child,” said Matthew Bergman, founding attorney of the Social Media Victims Law Center, in a statement. “Snap executives have long known that their features create a perfect environment for predators to exploit children, yet they have repeatedly failed to make the platform safe.”
A Snap spokesperson said in a statement the company cares “deeply about the safety and well-being of all Snapchatters.”
“Our teams have worked for years to build safeguards, launch safety tutorials, partner with experts, and work with law enforcement to help prevent the misuse of our platform,” the spokesperson said in a statement.
The lawsuit is the latest legal hurdle facing Snap. Multiple parents who lost their children have previously sued the company, alleging that Snap failed to provide enough safeguards on the messaging app. Parents and child safety groups have voice concerns about how the app can be used to connect young people with drug dealers and child predators.
Other tech companies such as gaming platform Roblox, Google-owned YouTube and Facebook parent company Meta have also faced lawsuits over safety and mental health issues.
In March, a Los Angeles jury found that Meta-owned Instagram and YouTube were liable for the suffering of a California woman who alleged the platforms were built to addict young users. Snap settled that lawsuit before the trial started.
The latest lawsuit against Snap highlights safety concerns surrounding several features on the messaging app including “Quick Add,” which suggests users to connect with on Snapchat. Valentin-Rios used that feature to connect with the girl along with others to disguise his identity and groom her into sending explicit photos, the lawsuit said. The company’s “Snap Maps” feature allowed him to find the girl’s home address. And he used a cartoon avatar known as Bitmoji on Snapchat to conceal his age and present himself as a “a young, innocuous, and friendly looking boy.”
Families have faced challenges holding tech companies accountable for safety issues because a U.S. law shields platforms from being held liable for content posted by its users.
The lawsuit against Snap, though, says that it seeks to hold the company liable for the design and marketing of “unreasonably dangerous social media products.” It alleges that Snap co-created content such as Bitmojis abused by child predators and it designed the app to entice users to spend more time messaging others.
The lawsuit accused Snap of consistently turning a “blind eye” to underage users of its app. Snapchat requires users be at least 13 years old to sign up for an account, but J.F. started using the app when she was 11 years old. Snapchat was popular among her peers and friends so J.F. downloaded the app, which was presented as lighthearted and entertaining platform, without her parents’ knowledge or consent. The company failed to warn users about potential dangers, verify the ages of minors and lacks adequate parental controls, the lawsuit alleges.
Snapchat has a “family center” where parents can see their teen’s friends, view time spent and other insights about how their children are using the app. But the lawsuit said it isn’t enough because parents can’t restrict teens from sending private messages and children can create accounts without their parents’ knowledge.
The plaintiffs’ counsel also tested Snap’s “Quick Add” feature in 2023 and found that many of the usernames “generated by Snap’s recommendation algorithm appeared on their face to belong to predatory users,” the lawsuit said.
Valentin-Rios was also able to create a second Snapchat account with the username “Nocits21g” to connect with J.F. and to conceal the activity from his girlfriend, according to the lawsuit.
The rape victim, who was diagnosed with PTSD, anxiety and depression, started to engage in self-harm and expressed suicidal thoughts, the lawsuit states.
The lawsuit seeks a jury trial and financial damages for the harm allegedly caused by the company to the family.
“J.F. feels embarrassed and ashamed, but she is also angry that Snap facilitated this by design, and angrier still that Snap continues to operate its platform in the same manner today,” the lawsuit said.
Business
Newsom blesses Uber ballot measure truce — but fight over car crash lawsuits continues
Gov. Gavin Newsom signed a law Thursday to crack down on inflated profits stemming from car crash lawsuits, blessing a hard-fought compromise between Uber and the state’s trial attorneys that averts a November showdown between two of California’s most powerful and moneyed lobbying forces.
The deal, the fruit of months of negotiations, takes aim at the lucrative way doctors can charge for procedures on patients referred to them by personal injury lawyers.
If a law firm has a client who was hurt in a car accident, the lawyer will often send them to a doctor who will perform surgery on a “lien” basis, meaning the doctor will be paid from money that comes from a lawsuit settlement rather than through insurance.
Uber contends this arrangement has created an incentive for doctors and attorneys to collude to dramatically inflate medical bills. The more expensive the bill, they say, the bigger the resulting payout.
The law, SB 623, caps how much these doctors can charge when their patient is involved in a lawsuit against a ride-share company, which are frequent targets of litigation due to their top-of-the-line insurance policies. The new law will also require Uber to ramp up background checks of its drivers.
“We’re going to have a much safer state both for medical patients and passengers in Ubers,” said Nicholas Rowley, a prominent Texas attorney who helped bankroll the fight and took a leading role in the negotiations.
The law only applies to cases that involve ride-share accidents that take place after Jan. 1, 2027.
“This legislation puts meaningful guardrails in place to better protect accident victims, increase transparency and accountability in the medical lien system and strengthen safety,” said Ramona Prieto, Uber’s head of public policy for the Western U.S., in a statement.
For months, Uber and lawyers from across the state poured tens of millions into dueling ballot measures that threatened to devastate the profits of whichever side lost.
Uber fired the first shot with a ballot measure that sought to cap how much attorneys can earn in lawsuits involving auto accidents. The company argued attorneys were swindling their own clients, inflating medical bills of car crash victims to increase the value of the settlement and then pocketing a hefty chunk of the payouts.
The state’s trial attorneys countered that the fee cap would make small or difficult cases a money-losing endeavor and block scores of accident victims from the courts. They shot back with their own ballot measure that would increase legal liability for ride-share companies if a passenger or driver is sexually assaulted while on a ride, seizing on investigative reporting that highlighted assaults in Ubers.
“They were waiting for us to blink and we didn’t,” said Douglas Saeltzer, the head of the Consumer Attorneys of California, the lawyer trade group that pushed for the measure against Uber. “Their starting place, I don’t believe, was in the interest of protecting victims — it was in the interest of protecting Uber.”
With the passage of Thursday’s law, both sides have agreed to pull their respective measures from the November ballot, halting campaigns that had both parties amassing tens of millions in funding and blanketing the airwaves with ads.
“Now we can stop seeing all the commercials,” said Assemblymember Blanca Pancheo (D-Downey) at a Tuesday hearing.
The law, put forward by Assemblymember Diane Papan (D-San Mateo) and Sen. Thomas Umberg (D-Santa Ana), also caps the amount that can be earned by third-party investors who buy out a doctor’s lien in a personal injury case. These companies will purchase a doctor’s stake in the case at a reduced rate, then pocket a share of the payout if the case settles.
“Private equity and hedge funds buy them at a steep discount, then turn around and collect the full inflated amount,” Saeltzer said at a Tuesday hearing on the bill. “That’s money flowing to Wall Street investors, not patients.”
The law will require annual background checks for ride-share drivers and expand the list of offenses that disqualify someone from the job.
In addition to the ballot battle, has Uber sued two of LA’s most well-known personal injury firms — the Law Offices of Jacob Emrani and Downtown L.A. Law Group — accusing them of inflating medical bills and forcing clients to undergo needless and expensive surgeries to inflate the value of the claim. The firms asked the judge to dismiss the case Wednesday, arguing Uber had failed to prove fraud. Both firms have vehemently denied wrongdoing.
The lawsuit, filed last year, has put the plaintiff lawyers in the unusual position of playing defense. Listening in the audience at Wednesday’s hearings were the partners of Downtown L.A. Law Group and Jacob Emrani.
“Let’s be clear about what this Uber case really is,” said John Hueston, outside counsel for Emrani. “It’s brought by a $150 billion dollar company … to intimidate the plaintiff’s bar, exhaust its resources and chill the suits that hold Uber accountable.”
Michael Huston, one of the lawyers who represents Uber, countered that the case is “not an attack on the plaintiff’s bar.”
“We have brought suit against the two in this state … that are engaged in naked fraud,” he said.
Business
Snap CEO Evan Spiegel and Miranda Kerr help erase $550 million in medical debt for Californians
Snap Chief Executive Evan Spiegel and his wife, supermodel Miranda Kerr, have helped pay off $550 million in medical debt for more than 261,000 Californians.
The couple made a multimillion-dollar donation to Undue Medical Debt, a nonprofit that provides debt relief to people in financial need. The organization acquires medical debt in bulk from hospitals, physician groups, collection agencies and other groups for a fraction of the cost.
“When someone you love is sick. All you want to do is focus on helping them get better,” Kerr said in a video with Spiegel. “That’s why we wanted to support this effort and help relieve medical debt, so families can focus on caring for their loved ones and really supporting their healing.”
The couple and the nonprofit didn’t disclose the exact amount of the donation, but a small gift can go a long way. Every $10 donated to Undue Medical Debt relieves an average of $1,000 in medical debt.
The gift comes as Americans struggle with the medical debt and rising cost of living. California is one of the most expensive states to live in because of soaring housing costs and energy prices. Concerns about wealth inequality have sparked heated political debates about how much billionaires should contribute.
In the United States, 1 in 4 adults are in medical debt, said Undue Medical Debt President and Chief Executive Allison Sesso in a statement.
“It’s a growing crisis undermining healthcare access, economic wellbeing and mental health and we’re so grateful that Evan Spiegel and Miranda Kerr share our belief that no one should go bankrupt because of a cancer diagnosis and no family should have to choose between insulin and groceries,” she said.
Californians whose medical debt have been paid off will start receiving a letter in mid-July from Undue Medical Debt informing them of the debt relief. Individuals can’t request debt relief because the nonprofit acquires bundled debt for thousands of people at once. Those who qualify for debt relief either earn at or below 400% of the federal poverty level or have medical debt that is more than 5% of their income, the nonprofit says on its website.
San Diego County residents benefited the most from the donation with total medical debt relief through the couple’s gift totaling roughly $99 million and affecting 40,369 people. In Los Angeles County, the gift provided $26.7 million in medical debt relief to 17,466 people, according to the nonprofit.
Spiegel, whose net worth is roughly $2 billion, and Kerr have helped relieve debt for others in the past. In 2022, the couple paid off the student loans for the Otis College of Art and Design’s graduating class.
In 2025, Spiegel was among business leaders and philanthropists who helped form the Department of Angels, a group that aims to help L.A.’s fire recovery efforts. The California Community Foundation, Snap, Spiegel and Snapchat co-founder Bobby Murphy committed $10 million to help start that group.
Roughly 200,000 people lost their homes in the January 2025 Los Angeles County wildfires. Spiegel, who grew up in Pacific Palisades and lost his childhood home in the fires, donated $5 million in immediate aid with Snap and Murphy that month.
He said in a statement that California has given so much to him and his family and that he cares “deeply about the wellbeing of our communities.”
“At a time when many families are already facing rising costs across nearly every aspect of daily life, an unexpected medical bill can create financial stress that lasts for years,” Spiegel said.
Undue Medical Debt said it’s abolished more than $40 billion of medical debt in all 50 states.
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