Prediction markets are making a 150-year comeback
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Prediction markets—where people bet on future events like elections, wars, and assassinations—are experiencing a massive resurgence, with over $60 billion traded on platforms like Polymarket and Calchi in just a few months. This modern boom echoes a 150-year history of such markets, from 19th-century horse-race-style betting on U.S. presidents to the 1920s curb exchanges where Wall Street elites wagered on political outcomes. The idea gained academic legitimacy in 1988 when three Iowa professors launched the Iowa Electronic Markets, proving they could outperform polls. But the dream of a world where markets forecast everything—from CEO changes to relationship longevity—was nearly crushed in 2003 when DARPA’s 'Policy Analysis Market' was shuttered after a firestorm over betting on terrorism and assassination. Now, with a pro-market CFTC chair and unprecedented public interest, these platforms are thriving—but not without controversy. Traders have made hundreds of thousands predicting real-world tragedies, including the U.S. strike on Iran and the capture of Venezuela’s Maduro, raising alarms about insider trading and moral hazard. As the world becomes a casino of bets on death and war, the central question remains: are we ready to let markets decide what we believe—and at what cost?
Prediction markets like Polymarket and Calchi have seen over $60 billion in trades in 2026, with users betting on real-world events including war, assassinations, and political outcomes.
The 2003 DARPA 'Policy Analysis Market' was canceled after a media firestorm over betting on terrorism and assassination, revealing deep public discomfort with profiting from tragedy.
Traders have made hundreds of thousands predicting real events like the U.S. strike on Iran and Maduro’s capture—raising concerns about insider information and ethical violations.
Prediction markets have a 150-year history, from 19th-century election betting in New York to the Iowa Electronic Markets, which outperformed polls 74% of the time between 1988 and 2004.
The U.S. government has long restricted prediction markets, with the CFTC only approving the Iowa market until recent regulatory shifts under a pro-market chair enabled Polymarket and Calchi to flourish.
…and 3 more takeaways available in PodZeus
The Rise of the Prediction Casino
“That's how much money someone made a couple months ago on a risky bet. Will the U.S. strike Iran by Saturday, February 28th, 2026? The answer, of course, was yes.”
From Three Beers to a National Experiment
In 1988, three University of Iowa economists—Robert Forsyth and colleagues—launched the Iowa Electronic Markets after a three-beer lunch. They created a market where people could bet on presidential elections, and it outperformed major polls, predicting the 1988 election within 0.2%.
The Forgotten Markets of the Past
Historian Paul Rohde and economist Coleman Strumpf uncover a long-lost history of election betting in the U.S., dating back to the 18th century. From the curb exchanges of Wall Street to bets on popes and city-states, prediction markets were once a mainstream, even elite, pastime.
The DARPA Project That Was Too Dark
“The accusation was we were having markets betting on death. And that was the very idea of betting on death was bad.”
The Rise and Fall of InTrade
InTrade, an Irish-based prediction market, gained fame by accurately forecasting Saddam Hussein’s capture and the 2004 U.S. election. But the CFTC relentlessly pursued it, eventually shutting it down in 2013 after a CEO’s death and accounting scandals, culminating in a 'fined corpse' penalty.
“The logic of your betting on whether somebody's assassinated, that's really ugly. The idea that you're profiting from somebody else's misfortune, that arises disgust.”
“the accusation was we were having marks betting on death. And that was the very idea of betting on death was bad.”
“We could have markets for students about what schools to go to or what majors to take. You could have markets to individuals about if you dated somebody, how long would the relationship last?”
Host
Guests
Polymarket
organization
Calchi
organization
Randa Abdel Fattah
person
Robin Hanson
person
Coleman Strumpf
person
Commodity Futures Trading Commission
organization
DARPA
organization
Paul Rohde
person
Robert Forsyth
person
InTrade
organization
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