For years, prediction markets were defended as an intellectually elegant innovation. They were not presented as an offshoot of entertainment, but as a superior mechanism for aggregating dispersed information and turning it into a useful signal. The thesis was powerful: when many people risk money on a future outcome, price can begin to look less like opinion and more like a condensed form of knowledge.
The problem is that the industry born from that promise has drifted elsewhere.
The recent CNN piece makes the contrast clear. The economists who originally imagined these markets were thinking about inflation, interest rates, elections, monetary policy, environmental risks, and corporate decisions. They even envisioned relatively modest participation limits and, quite explicitly, a system that would presumably not include contracts on sporting events. Today, the picture is largely the reverse. According to the figures cited in the article, sports and sports parlays accounted for about 84% of Kalshi’s monthly volume; on Polymarket’s U.S. site, the share was said to be closer to 99%. Once the economic core of the system is no longer built around economically relevant events but around penalties, finals, celebrities, and pop culture, the debate stops being purely informational.
That is where the central problem emerges. Legally, these instruments may be called contracts. Functionally, to the average user, they look too much like a wager.
And that resemblance matters more than some defenders are willing to admit. The intellectual legitimacy of prediction markets depends on their capacity to generate signal, not merely liquidity. If liquidity comes mainly from sports and entertainment, then the system begins financing its academic prestige with the same behavioral logic it once tried to distinguish itself from.
This helps explain why the issue can no longer be treated as merely economic. It is regulatory, cultural, and, in certain contexts, even public-health related. The economists are still right about one important point: markets can be highly efficient tools for aggregating information. But it does not follow that every liquid platform is socially valuable in the same proportion as its volume.
This past weekend in Colombia offered only a subtle reminder of that shift. Increasingly, people look at these markets not as specialized instruments for reading complex expectations, but as emotional barometers of political momentum. And once a market begins to be consumed as spectacle, it may still move price, but it starts to lose depth. The real question, then, is no longer whether these markets work. It is whether they still work primarily for what they originally promised to be.
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