Prediction Markets Need To Stop Doing Dumb Shit
Roundup: More on Kalshi's court win vs. New Jersey; Polymarket international is making big changes, including introducing a native stablecoin; Betfair Predicts launches in beta (but not in the US).
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As soon as someone texted me that Polymarket put up a market for whether US pilots would be rescued after a fighter jet was shot down by Iran, this was me:
If you’re playing catch-up, here’s a newser on the situation from NBC News:
Prediction market platform Polymarket issued an apology for allowing users to place bets on the fate of American pilots aboard a U.S. fighter jet downed over Iran.
A two-seater F-15E Strike Eagle was shot down on Friday, according to a U.S. official. One crew member was rescued, but the other remains missing.
In a since-deleted market, users were able to wager on when the pilots might be rescued, with the majority predicting a Saturday rescue.
The whole situation went pretty viral, at least on Twitter, including this post from Rep. Seth Moulton:
Polymarket replied to several Twitter accounts (including mine), with this:
“We took this market down immediately as it does not meet our integrity standards.
It should not have been posted, and we are investigating how this slipped through our internal safeguards.”
Some prediction markets evangelists were arguing that the market is extremely valuable, saying it aggregates information and sentiment about whether the pilots would be rescued.
While they are perhaps correct in a vacuum, here on Planet Earth, the rest of us think this is an absolutely ridiculous market to take bets/trades on. And even Polymarket agreed! If you bet against their rescue, you were in essence betting they will be in captivity for a long time, or even dead (or killed).
You can even imagine macabre scenarios like this: someone holding the pilots says they will release them, they then bet “no” on the market about if they will be released….
Would that scenario happen? Probably not. But it’s the kind of thing you want people in power to avoid imagining, let alone actually happening.
Which gets us to the point of today’s newsletter. Prediction markets should be doing everything in their power to avoid the kind of scrutiny the pilot market created. It can’t happen, if you’re Polymarket and the prediction market industry. It’s fuel for the fire that prediction markets need to be reined in, right as Congress is introducing bills on the subject almost every other day. (It was also fodder for Kalshi, which was dunking on Polymarket all day, pointing out this happened at an unregulated prediction market.)
I am not even joking when I suggest this: Polymarket and Kalshi should hire someone whose only job is to stop them from doing dumb stuff. Call them an ombudsman, or quality control, or some cooler title, and make them look at every new market, every advertisement, etc. Lock them in a room and their only job is to say if what you are about to do is dumb or not.
Serving users with 30-leg parlays? No, knock it off. Taking hundreds of millions in bets on whether a leader is going to wear a suit? Please don’t. Advertising yourself as legal sports betting as you are fighting for your legality? Terrible idea.
I don’t know what will end up happening with prediction markets. But if they continue to insist on doing extremely dumb things, the odds of them going away entirely will shorten in response.
Or just keep doing it. It is great fodder for everyone doing content.
Prediction markets roundup
📬 I am playing with the format of the roundups on my newsletters, and trying to make it a bit more scannable. If you hate it, let me know. If you love it, let me know. If you will read it either way, just keep reading!
🚨The important stuff
Kalshi Wins Appeal Vs. New Jersey In Biggest Prediction Market Decision Yet (Event Horizon): “Kalshi won its appeal against New Jersey in the Third Circuit, the biggest decision to date on the legality of prediction markets and whether federal law preempts state gaming law. …Kalshi had won this case in district court, although it has suffered defeats in district courts in other circuits. Two of the three judges in the Third Circuit ruled in favor of Kalshi in the case.”
Kalshi statement: "The Third Circuit ruled in Kalshi’s favor. People use prediction markets because they’re more fair, transparent, and reward being right. Free markets work. We should keep them that way. This is a big win for the industry and millions of users."
🔍 It’s a big deal, and it’s not! Everyone from prediction markets land was taking a victory lap on Monday, and deservedly so. This is arguably the most important outcome so far in any case involving prediction markets. It’s a federal appellate court saying this, and not a district court. It would be silly to dismiss this as noise.
At the same time, there are tons of cases all over the country in both federal and state court. This is not the end of litigation. Heck, this is not even the end of this specific case; New Jersey could ask for an en banc rehearing in the Third Circuit. The issue of prediction markets is almost certainly going to the US Supreme Court. So while this is a big deal, overreacting to this like it means prediction markets have won the war is also silly. Not even the three judges deciding the case agreed! I was cited in the dissent:
Dustin Gouker@DustinGoukerLook ma, I was cited in the Third Circuit dissenting opinion in Kalshi v. New Jersey.
10:13 PM · Apr 6, 2026 · 1.45K Views2 Replies · 15 Likes
Big changes coming at Polymarket international: Polymarket announced it is rolling out the “biggest infrastructure change since launch,” including a native stablecoin.
Polymarket@PolymarketWe've heard your feedback, and we're excited to announce Polymarket is getting a full exchange upgrade. Over the next few weeks, we're rolling out a rebuilt trading engine, upgraded smart contracts, and a new collateral token (Polymarket USD) to move off USDC.e. 🧵3:38 PM · Apr 6, 2026 · 428K Views221 Replies · 160 Reposts · 1.55K LikesMore details here. And coverage from Crypto Briefing.
Inside Deal (Josimar Football): “Ahead of the World Cup, Fifa has signed a prediction market partner. But the company, ADI Predictstreet, which is backed by the Abu Dhabi royal family, has no working product yet, is unlicensed in almost all jurisdictions and is run by a man who last year paid a six-figure sum to settle an accusation of insider trading in India."
👀 Read this whole thing. The deal smelled strange when it was announced, and this piece shows us why. Also, it got very little coverage in a world where prediction market deals get tons of run. It’s all weird. I am not saying FIFA needed to do a deal with Kalshi or Polymarket, but it’s hard to believe we have heard the last of the weirdness on this front. Stay tuned!
⚖️ Legal and regulation
‘Like a house of cards’: New York seeks to rein in prediction markets (Times Union): “Daniel Wallach, an attorney specializing in gaming and sports betting regulations, said that Kalshi’s case against the gaming commission in New York could prove the most significant of its current legal battles if the federal judge in the case, Analisa Torres, denies the company’s request for a preliminary injunction that would pause the gaming commission’s cease-and-desist order.”
“If that happens, Wallach said, it could provide New York Attorney General Letitia James an opening to bring a civil enforcement proceeding that has the potential to shut down Kalshi, force them to pay back customers from across the U.S. and hold the company’s executives personally liable.”
The latest in Nevada:
Daniel Wallach@WALLACHLEGALThe 3-judge panel has been selected for the Ninth Circuit oral argument on April 16th in the prediction markets appeals involving Kalshi, Robinhood and Crypto. The 3 judges--Ryan D. Nelson, Bridget S. Bade, and Kenneth Lee--are all Trump appointees. Ideal draw for PMs.
5:12 PM · Apr 6, 2026 · 3.57K Views5 Replies · 5 Reposts · 20 Likes
🧩 Odds and ends
Truth Machines Go to War (Bloomberg, Money Stuff): “On the other hand, if prediction markets are “truth machines,” it is good to make sure that the truth people are betting on is the truth people care about. If the purpose of this $155 million market is to inform the world about the probability that the US will launch a ground invasion of Iran, then does this rescue mission meet that purpose? Or does it just meet a technicality? Should the markets try to write rules in a way that reflects people’s intuitive use of words, and the things they intuitively want to predict, or do more technicalities make for more fun? If they are on a quest for truth, should Kalshi and Polymarket be hiring philosophers?”
Prediction Markets Create New Insider Trading Headaches for Executives (Bloomberg): “Still, that hasn’t assuaged the concerns of lawmakers, who have proposed legislation to crack down on insider trading even as new cases keep coming up suggesting that traders are working with non-public information. It’s becoming ‘a board-level conversation,’ said Hugo Doestch, chief financial officer at Optro, a software platform used by organizations to manage governance, risk and compliance programs. ‘Corporations are going to have to put in place the right policies and controls to make sure they’re appropriately monitoring and reacting to the risk.’”
CFTC chairman does interviews:
And on CNBC:
This is not in the US, but…:
DYOR.eth@Dyor_0xAs predicted Betfair enters the Prediction Market game. Centralized PM's (Kalshi) should be panicking as these web2 bookmakers have decades of experience and already huge existing userbases. Onchain PM's (Polymarket .com) on the other hand will be ultimate winners as these web2
6:31 PM · Apr 5, 2026 · 17.5K Views20 Replies · 8 Reposts · 109 LikesPrediction Markets Earn Plenty Of Pop Culture Notoriety Over Weekend (InGame): “Saturday night provided another opportunity for Kalshi to be glad it wasn’t having Polymarket’s weekend. But while its mention on Saturday Night Live validated the platform’s mainstream presence, it was more cutting commentary than chuckles.”
“In a sketch involving his CBS crew analyzing the Final Four, Charles Barkley (played by Kenan Thompson) paused to opine on several issues concerning him — recently deposed U.S. Attorney General Pam Bondi, the extravagance of the Artemis II mission, the war in Iran — and the fact that ‘It’s crazy. You can bet on anything now.’”
The latest in lobbying:
Dan Bernstein@dan_bernstein_Resolution Public Affairs LLC, a firm with ties to Chuck Schumer, submitted a lobbying registration form last Friday to note the start of a relationship with Kalshi.2:16 AM · Apr 7, 2026 · 750 Views1 Reply · 9 LikesIs anything brewing in California?
Ashley Zavala@ZavalaAIn a state that bans online sports betting, why is California allowing people to bet on politics? CA’s @AsmMaggyKrell is pushing to address Kalshi/Polymarket’s new path for dark money in politics. “The sanctity of our elections is threatened when we let people bet on it”9:00 PM · Apr 5, 2026 · 10.8K Views21 Replies · 34 Reposts · 182 LikesCan anything stop Kalshi? (The Hustle): “RJ Adams, a freelance photographer in Brooklyn, first heard of Kalshi early this year. … He’d already dabbled in sports betting, but Adams was intrigued. He downloaded the app and bet $50 that actor Delroy Lindo would receive an Oscar nomination for his supporting role in Sinners.
His guess paid off — he won $414. Then he discovered the platform’s 15-minute crypto bets, where users wager on currencies like bitcoin and XRP going above or below a certain trading benchmark within an immediate 15-minute market window.”
“Those get pretty addictive,” he says with a chuckle. “I’ve lost a fair amount of money doing that.”
the ombudsman idea is funny but honestly every prediction market and every ai agent protocol needs one
The ombudsman idea is sound in theory, but it fights the platform's own unit economics — controversial markets drive volume, and volume drives revenue. Intrade faced this exact dynamic before the CFTC shut it down in 2012; it kept listing markets that were legally and ethically borderline because they were the most liquid ones on the platform. The real question is whether Kalshi's CFTC-regulated structure actually solves this or just moves the "dumb shit" filter from an internal hire to a regulator who can say no months after the damage is done. Sports betting went through the same arc — DraftKings and FanDuel only cleaned up injury-adjacent props after state regulators forced it, not because an internal ombudsman caught it.