A Polymarket trader made $300,000 on Biden's last-minute pardons in April. Another raked in $400,000 in January correctly predicting Maduro's ouster. In March, someone bet $553,000 on Iran and Khamenei just before an Israeli strike killed him. Campaign staffers receive tips on unreleased polls, compare them to prediction market odds, and buy low-cost contracts before the polls drop. The method is simple, the edge is structural, and the money is real.
Prediction markets exploded because they promised to strip out the noise—pure price discovery on future events, no pundit spin, just the crowd's best guess weighted by conviction. Polymarket alone processed more than $20 billion in trading volume in 2025. Kalshi hit an $11 billion valuation following a Series E funding round in 2025 and made $263.5 million in fee revenue. Robinhood's prediction markets hub, launched after the 2024 election, quickly became one of its fastest-growing business lines by revenue, with users trading billions of contracts. The platforms marketed themselves as information aggregators—better than polls, faster than the news, the purest signal available.
The pitch was efficiency. Markets are supposed to be hard to fool because every mispricing invites someone to trade against it. If a contract is mispriced, arbitrageurs close the gap. The wisdom of crowds, they said, beats any single expert.
But the crowd assumed everyone was trading on public information, and that assumption just died.
In April, Kalshi suspended and fined three users for "political insider trading" after finding that candidates bet on their own campaigns. That same month, Kalshi revealed insider trading cases against an editor for MrBeast and a California gubernatorial candidate who told supporters he had bet on himself to win. The campaign staffer who front-ran the poll sold their position as soon as it was released and their shares went up. The trades weren't sophisticated. They were just informed.
Election betting has been legal for years—the CFTC first allowed a limited number of election bets in 2014 on PredictIt, but recently for-profit prediction markets like Kalshi have jumped into the game, advertising and popularizing election betting, and Kalshi now hosts billions of dollars in legal elections and political bets. There have been a handful of bipartisan bills recently introduced seeking to ban or limit political and war betting by insiders, but none have come close to becoming law, and government ethics rules have been slow to keep up, creating a transparency blind spot at the highest levels of government.
The problem isn't that insiders exist—every market has them. The problem is that prediction markets sold themselves as democratized information while building a structure that rewards the least democratized players. A campaign staffer with a poll, a State Department employee who knows the strike is happening tonight, a YouTube editor who knows the video upload schedule—each has something the market doesn't, and the market has no mechanism to prevent them from monetizing it.
Traditional financial markets solved this decades ago with rules, reporting requirements, and enforcement. You can't trade your own company's stock ahead of earnings because that's theft from everyone on the other side of the trade. Prediction markets are running the same structure with none of the guardrails, and the excuse is that these aren't securities, they're event contracts.
Call it what you want. The dynamic is identical. Someone with private information trades against someone without it, and the person without it loses every time. The market isn't aggregating opinion; it's laundering inside knowledge into apparent consensus. The price looks like wisdom. It's just someone who knew.
Kalshi dominates the U.S. prediction market space, accounting for roughly 90% of U.S. market share, per an April 8 Bank of America report, while Polymarket is a major global player but has a limited U.S. footprint. Prediction market apps surged by over 300% in trading volume from 2023 to 2026 according to industry reports, and platforms like Polymarket and Kalshi have seen 500% growth cycles since 2024, now home to more than 50 million combined users. That growth came from retail traders who believed the price was information. It wasn't. It was somebody's edge.
The people making big money in prediction markets aren't the ones with better models or sharper reads on the world. They're the ones with the phone call ten minutes early. Prediction markets have boomed, inviting increased scrutiny from regulators and Congress, and another key issue for many lawmakers is the ability of traders to place bets on war and military actions, which is banned on Polymarket in the U.S. but is available elsewhere in the world. Senator Jeff Merkley stated that "by offering bets on wars, elections, and U.S. government actions, prediction markets are a real danger to our democracy and ripe for exploitation by public officials with insider information," and he has introduced multiple bills seeking to more strictly regulate prediction markets.
Nobody's coming to save the retail trader betting on the other side of a campaign staffer who already read the crosstabs. The market will keep pricing like it's efficient while insiders keep printing. The only real question is how long it takes everyone else to figure out they're the exit liquidity.