Who wins on prediction markets?

Critical Analysis

Find answers to the following questions using the visual above, your big brain, the information provided and any links below:

1. According to the data from the visual above what percent of accounts on Polymarket take home 67% of the profits?

2. According to the data from the visual above about what portion of accounts on Polymarket are unprofitable?

3. Polymarket and Kalshi are both peer-to-peer prediction market platforms where users buy and sell shares on the outcomes of real-world events. Polymarket functions essentially like a gambling site because it allows you to bet money on real-world events, but legally it operates as a prediction market. Why do you think so few people make a profit on these sites?

4. Polymarket holds federal approval under the Commodity Exchange Act, but faces state-level legal challenges, including a lawsuit from New York State alleging it operates as an unlicensed gambling platform. State regulators, such as the New York Attorney General, argue that the lack of local licensing exposes vulnerable populations and underage users to severe financial risks without the guardrails required of standard gaming operations. How does this illustrate the concept of federalism?

5. Recent high-profile insider trading cases and enforcement actions on prediction markets like Kalshi and Polymarket involve political figures, military personnel, and corporate employees exploiting non-public information. Federal authorities arrested a U.S. Army Special Forces soldier (Gannon Ken Van Dyke) accused of using classified information to make over $400,000 in profits on Polymarket event contracts regarding the capture of former Venezuelan leader Nicolás Maduro. Traders won nearly $1 million from suspicious wagers tied to specific U.S. and Israeli military strikes against Iran before public announcements. Former U.S. Representative George Santos was fined $35,000 by the CFTC and hit with a $71,000 internal fine alongside Kalshi's first-ever lifetime ban for market manipulation regarding a contract on whether he would attend Donald Trump's State of the Union address. President Trump’s longtime teleprompter operator paid $172,000 to settle CFTC claims after Kalshi flagged suspicious bets regarding specific individual words the president planned to use during his public speeches. Donald Trump Jr. works for Kalshi as a strategic advisor.Do you think sites like Polymarket and Kalshi should be subject to more regulation and scrutiny?

6. Independent federal agencies like the The Commodity Futures Trading Commission (CFTC) are created by Congress, their leaders are nominated by the president and confirmed by the Senate. Historically, members have tenure protections shielding them from being fired by the president without cause. According to reports by NPR, recent executive orders have sought to expand presidential oversight and supervision over several independent regulatory bodies. How do independent federal agencies created by congress but run independently illustrate the concept of checks and balances?

7. Kalshi has sued multiple state governments and regulators rather than the federal government, while the federal government (the Commodity Futures Trading Commission) has actually stepped in to sue states on Kalshi's behalf. Who does it sound like the CFTC is working for?

8. How can Congress exert oversight over an executive regulatory agency if lawmakers disagree with the agency’s restrictions on financial prediction markets

9. Everyday traders on Polymarket and Kalshi are suffering losses, while a few data-rich pros and trading firms capture the profits. Why do you think the federal government is not exercising more regulatory power over Polymarket and Kalshi?

10. Democratic theories distinguish between participatory democracy (broad citizen involvement), pluralist democracy (group-based competition), and elite democracy (limited influence by wealthy or powerful actors). Which of these three democratic theories seems most accurate in describing how the government makes policy about Polymarket and Kalshi.

Write and Discuss

Take ten minutes to write about the question at the top of the page and then discuss with your classmates.

Act on your Learning

Public interest organizations such as Public Citizen file legal petitions and formal complaints demanding regulatory investigations into suspicious event-contract trading. Support their work. You can also urge federal representatives to pass proposed measures like the Public Integrity in Financial Prediction Markets Act or the Bets Off Act, which restrict insider trading by government officials and ban wagers on sensitive topics like war and terrorism. These are bipartisan bills sponsored by Senators Curtis (R-UT) and Schiff (D-CA). Contact Senator Curtis and let him know what’s up!

Get Creative

Start an anti-prediction Market Tik-Tok and share it with your classmates.

Learn more*

We hope you enjoyed today’s lesson. Join our archive for access to this and over 1000 other great GoPo lessons.

• Monthly
• Yearly

Liberty Bell Ringer Membership

$19.99

Every month

$199.00

Every year

Teaching AP Government is a marathon, and every class period needs a strong start. The Liberty Bell Ringer Membership gives you an archive of 1,000+ ready-to-go bell ringers. But it doesn't stop there. When it's time to mix things up, dig into a growing library of whole-class games your students will actually enjoy. And when May draws near the built-in exam prep has you covered. Cancel at any time. Use promo code SIGNMEUP at checkout to get the first month of our monthly subscription for free!

Sign Up

Sign Up

---

✓ Our Archive of Over 1000 Bell Ringers

✓ Whole-class activities, games, and learning labs

✓ All 14 Landmark Supreme Court Case Completed Rubrics

✓ All 9 Foundational Document Completed Rubrics

✓ All 4 FRQ Workshops