Prediction markets have grown into a multibillion-dollar industry. This episode asks whether they are powerful forecasting tools or gambling platforms in disguise—and what their rise means for how risk and information are priced. 

Hosts: 

Rebecca Patterson, Senior Fellow, Council on Foreign Relations (CFR)

Sebastian Mallaby, Paul A. Volcker Senior Fellow for International Economics, Council on Foreign Relations (CFR)

Guest: 

Christy Goldsmith Romero, Former Commissioner, Commodity Futures Trading Commission (CFTC)

We discuss:

• How prediction markets are turning the world into a “casino” where you can bet on almost anything, from elections and geopolitics to sports and niche events.
• The evolution of prediction markets from academic tools to mainstream platforms shaping finance, politics, and culture.
• Why these markets sometimes outperform polls, where they fall short, and how they blur the line between forecasting and entertainment-driven gambling.
• As Rebecca Patterson asks: “Are these markets actually useful, or are they just gambling dressed up as forecasting?”
• The legal gray areas that are allowing prediction markets to expand so quickly and the growing risk of manipulation and insider bets.
• An anecdote from France, where someone allegedly tampered with a weather sensor to manipulate the outcome of a prediction market bet.
• How governments and regulators are struggling to keep up.
• Whether these markets truly reflect the “wisdom of crowds” or just loud, well-funded players.

Mentioned on the Episode: 

Anthony M. Diercks, Jared Dean Katz, and Jonathan H. Wright, “Kalshi and the Rise of Macro Markets,” Federal Reserve Board

“The Future of Financial Services Regulation: A Conversation with CFTC Commissioner Christy Goldsmith Romero,” Brookings Institution 

Adam Hoffer and Jacob Macumber-Rosin, “Expanded Sports Betting Legalization Would Generate Billions in Tax Revenue,” Tax Foundation

Andy Serwer, “Charles Schwab CEO Explains Why Investing Works—and Gambling Doesn’t,” Barron's

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The Spillover is a production of the Council on Foreign Relations. The opinions expressed on the show are solely those of the hosts and guests, not of the Council, which takes no institutional positions on matters of policy.