A few weeks ago, a 35-year-old man named Stew was scrolling through his phone late at night…

When he noticed something odd.

Reports were circulating on social media of an unusual spike in pizza deliveries to the Pentagon.

For most people, this would be a mildly amusing piece of late-night trivia.

But for this guy from Montana it was a ‘buy’ signal.

He opened an app called Kalshi and placed a $10 (roughly £7.50) bet on the proposition that Iran’s Supreme Leader, Ayatollah Khamenei, would be ‘out’ by 1 March.

And, of course, it came to pass…

The USA bombed Iran and the rest is (recent) history.

The media were in uproar about it, as you can imagine, and focussed on Stew’s grisly bet.

But this wasn’t the only example…

Others have bet on military actions in Venezuela and Palestine… while an app called Polymarket has hosted more than $500m in bets related to the Iran war, including the chance of a nuclear detonation.

Not exactly the kind of win you’d want to celebrate!

But this is just an example of the many strange twists and turns in the brave new world of prediction markets!

And while I don’t normally write about betting, it’s a really interesting development, which has scope outside the obvious moneymaking potential of winning bets.

The Prediction Market Explained

A prediction market is an online platform where you can speculate on the outcomes of real-world events.

As you’d expect, much of the betting is related to sports….

But users can also bet on election results, financial events and cultural developments.

For example, you could bet on things like election outcomes…

Who will be the next Prime Minister…

Or whether a Chancellor will lose their job.

It’s a bit like betting with a bookmaker, except that every market is a simple yes/no question, and each one has a probability attached, expressed as a percentage.

So instead of seeing ‘Evens’ or ‘2/1’, you get something like ‘64% Yes’ or ‘36% No.

That percentage is set by the crowd. So if lots of people think something is likely and start buying ‘Yes’, the probability ticks up.

If sentiment shifts and people start selling, it falls back down.

The price therefore is a live, continuously updated reading of what people collectively believe.

For example, let’s take the wager ‘‘Will the bank cut interest rates before September?’

If that market is at 72%, it means the crowd currently believes there’s roughly a 72% chance of a cut happening.

If you think the market is being too optimistic, then you could be contrary and buy ‘No’ at 28%.

You’d make a profit if you turn out to be right!

When September comes, those rates will either be cut…. or they won’t.

Whatever happens, the winning side gets paid out in full.

But the losing side gets nothing.

So really this is more like Betfair than Ladbrokes.

You’re betting against other people’s opinions, not against a trading team whose job is to make sure the bookmaker wins.

In the USA, the two dominant prediction market platforms are Kalshi and Polymarket.

Kalshi was founded in 2018 by two MIT classmates and has full regulatory approval as a financial exchange (not a gambling platform, though).

The Federal Reserve published research in 2022 suggesting that its predictions are at least as accurate (and in some cases better) than professional economic forecasting models for things like inflation.

Polymarket is a crypto-based, offshore business that’s a lot more ‘wild west’ than its rival.

It became famous during the 2024 US election when its markets consistently outperformed mainstream polling in predicting Trump’s victory.

But it has also been controversial…

For instance, earlier this year, a Polymarket user bet $34,000 on Venezuelan president Nicolás Maduro being removed from power.

He then doubled down on this bet hours before a US operation whisked the president him out of the country.

Regulators are now investigating whether this was a case of insider trading.

Either way, these news stories are sparking more awareness of prediction markets.

But what about here in the UK?

A Sign of a Major Shift in Regulation….

Kalshi and Polymarket are not currently available to UK users.

The USA classifies them as federally regulated financial exchanges. But the Financial Conduct Authority (FCA) is clear that any similar product in the UK would be classified as a betting exchange, not a financial instrument.

Which means that company would need a Gambling Commission licence.

There are signs that change is afoot though…

In January, Matchbook – an established betting exchange – took the first steps toward launching Britain’s first licensed prediction markets platform, operating under its existing Gambling Commission licence.

The CEO described the UK launch as a ‘road test’ for the platform before they push into the US later in 2026.

It’s early days, though, and at the moment you can pretty much only bet on election outcomes – here’s a screen shot of what that looks like.

Smarkets, another UK exchange, also offers political and current events markets that function in a similar way.

There’s a ‘news and politics’ section that has betting categories like ‘Defections to Reform’ and ‘Keir Starmer Exit Date’.

Again, the options are a little thin on the ground at the moment.

Meanwhile, Betfair has had political markets alongside its sports options for a while. For example, you can bet on the next chancellor.

These have nowhere near the scope of the US versions…

But I expect that will change in the next 2–3 years.

More broadly, here’s why I think these platforms are worth paying attention to – even if you’ve no interest in placing a bet.

More Than Just a New Way to Gamble

When money is at stake, people tend to think very carefully about what they genuinely believe is going to happen.

So when you have an aggregate of thousands of individuals putting their cash on the line to bet on a certain outcome…

It becomes a crowd-sourced forecast that can be more accurate than the expert opinion of pundits and analysts.

You see, prediction markets aren’t new…

Academic versions have existed since the 1990s, the most famous example being the Iowa Electronic Markets, run by the University of Iowa.

These allowed real‑money trades on U.S. election outcomes for research and teaching purposes.

Interestingly, these prediction markets outperformed traditional opinion polls at forecasting those election results.

The wisdom of crowds, it turns out, can genuinely be wise.

So this is not only about betting…

It could be a way to spot trends and predict events that could help you avoid financial problems… create products… and time the launch of products…

For instance, if these platforms take hold in the UK, you could get advance warning of potential obstacles… as well as flagging up potential shifts in economics and politics that could benefit you.

• What does the market say about the probability of a recession?
• How likely is a particular election outcome?
• How likely is a government crackdown on TikTok?

It’s not that the prediction markets would give you a guaranteed outcome… but they could be as good an indicator as anything you’ll read in the press.

Could You Make Money from Predictions?

Just to be clear…

I’m not recommending this as a primary income strategy, and I’m certainly not suggesting you pile all your money into prediction markets when they open up in the UK.

But they represent a fascinating new mechanism for turning collective intelligence into a live, publicly visible trading signal.

If you’re interested in this, I recommend picking three or four political markets on Matchbook and Smarkets…

Then watch how the probabilities shift as events develop.

You’ll quickly develop a feel for how the crowd thinks, and where it tends to over or underreact.

And if you do want to place trades, keep them small and treat the first few months as a test!