When might the United States take military action in Venezuela? Will Venezuela give its oil to the U.S.? Is Colombia potentially facing an invasion as well?
This week, numerous bets have been placed on these questions through prediction markets. These bets followed the recent U.S. military operation in Venezuela that led to the removal of President Nicolás Maduro.
The significant amounts of money involved have sparked renewed interest in prediction markets, where users can wager on various events. These markets have grown from small startups to significant players in the industry in recent years.
So, how do prediction markets function, and what are the regulations in place? Here’s a breakdown of what you should know.
How do prediction markets operate?
Prediction markets typically involve binary bets, such as predicting yes/no outcomes or higher/lower results.
For instance, on platforms like Polymarket, users can bet on a wide range of events, from movie awards nominations to political developments like the future of the Iranian regime or the weather in Toronto on a specific day.
“The long-term goal is to create tradeable assets out of differences in opinions,” stated Tarek Mansour, CEO of Kalshi, during a conference in late 2025.
Among the various platforms, Polymarket and Kalshi stand out as major players. The total value of bets placed on the top five prediction markets has soared significantly, as reported by crypto firms Keyrock and Dune. From $100 million US in early 2024, the monthly betting volume has surged to over $13 billion US.
Are prediction markets gambling, financial instruments, or news sources?
Unlike traditional sports betting platforms, prediction markets do not operate as the “house.” According to gaming analyst Dustin Gouker, these markets facilitate bets between individuals or market makers, with platforms like DraftKings and FanDuel acting as the house in sports betting scenarios.
Revenue in prediction markets is generated through small transaction fees, as confirmed by Kalshi’s spokesperson Elisabeth Diana.
However, Gouker highlights that, despite logistical differences, the essence remains the same — people betting against each other, regardless of the platform.
Prediction markets also claim to offer news value by reflecting public sentiment and available information, known as the “wisdom of crowds,” as explained by Gouker.
Major news outlets like CNN, CNBC, and Dow Jones have partnered with Kalshi or Polymarket to incorporate prediction market data into their programming.
In terms of regulation, these platforms are treated as financial products and fall under the oversight of the Commodity Futures Trading Commission (CFTC) in the United States.
Concerns over insider trading
A recent successful bet on Venezuela has raised suspicions of potential insider trading. An anonymous bettor staked over $30,000 US on Maduro’s ousting by the end of January, shortly before