The mushrooming growth of prediction markets, where people place bets on anything from the winner of the 2028 U.S. elections to Taylor Swift’s wedding date, has recently drawn scrutiny over allegations of insider trading and market manipulation.
In April, a U.S. Army soldier was charged with using classified information to bet on the timing of a U.S. military operation to capture Venezuelan President Nicolás Maduro. According to the Justice Department, the soldier, who took part in the operation, made more than $400,000 in wagers he placed on Polymarket.
And a recent investigation by The New York Times found a number of well-timed bets on Polymarket involving the war in Iran, cryptocurrency, and other events that hint at insider trading.
In this interview, edited for length and clarity, Howell Jackson, James S. Reid, Jr., Professor of Law at Harvard Law School, discusses the appeal of prediction markets and the need for clear regulations.
How do prediction markets differ from gambling and sports betting?
