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Looking at just the odds isn’t enough. How traders gain an edge on prediction markets

“For the Super Bowl I bought an antenna, so that I could watch the commercials,” he said, noting online streaming services could face lags.

Between Polymarket and Kalshi alone, there can be more than 100,000 active markets.

Kalshi, for example, recently launched a “Pro” trading terminal, which it says makes it easier to place trades faster and view data about individual markets. 

He usually speculates on the 15-minute cryptocurrency contracts, which ask if Bitcoin prices will go up or down in a quarter hour. 

Jay Malavia is a co-founder and CEO at Kairos, an Andreessen Horowitz-backed prediction market trading terminal that allows speculators to trade across various exchanges, including Kalshi and Polymarket.

Introduction: The Rebranding of Gambling

trading event contracts

retail liquidity provider contributing to a truth machine

The theory is that by allowing people to bet on anything from congressional control to the next Federal Reserve decision, the information fed back will be far more accurate than traditional polling.

The Fight for Election and Sports Contracts

event contracts

They also tried to ban election contracts, arguing quite sensibly that approving them would effectively turn the commodities regulator into an election cop.

If you allow people to trade contracts on election outcomes, the CFTC becomes responsible for making sure no one is manipulating those outcomes.

The "Truth Machine"

The core argument in favor of prediction markets is that they provide more accurate information than traditional polling or expert analysis. The idea is that when people have to back their opinions with their own money, they strip away their biases. They bet on what they think will happen, not what they hope will happen. The theory dictates that the market absorbs all available information, and the contract price represents an objective probability of an event occurring. It is the efficient-market hypothesis applied to everything—not just stock prices, but elections, wars, weather, and apparently,

Prediction markets are often quite small and thinly traded, it doesn't take too much money to move the odds. And if the media treats those odds as objective truth, then buying the odds becomes a highly efficient way of buying positive press coverage.

A platform called InTrade.

Financial Nihilism and the Rise of the Quants

"financial nihilism"

Bitcoin is up about 25% over five years, which sounds okay until you realize that a risk-free money market fund paying 4% would have gotten you most of the way there. In fact, your dad achieved triple the return of Bitcoin over the last five years simply using his index fund

At least with prediction markets, you can watch the sports you've bet on

quantitative trading firms like Susquehanna and DRW—firms that normally act as market makers on major stock exchanges—are now setting up dedicated prediction market desks.

Sharks, Fish, and the Structural Disadvantage

unlike trading a meme stock, where the price is just whatever the next person is willing to pay, an event contract eventually resolves to either true or false. There is a definitive, objective answer.

A Structural Edge: Peer-to-Peer vs. Traditional Sportsbooks

If you walk into a sportsbook or open a DraftKings account and start winning consistently, the sportsbook will routinely reduce your bet size, restrict which markets you can access, or simply close your account entirely. This is standard industry practice.

Prediction markets don't do this because the platform is never your counterparty. It is a peer-to-peer exchange. It simply matches buyers and sellers and takes a small transaction fee. If you are winning, the platform doesn't care; someone on the other side of your trade is losing, and the platform collects its fee either way. So, in that sense, prediction markets are structurally fairer than traditional sportsbooks.

DraftKings, FanDuel, and Fanatics have all quietly launched their own prediction market products.

Insider Trading: A Feature, Not a Bug

In prediction markets, insider trading is often described by proponents as a feature, not a bug. That's right—a feature.

If we look at recent events, this feature appears to be working remarkably well.

When you ask the operators and advocates of these markets about this sort of activity, they are surprisingly relaxed. They argue that insider trading is actually a net positive. The logic is that the insider brings valuable, otherwise hidden information to the market, which immediately makes the contract price more accurate. The market absorbs the leak, the odds adjust, and society gets a more accurate forecast. This, they claim, is the truth machine working exactly as intended.

Conclusion: A Charted Way to Lose Money

The reality: it is a financial product that is far too sophisticated to be called gambling, yet far too simple to be called investing.