Prediction markets have garnered mixed reviews ever since bursting onto the mainstream following the election of President Donald Trump. For the most part, the public has a negative view of these services. And they’re now drawing criticism from a new source: the scientific community.
This is the stark departure from typical prediction-market discourse. Companies who offer them—Kalshi, Polymarket, ProphetX, etc.—are most often associated these days with sporting events. That holds true no matter where you are located. A search for the best sports betting sites in Florida will return results for prediction markets. Ditto if you live in New York. Or Maryland. And so on.
To that end, criticism of prediction markets has focused on their similarities to sports gambling, and how these companies provide that service without being licensed by any individual state. More recently, though, prediction markets have come under fire for offering the ability to invest in the outcomes of wars and global conflicts.
This follows their unofficial motto of being able to treat anything as a commodity. And apparently, this also extends to scientific trials on potentially life-saving drugs.
According to Rebecca Robbins of the New York Times, Kalshi and Polymarket, among others, now allow customers to “wager on whether the Food and Drug Administration will decide this year to approve medicines for cancers of the lung, breast, pancreas and blood.”
The downstream effects of these specific markets lend themselves, as ever, to an uptick in insider trading. We have seen the same thing happen when people invest in the outcome of global conflicts. Per reporting from CBS, certain suspected insider accounts made millions of dollars with a 98 percent success while wagering on actions taken by the United States in Iran sometimes only minutes before President Trump announced them.
Similar issues could bubble to the surface when it comes to betting on clinical trials
Experts Believe Prediction Markets ‘Erode’ Public Trust
At their best and most charitable, prediction markets offer a window into the potential something happens. To be sure, the industry’s adjacency to gambling despite operating as a commodities service can’t be detached from it. But from a brass-tacks perspective, prediction markets can reflect what’s most likely to happen ahead of an election, sporting event, the Oscars, etc.
When it comes to wagering on clinical trials, though, experts believe these markets will do real-world harm. As Robbins writes for the Times:
“Researchers, doctors and patients said that these prediction markets threaten to undermine the drug development process. They said they worry that study results could be compromised, insider trading could go undetected and public trust could be eroded…For example, the critics said, participants might drop out of an ongoing study, or trial administrators could unconsciously alter their behavior, because they were discouraged by a public prediction market suggesting their study was doomed to fail.”
This all says nothing of the potential for bad actors who might try to tilt the results of a study. They could compensate certain trial members to alter their own results. Or to drop out of the procedure.
Will Prediction Markets Ever Be Reined In?
Proponents of prediction markets will point out that insider trading and manipulation already happens, and the most extreme ill effects won’t happen at a particularly frequent scale. This is all true. But rest assured, the vulnerabilities associated with clinical trials will increase, even if ever so slightly, when it’s so easy to profit off the results and shift the markets on said studies.
More than that, perception is everything. It will not take massive amounts of evidence for people to now second-guess the results of these trials. If they believe the process isn’t pure, they may be less likely to use approved medication, even if it is actually safe. On the other end of the spectrum, there could, in theory, be effective cancer-combating medication that never goes to market because people believe the trial has been compromised.
This issue is not dissimilar to the public’s view of vaccinations. It doesn’t matter that an avalanche of data proves their efficacy and safety. People distrust their approval and dissemination for a variety of reasons, not the least of which is because there’s already an underlying distrust in the medical community among segments of the population.
The presence of prediction markets on upcoming FDA trials for cancer treatments only serve to increase skepticism. And it raises the question of when the companies offering these opportunities will be reined in.
Opponents aren’t going to like the answer. Prediction markets have run relatively unchecked since President Trump’s second election in 2024. There is no evidence to suggest this administration will apply pressure with stricter federal regulation.
If anything is going to change, it probably isn’t happening until after the 2028 election. And by then, who knows how prevalent prediction markets will be. It could be too late to truly rein them in.
One way or the other, however, we’re going to find out.
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