On Sunday, Polymarket betters predicted with near 90% accuracy that Eric Swalwell would drop out of the California Gubernatorial primary hours before he did. While allegations were mounted, the odds of the bet displayed on the website increased.
It's one example of numerous bets of serious geopolitical events where people have placed wagers on the outcome of anything. Essentially, anonymous betters stand to make money from correctly predicting how an event will play out, from a sports game to the time frame of a peace deal between the U.S. and Iran.
In fact, bets placed on the U.S. and Iran crisis are increasing, some specific outcomes reaching volumes up to $39 million.
Raihan Alam is a doctoral candidate at UCSD studying moral psychology and focusing on the relationship between Congress and the stock market. Prediction markets draw stark similarities with stock markets, he says.
“What we found is that when people learn about members of Congress making really outrageous sums from stock trades, it reduces congressional legitimacy,and it also affects [people’s] willingness to comply with the law," Alam explained.
Because the bets are placed anonymously, Alam argues that members of Congress could benefit financially from their own decisions, something that results in both moral degradation of the office and is in direct opposition to being a public servant.
“People don’t like it when members of Congress or politicians’ money are tied to their political actions, because that means they’re not acting for the common good,” Alam explained. “I would say politicians shouldn’t be even allowed to bet in these markets.”
But for the general public, the markets could provide something else: information.
A disclosure on the Middle East betting sub-category on Polymarket reads, “The promise of prediction markets is to harness the wisdom of the crowd to create accurate, unbiased forecasts for the most important events to society. That ability is particularly invaluable in gut-wrenching times like today. After discussing with those directly affected by the attacks, who had dozens of questions, we realized that prediction markets could give them the answers they needed in ways TV news and 𝕏 could not.”
In other words, prediction markets using the stakes of money could provide more accurate outcomes for people looking to make important decisions.
Polymarket and other apps also provide sports betting options and a variety of other bets.
For Alam, a variety of betting options pose a different risk.
“There are so many avenues to be upset about things not working out in your way and in your favor,” he said. “We know for things like NBA players who talk about how they’re getting all these death threats because people blew their savings on them losing a match.”
