Prediction markets are not just for betting. They are becoming a valuable source of predictive data for enterprises, as shown by new partnerships with media giants like CNN and CNBC. This dual-purpose model, functioning as both a consumer product and a B2B data service, creates two distinct revenue streams.

New platforms frame betting on future events as sophisticated 'trading,' akin to stock markets. This rebranding as 'prediction markets' helps them bypass traditional gambling regulations and attract users who might otherwise shun betting, positioning it as an intellectual or financial activity rather than a game of chance.

Speculation is often maligned as mere gambling, but it is a critical component for price discovery, liquidity, and risk transfer in any healthy financial market. Without speculators, markets would be inefficient. Prediction markets are an explicit tool to harness this power for accurate forecasting.

The primary value for the vast majority of prediction market users isn't trading but consuming the market's data as a form of real-time, aggregated news. This reframes the user base as a media audience of 'lurkers' rather than a community of active traders.

Prediction markets like Polymarket operate in a regulatory gray area where traditional insider trading laws don't apply. This creates a loophole for employees to monetize confidential information (e.g., product release dates) through bets, effectively leaking corporate secrets and creating a new espionage risk for companies.

Foreign adversaries, particularly from the Middle East and China, are weaponizing political prediction markets. By funding ads that display skewed betting odds, they aim to create a false sense of momentum or inevitability for a candidate, representing a novel and subtle form of election interference designed to sow division.

The market for financial forecasts is driven by a psychological need to reduce uncertainty, not a demand for accuracy. Pundits who offer confident, black-and-white predictions thrive because they soothe this anxiety. This is why the industry persists despite a terrible track record; it's selling a feeling, not a result.

Innovation doesn't happen without risk-taking. What we call speculation is the essential fuel that allows groundbreaking ideas, like those of Elon Musk, to get funded and developed. While dangerous, attempting to eliminate speculative bubbles entirely would also stifle world-changing progress.

Extreme conviction in prediction markets may not be just speculation. It could signal bets being placed by insiders with proprietary knowledge, such as developers working on AI models or administrators of the leaderboards themselves. This makes these markets a potential source of leaked alpha on who is truly ahead.