But there's an important caveat: only $4,512 has been cumulatively wagered, underscoring the current limitations of prediction markets, hamstrung by regulations when they operate in the U.S. and by the clunkiness of crypto when they don't.
On the question "SBF guilty of all charges?" "yes" contracts were trading at 59 cents Thursday morning – which equates to traders seeing a 59% chance he will be – as the judge began reading out instructions to the jury after a month of hearing testimony and lawyers' arguments in the case. Each contract pays out $1 if the prediction turns out to be true, and zilch if it is false. "No" contracts were priced at 41 cents.
The low volume could be read as an indication that crypto traders have moved on from the saga of Bankman-Fried, who stands accused of pilfering money that belonged to customers of his now-bankrupt cryptocurrency exchange FTX.
After all, there are larger markets on Polymarket – the biggest, which concerns the outcome of the 2024 U.S. presidential election, had $5 million of bets outstanding so far Thursday.
But there are other factors limiting participation.
For starters, U.S. residents are not allowed to trade on Polymarket under a 2022 settlement with the Commodity Futures Trading Commission (CFTC), so the platform is locked out of the world's largest economy. And traders in other countries can't bet in their local currencies, but must first buy and then deposit one of several cryptocurrencies (ETH, USDC or USDT), filtering out the "normies."
But Polymarket at least enjoys the freedom to host bets on spicy topics like the outcome of a criminal trial. The two mainstream U.S. prediction markets, which settle their bets in dollars, are, by comparison, straitjacketed.
Kalshi, the first and only federally regulated U.S. exchange devoted to trading on event outcomes, is required to certify compliance and/or seek approval from the CFTC for every market it lists. On Wednesday, the company sued the regulator for denying its application to list a market on the relatively anodyne question of which party will control each chamber of the U.S. Congress after an election.
The situation makes it difficult to say how powerful prediction markets could potentially be in helping to forecast significant events. Theoretically, because traders are putting their money where their mouths are, they are at a minimum honestly expressing their beliefs about what will happen, in contrast to media pundits with no skin in the game. But the limited lucrativeness and obstacles to onboarding likely constrain the number of people with real expertise on a given topic who are able or willing to participate.
CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk offers all employees above a certain salary threshold, including journalists, stock options in the Bullish group as part of their compensation.