Original｜Odaily Planet Daily (@OdailyChina)

Author｜Wenser (@wenser2010)

Recently, Polymarket completed a $400 million financing, increasing its valuation to $15 billion. According to statistics, the nominal trading volume of the prediction market is expected to reach $25.7 billion by March 2026, a 10.6% month-on-month increase compared to $23.2 billion in February 2026; a year ago, this number was only $8.7 billion. As the broader cryptocurrency market fluctuates with macroeconomic factors and regional conflicts, the prediction market has become the most prominent sector in the crypto sphere. With the trading volume in the prediction market still maintaining rapid growth, combined with Odaily's previous publication "Why Prediction Markets Are Not Gambling Platforms", it may be time to discuss the unique value of prediction markets to set the record straight.

The Unique Value of Prediction Markets: Entertainment Consumption, Insurance Value, Risk Hedging, Truth Machines

The inspiration for viewing prediction markets from the perspective of "non-gambling value" came from a post published yesterday by Bitwise advisor Jeff Park titled “Misunderstandings Most People Have About Prediction Markets”.

In this lengthy article, Jeff Park pointed out the similarities and differences between prediction markets and stock selections or poker games, affirming the entertainment consumption attributes, financial innovation attributes, and precise information attributes of prediction markets.

If the previous article “Why Prediction Markets Are Not Gambling Platforms” provided a detailed comparative analysis of prediction markets and gambling platforms from the perspectives of price mechanisms, usage differences, user structure, and regulatory logic, then today we aim to clarify its diversity value using this article.

Entertainment Consumption Stimulates Economic Development

In "The Theory of the Leisure Class," American economist Thorstein Veblen argues that the essence of the leisure class is not merely enjoying leisure but using freedom from labor and the expenditure of wealth as a symbolic system to gain prestige. The so-called alienation of individuals through capitalism is completed within various types of consumption.

Today, the value of consumption is also evident.

In a modern society with clear division of labor, consumption is a necessary process of value exchange, and entertainment itself is a form of economic consumption, one of the pursuits that distinguish humans from machines. Specifically for the sports industry, the overall value of the industry is around $1 trillion; for instance, the sports brand NIKE earns profits by controlling supply chains, manufacturing goods, and completing sales on one hand, while on the other, they shape the sports industry through sponsorships, endorsements, and sports events. Based on the actual performances of various sports events and athletes, betting on prediction markets is also a form of entertainment that stimulates mental consumption, influencing the attention of both prediction market users and the general public towards sports events, sports brand consumption, and spending on mental entertainment.

Limited Insurance Guarantees Personal Interests

As Jeff Park mentioned in “Misunderstandings Most People Have About Prediction Markets”: “The value of derivatives lies in allowing risk transfer, which means that speculators belong to the side of insurance institutions (Odaily Planet Daily Note: that is, the insured transfers uncertain risks to speculators bearing risks in exchange for certain costs). However, the reality is that government interventions distort the true market prices of insurance holders, leading to insurance default behavior. In the absence of government intervention, no other methods can achieve risk transfer in a transparent and open market.”

In this regard, two significant advantages of prediction markets over conventional derivatives emerge: first, the event precision of prediction markets; second, the limited timeframe of prediction markets. The former means prediction markets are binary and defined propositions, with no ambiguous loss estimation space, and the settlement conditions are entirely transparent and verifiable; the latter clarifies that the outcomes of prediction markets are not artificially set contract deadlines.

Moreover, as Jeff Yass, founder of SIG (Kalshi's official market-making institution), mentioned in a previous interview “to some extent, prediction markets act as a 'new-style insurance.' In hurricane-prone Florida, where there are insurance price caps, users can utilize prediction market bets on events like 'Will wind speeds in the area exceed 80 miles per hour?' for reverse insurance. This channel also eliminates the complex processes of claims, operations, and marketing costs in traditional insurance.”

In summary, prediction markets can provide participants with cost-clarifying and fact-following protective value based on clearly defined betting events.

Risk Hedging to Respond to Crisis Events

Recently, Kalshi announced the official launch of a 24/7 commodities market, offering price prediction services for commodities including crude oil, diesel, gold, silver, copper, lithium, natural gas, sugar, soybeans, wheat, corn, coffee, cocoa, and live cattle.

Citadel Securities President Jim Esposito also recently stated at the Semafor World Economic Forum in Washington that the company may provide liquidity for prediction markets, but compared to sports events, it places more emphasis on the value of prediction markets in hedging geopolitical risks. Using the U.S. mid-term elections in November as an example, he stated that this event will be "one of the biggest risks facing investors' portfolios," and that prediction markets will become a new tool for institutions to hedge risks.

From this perspective, investors can hedge risks by holding relevant "NO" chips in prediction markets, allowing them to respond more flexibly to price fluctuations of various commodities and changes in economic conditions. Given the skyrocketing trading volume in the political situation sector since the onset of the U.S.-Iran conflict on February 28, prediction markets have already served as a risk hedging tool for individuals and institutions.

Truth Revelation to Counter Media Bias

Aside from the above values, from the perspective of information pricing, the role of prediction markets in addressing public media agenda-setting and media bias should not be overlooked.

American writer and media editor Ashley Rindsberg detailed the negative impact of The New York Times on many historical events in his book "The Gray Lady Winked: How the New York Times Misreporting, Distortion, and Fabrication Changed History," recounting several institutional failures over the past few decades, including the suppression of the Stalin famine in Durand Cuba, the sudden rise of Castro, Iraq's weapons of mass destruction, and the systematic softening of Hitler's rise. In these historical events, The New York Times obscured the pursuit of truth regarding events due to information channel, ideological, and institutional self-protection purposes, ultimately resulting in a series of negative consequences.

Although many of the event determination rules in prediction markets currently still heavily rely on media, with the development of industry platforms, the acceleration of information transmission speed, and the expansion of the breadth of event contract dissemination, prediction markets are expected to become real truth machines to counter the series of biases arising from reasons like personal preferences of media workers, workflows, ideologies, and platform interests.

Previously, Crypto.com COO Ericnode stated that prediction markets could become a trillion-dollar market, as users have a vested interest, and their accuracy may be 30% higher than surveys.

In the not-too-distant future, the roles, functions, and achievable values prediction markets can play will far exceed our previous imagination.

Recommended Reading:

Misunderstandings Most People Have About Prediction Markets

Why Prediction Markets Are Not Gambling Platforms

SIG Founder Jeff Yass Discusses the Value of Prediction Markets

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