‘A Rigged and Dangerous Product’: The Wildest Week for Prediction Markets Yet | WIREDSkip to main contentMenuSECURITYPOLITICSTHE BIG STORYBUSINESSSCIENCECULTUREREVIEWSMenuAccountAccountNewslettersSecurityPoliticsThe Big StoryBusinessScienceCultureReviewsChevronMoreExpandThe Big InterviewMagazineEventsWIRED InsiderWIRED ConsultingNewslettersPodcastsVideoLivestreamsMerchSearchSearchKate KnibbsBusinessMar 20, 2026 5:07 PM‘A Rigged and Dangerous Product’: The Wildest Week for Prediction Markets YetAs the prediction market boom continues, backlash is growing, too, with Arizona filing criminal charges against Kalshi and public outcry after Polymarket traders threatened a journalist.Photograph: Kent Nishimura/Getty ImagesCommentLoaderSave StorySave this storyCommentLoaderSave StorySave this storyKalshi CEO Tarek Mansour posted a video on Wednesday of six men decked out in business casual doing push-ups on the sidewalk. “This is how Kalshi Q1 board meeting ended,” he wrote on X. The board members are laughing and smiling in the video after their impromptu cardio session, and the mood is jubilant. The next day, it became clear that the team had ample reason to celebrate: Kalshi had just raised $1 billion at a $22 billion valuation, making the company worth on paper roughly double what it was only a few months ago.The funding round represented a bright spot during one of the most turbulent weeks for the prediction market industry yet. In just the past five days, Nevada temporarily banned Kalshi by issuing a temporary restraining order and Arizona filed criminal charges accusing it of running an illegal gambling business; an Israeli reporter said that he received an avalanche of threats from Polymarket traders furious about how a story he wrote impacted their wagers; Polymarket scored a major deal with Major League Baseball, further entrenching itself in the world of professional sports; and US Senators introduced legislation to ban specific types of markets offered by the industry, including any involving “government actions, terrorism, war, assassination, and events where an individual knows or controls the outcome.” It is the latest in a series of bills intended to place guardrails around the prediction industry.Senator Chris Murphy, a cosponsor of the bill and one of the industry’s most outspoken critics, said in an interview with WIRED that prediction markets are “a rigged and dangerous product,” and represent “a brand-new source of mind-bending corruption.”"Kalshi already bans insider trading and markets directly tied to death and war,” says Kalshi spokesperson Elisabeth Diana. “As a US-based exchange, we support regulators and policymakers from both sides of the aisle in their efforts to keep these markets safe and responsible in America." Polymarket did not return requests for comment.Existing law gives the Commodity Futures Trading Commission, the agency that oversees prediction markets, the authority to ban offerings related to assassination, war, terrorism, and other subjects deemed contrary to the public interest. Some prediction markets already stay away from these categories. But not all of their users understand where exactly the lines are drawn, which created a messy situation when some assumed that a market on the fate of Iran’s supreme leader would result in a payout if he “left office” by getting killed.Meanwhile, Polymarket, which largely operates outside of the United States, offers plenty of war markets—but legislation is unlikely to impact these offerings. The platform is currently offering a market on whether Israeli Prime Minister Benjamin Netanyahu will be “out” by certain dates; someone recently wagered $177,000 that he would be out by March 31. Polymarket would likely resolve the market to “yes” and allow its bettors to profit if Netanyahu dies, just as it did when Khamenei was killed.One of the reasons Senator Murphy is so passionate about prediction markets is because he sees them as vectors for insider trading. The Israeli government, for example, has charged two of its citizens with leaking classified information by placing Polymarket bets tied to the war in Iran. The Connecticut lawmaker suspects that other trades related to the conflict may have been carried out by members of Trump’s inner circle who have advanced knowledge about military operations. “It's bone chilling to think that there are staffers inside the situation room that are pushing the United States into war, not because it's good for our security, but because they're going to make $100,000 off it,” he says.The Trump Administration denies that its staffers have engaged in insider trading. “The only special interest guiding the Trump Administration’s decision-making is the best interest of the American people,” says White House spokesperson Davis Ingle.As Murphy and other lawmakers continue to push for federal legislation, a parallel wave of state-level legal battles is beginning to shape how prediction markets can operate. A judge in Nevada just issued a temporary restraining order against Kalshi that could force the company to cease operations in the state, following a similar ban placed on Polymarket’s US arm. And the charges brought by Arizona earlier this week demonstrate that state authorities are now thinking of ways to act beyond cease-and-desist letters and civil enforcement actions.“These charges were filed to circumvent federal court and short-circuit the normal judicial process,” says Kalshi’s Diana.The charges brought in Arizona may end up being consequential, though they are misdemeanors. “The Arizona attorney general may have cracked the code,” says gaming attorney Daniel Wallach, who calls state criminal charges a potential “kryptonite” for Kalshi, since federal courts typically abstain from exercising their jurisdiction while there are ongoing criminal proceedings. Wallach suspects that other states may follow suit.Kalshi is taking a proactive approach to try to prevent that from happening. On Friday the company filed a motion in Ohio to block the state’s attorney general from pursuing civil and criminal charges while it appeals a ruling that found it must comply with state gambling laws. “These charges are meritless, and we look forward to fighting them in court,” Diana says.For people following along with all the drama, this week also brought a new gathering place to keep up with prediction market news—Polymarket is opening a pop-up bar in Washington, D.C. for the weekend.CommentsBack to topTriangleYou Might Also LikeIn your inbox: Will Knight's AI Lab explores advances in AI‘Flying cars’ will take off this summerBig Story: Inside OpenAI’s race to catch up to Claude CodeHow ‘Handala’ became the face of Iran’s hacker counterattacksListen: Nvidia’s ‘Super Bowl of AI,’ and Tesla disappointsKate Knibbs is a senior writer at WIRED. She covers prediction markets, the future of media, and how AI is changing the internet. She’s also interested in digital grey markets and regulatory battles over new tech. She is based in Chicago. Send tips to [email protected], or reach her on Signal ... Read MoreSenior WriterXTopicsprediction marketsKalshiPolymarketsenateRegulationRead MoreKalshi Has Been Temporarily Banned in NevadaA judge ordered Kalshi to immediately halt sports and election contracts in the state, intensifying a growing regulatory battle over prediction markets.Kate KnibbsThe War Over Prediction Markets Is Just Getting StartedPrediction markets like Kalshi and Polymarket are booming, and so is a fight among regulators, lawmakers, and advocates over their legality.Kate KnibbsOpenAI Fires an Employee for Prediction Market Insider TradingPrediction markets like Polymarket and Kalshi are big business, and some Big Tech employees are testing boundaries by making trades based on insider knowledge.Kate KnibbsKalshi Suspended a California Politician and a YouTuber for Insider TradingLeading prediction market Kalshi has revealed details of two recent insider trading cases it flagged to authorities, giving a rare look at how the platform enforces its policies.Kate KnibbsSupreme Court Rules Most of Donald Trump’s Tariffs Are IllegalIn a 6-3 ruling, justices upended the Trump administration’s signature economic policy, potentially putting the US government on the hook for at least $175 billion in tariff refunds.Zeyi YangTrump Administration Won’t Rule Out Further Action Against AnthropicThe White House is preparing an executive order targeting the AI startup, even as its earlier actions against the company face a major test in court.Paresh DaveWall Street Is Already Betting on Prediction MarketsAs the legal war over how to regulate prediction markets rages on, financial institutions are embracing the industry anyway.Kate KnibbsAnthropic Sues Department of Defense Over Supply-Chain-Risk DesignationThe Claude chatbot developer says the Trump administration overstepped by escalating a contract dispute into a federal ban on the company’s technology.Paresh DaveAnthropic Hits Back After US Military Labels It a ‘Supply Chain Risk’Anthropic says it would be “legally unsound” for the Pentagon to blacklist its technology after talks over military use of its artificial intelligence models broke down.Maxwell ZeffArea Man Accidentally Hacks 6,700 Camera-Enabled Robot VacuumsPlus: The top US cyber agency falls into shambles, AI models develop an upsetting penchant for nuclear weapons, and more.Andy GreenbergThey Bet Against Trump’s Tariffs. Now They Stand to Make MillionsAfter the US Supreme Court struck down President Donald Trump’s tariff regime, investment firms are in line for a whopping return on a niche trade.Joel KhaliliTrump Moves to Ban Anthropic From the US GovernmentPresident Donald Trump’s sudden order comes after the Defense Department pressured Anthropic to drop restrictions on how its AI can be used by the military.Will KnightWIRED is obsessed with what comes next. Through rigorous investigations and game-changing reporting, we tell stories that don’t just reflect the moment—they help create it. When you look back in 10, 20, even 50 years, WIRED will be the publication that led the story of the present, mapped the people, products, and ideas defining it, and explained how those forces forged the future. 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The tumultuous week surrounding prediction markets, as highlighted by Kate Knibbs, represents a significant escalation in regulatory scrutiny and legal challenges within the industry. Kalshi, a prominent player, faced immediate setbacks with temporary bans in Nevada and criminal charges in Arizona, accusing the company of operating an illegal gambling business. Simultaneously, Polymarket experienced a major coup with a deal to operate prediction markets for Major League Baseball, further solidifying its position within the sports betting landscape. Adding to the complexity, US Senators introduced legislation aiming to restrict the types of markets offered—specifically targeting events involving government actions, terrorism, war, assassination, and events where an individual controls the outcome—reflecting a growing concern regarding potential insider trading and misuse of information. Senator Chris Murphy, a vocal critic of prediction markets, characterized them as “a rigged and dangerous product,” citing the risk of facilitating insider trading and potentially influencing critical decisions within government.

Kalshi’s response focused on its commitment to regulatory compliance, emphasizing its support for responsible market practices. However, the situation rapidly deteriorated as Polymarket continued to operate largely outside US jurisdiction, offering markets for events like the potential “out” of Israeli Prime Minister Benjamin Netanyahu, generating significant betting activity—for example, a wager of $177,000 on his departure by March 31st. This underscored the challenges of enforcement given Polymarket’s international reach. The legal battles gained further complexity with a judge issuing a temporary restraining order against Kalshi in Nevada, potentially forcing a halt to operations in the state, and with Arizona’s filing of misdemeanor charges against the company, a move potentially deemed “kryptonite” by gaming attorney Daniel Wallach due to the potential for federal courts to abstain from jurisdiction during ongoing criminal proceedings. Kalshi proactively filed a motion to block these charges, demonstrating a defensive strategy.

The escalating legal drama has resulted in a parallel shift involving state-level actions, mirroring federal efforts. The immediate impact of these regulatory actions, particularly those in Arizona, presented a significant obstacle for Kalshi, potentially influencing future regulatory approaches. The situation highlights the inherent tension between the rapid growth of prediction markets and the existing legal frameworks designed to govern traditional gambling and financial markets. The proliferation of these markets presents novel challenges for regulators seeking to balance innovation with safeguards against potential misuse and corruption, an area that Senator Murphy believes underscores a fundamental concern regarding “mind-bending corruption," and the need to establish robust guardrails.