By Andrew Miller
Prediction markets like Polymarket and Kalshi may have a hidden benefit.
Despite their combined volume of $24 billion in April, not many of their users profit. For example, 2.9 people on Kalshi lost money for every one who made anything. Those aren’t great odds.
So, don’t bet on making it big on these platforms any time soon. Instead, focus on what the trends are telling you.
Aside from popular betting subjects like sports and pop culture, the most useful data comes from the market’s predictions on things that actually move the economy. Institutional traders, economists, and hedge funds are clustering around Fed decisions, inflation data, employment figures, and policy outcomes. They’re putting real money behind their reads.
Bernstein expects sports’ share of total prediction market volume to be cut in half by 2030, as business, economic, and political contracts take over.
That’s significant. Not because you can now compete with Wall Street to guess the next rate hike and picture yourself as Gordon Gekko, but because of what the data reflects.
Federal Reserve economists have argued that macroeconomic markets like Kalshi provide high-frequency, continuously updated forecasting data. It’s valuable enough for researchers and policymakers to take seriously.
It’s not a committee’s opinion or a model that hasn’t been updated since Q3. It’s an evolving number that reflects what thousands of people with real money on the line actually believe will happen.
In several well-documented cases, most notably the 2024 presidential election, prediction markets called the outcome more accurately than traditional polls and expert forecasts. They’re not infallible, but they’re incentivized to be honest in a way that a pundit on TV is not.
More relevant to your business: when the market’s consensus says no rate hike is coming, that’s a signal. It means the people watching the economy most closely aren’t bracing for pain. Additionally, consumers who aren’t bracing for pain tend to keep spending. That’s good for you.
User sentiment on prediction markets won’t tell you what to do. But it can tell you whether the people with the most skin in the game are feeling good about the economy or quietly hedging against something worse.
The smart money isn’t just betting on the economy, it’s reading those bets to make decisions. Hedge funds and institutional traders treat prediction market data the way other investors treat earnings reports: as a signal worth acting on.
Small business owners can do the same thing without placing a single bet. This is a market projected to hit $1 trillion by 2030. The data trends it produces on rates, inflation, and economic outlook are only going to get sharper as more money flows in.
Ignoring it is like ignoring your industry’s trade data because you didn’t compile it yourself. The information is there. It’s free. And it’s being updated in real time by people with something to lose if they’re wrong.
P.S. You don’t need to place a bet to benefit from prediction markets. The same goes for funding. Signet can get your business funded in as little as 24 hours, no guesswork required. Let’s talk.