Many are talking about the wild bets being placed on prediction markets like Polymarket and Kalshi nowadays. Too few are thinking about the national security risks these markets present. Alex Goldenberg and I have a new piece out in the @WSJ that seeks to bring some of these concerns top of mind. We highlight how the same structural features that make these markets efficient prediction tools also make them vulnerable to abuse and manipulation—and to the transmission of sensitive signals to foreign adversaries. We also highlight how bad actors could manipulate these markets to cause wider panic. We don't suggest that governments should ban prediction markets. Far from it. But we do offer three concrete recommendations for the United States and allied governments to implement moving forward. 1. @FinCENnews should identify red flags in prediction-market activity and direct financial institutions to file suspicious-activity reports on high-conviction, low-probability bets on sensitive geopolitical events—particularly when there is an indication that the account holder has access to sensitive government information. 2. @CFTC and any relevant state authorities should require prediction markets to develop surveillance protocols that detect trading patterns consistent with the exploitation of classified information or the coordinated manipulation of event contracts. 3. The U.S. should coordinate with intelligence partners to develop shared approaches for detecting insider trading and manipulation by adversary intelligence services. My DMs are open if you have thoughts. Thanks to @WSJopinion for running our piece, and to @ColeMurphy117 for the helpful edits! wsj.com/opinion/gambli…
