On June 11th, Kalshi, the prediction market platform, caught the zeitgeist with an ad featuring Timothée Chalamet, the New York Knicks fan. But at a recent festival for prediction markets, attendees were more concerned about the greater risks these platforms face.

Dan Schwarz, CEO of FutureSearch, argued that while they waited to enter the market, problems such as insider trading and sports contracts potentially fuelling addiction loom large. To overcome these issues, he suggested these platforms would need to deliver a lot more value than they currently do.

At the Manifest festival in Berkeley, California, attendees huddled over laptops and discussed everything from AI safety to optimizing one’s sex life. However, sports betting was notably absent from sessions on mastering market strategies around world events and politics. David Bensoussan made a $1.6 million profit but questioned the correlation between prediction markets’ truth-seeking mechanism and sports.

Despite Kalshi and Polymarket’s efforts to position themselves as not like traditional sports betting, researchers highlighted their gambling-like design, raising public health concerns. Legal challenges from insider trading and state-level lawsuits are painting a less rosy picture for the future of these markets.

The philosophers behind prediction markets now face a choice: lobby with Democrats or completely remove sports betting to secure their place in what they see as a tool for greater good, rather than just a form of gambling.