[Digital Today reporter Chi-gyu Hwang] The market around prediction markets, where people can bet on outcomes, continues to expand.

Once used only among some political enthusiasts, prediction markets have rapidly emerged as platforms with significant influence across U.S. politics and culture. On popular markets such as Polymarket and Kalshi, bets are placed on issues ranging from sports results and election outcomes to the wedding date of singer Taylor Swift.

More people are also finding opportunities to access prediction market data without using the platforms themselves. Major U.S. media companies are partnering with prediction market platforms through CNN, CNBC and The Wall Street Journal (WSJ) and integrating their data into news coverage.

Prediction markets began spreading in the 2010s as political betting increased, but remained far from mainstream. They entered the mainstream in one leap with the 2024 U.S. presidential election. Polymarket also sharply raised its profile in the process.

Polymarket, founded in 2020, provided odds on elections and showed that candidate Donald Trump held a larger advantage than conventional opinion polls at the time. The New York Times reported that Trump promoted this heavily on his social media platform Truth Social, sharing a graphic showing he had a 64 percent chance of winning.

The amount of money wagered on prediction market platforms is also growing. Piper Sandler data show that $12 billion was traded on Kalshi and Polymarket in December alone last year. That was an increase of more than 400 percent from the previous year.

Against this backdrop, valuations for prediction market platforms have also surged. Last year, Kalshi and Polymarket raised investment at valuations of $11 billion and $9 billion, respectively.

According to a recent New York Times report, prediction markets operate differently from traditional sports betting. They offer yes-or-no questions such as "Will Iran's regime collapse before 2027?" or "Will the Supreme Court rule in support of Trump's tariff policy?"

Users access the platforms to buy so-called contracts and bet whatever amount they want. These contracts trade between $0 and $1.

This reflects how the market views the likelihood of a specific event. A price of $0.20 shows a 20 percent chance, while $0.90 indicates a 90 percent chance. If the event happens, profits are paid out when the value of the contract matching the result rises to $1. If a user bought 100 contracts at $0.10, that person would make $100.

Unlike sports betting firms, prediction markets do not act as the "house" taking the opposite side of bets. They match buyers on both sides, charge transaction fees and generate revenue, the New York Times reported.

As the market grows, concerns are also rising that gambling will spread. A recent New York Times report said sports betting in the United States had been largely banned for decades until the Supreme Court ruled it unconstitutional in 2018, loosening regulations.

Prediction market platforms are also not free from allegations of manipulation and insider trading. Critics, including some members of Congress, have continued to voice concerns that people with non-public information could use prediction markets to make money.

In one case, hours before the U.S. military arrested Venezuelan President Nicolas Maduro, an anonymous Polymarket user bet tens of thousands of dollars on Maduro's removal. This fueled speculation that a government official used classified information about military plans to place the bet. The New York Times reported the person made $410,000 from it.

Supporters of prediction markets, of course, counter that platforms such as Polymarket and Kalshi are fundamentally different from gambling. They argue that by allowing people to bet on events happening around the world, they provide a valuable new source of information.

Tarek Mansour (타렉 만수르), a co-founder of Kalshi, said, "Prediction markets are the most effective way to aggregate information and the wisdom of crowds. When money is on the line, people don't lie. To avoid losing money, their prediction has to be right." He added, "Kalshi has systems to prevent insider trading, and a regulated exchange also operates in the United States."

Despite rising concerns, prediction market companies are aggressively pouring funds raised from investors into business expansion. They are also aggressive in marketing. Kalshi put up a flashy billboard in Times Square featuring election win-rate predictions, and during a recent live broadcast of the Golden Globe Awards, predictions for Polymarket on winners in best original song and other categories were introduced, the New York Times reported.