The Youth Lab

Prediction markets aren’t new. They began in 1988 as a University of Iowa academic experiment.

The mechanic is deliberately simple. Two users take opposite sides of a yes-or-no question. You buy “yes,” someone else buys “no,” priced between 0 and 100 cents. The price is the probability: a 70-cent “yes” means the crowd thinks there’s a 70% chance. If you’re right, your share pays a dollar. If you’re wrong, you lose your stake. Unlike a traditional bookie, you’re not betting against the house, you’re betting against another user who thinks the opposite.

What’s driving the boom isn’t civic curiosity, it’s financial nihilism. The term, popularised by writer Kyla Scanlon in the New York Times, describes a generation’s loss of faith in traditional paths to wealth. New data shows it has gone mainstream. Northwestern Mutual’s 2026 Planning & Progress Study of over 4,300 adults found that 73% of Americans who feel financially behind now believe high-risk speculative investments will help them reach their goals more effectively than traditional methods. Nearly one in three Gen Z adults are already using or considering crypto, sports betting and prediction markets, and 80% of those young investors are convinced these tools offer a faster path to wealth than the conventional playbook.

The housing data provides some clues as to why. The US median age of a first-time home buyer hit 40 last year, the oldest since records began in 1981, while Gen Z made up just 4% of buyers. The Guardian’s recent wealth investigation found the poorest millennials in service-sector roles often have negative net worth at 35, something that was rare for boomers at the same age. As Scanlon puts it: “people feel like they can’t get ahead, so they might as well go bet on all of this stuff.” The casino in your pocket stops looking like gambling and starts looking like a strategy.

Three things you need to know about how prediction markets actually work.

1. Sold as anti-establishment, yet legitimised by the establishment. Polymarket CEO Shayne Coplan calls his platform “the most accurate thing we have as mankind right now, until someone else creates some sort of super crystal ball.” That belief in prediction markets as a new source of truth is increasingly intersecting with politics: Donald Trump Jr. is both a paid strategic advisor to Kalshi and, since August 2025, an investor and advisory board member at Polymarket through 1789 Capital, while the Trump family’s media company is now preparing to launch its own rival platform, Truth Predict.

2. The “democratisation of finance” pitch collapses under its own data. Kalshi frames trading as a way to “monetise your knowledge, the same way an Uber driver monetises their free time.” Yet, according to The More Perfect Union investigation, only 0.04% of traders capture nearly 70% of the profits on these platforms. Insider trading isn’t a bug, it’s the model. Dr. Robin Hanson, the academic godfather of modern prediction markets says it openly: “If the main purpose is to get more accurate prices, then basically we want as many insiders as we could. Insiders is great. Please, insider trading.” In January 2026, an anonymous Polymarket trader turned $34,000 into $400,000 betting on the timing of Venezuelan President Maduro’s removal, placing a final bet less than an hour before President Trump ordered the operation. As Senator Chris Murphy puts it: “All of the bets on government action are rigged because somebody in government knows the outcome.”

3. Mainstream media working in partnership validates it in culture. Google now integrates Kalshi odds into search results. The Wall Street Journal, CNN and CNBC have all signed partnerships. So a ‘3% chance of Jesus returning before 2027’ sits next to election odds, alongside markets on whether the US will invade a country, each carrying the authority of “what the market thinks.”