Why Everyone’s Betting ‘Yes’ or ‘No’

...and how a niche idea just ran up $10B in November trading volume.

Trading Lessons
December 03, 2025

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Poll of the Day:

Would you trade your predictions on real-world events?

Prediction markets used to live on the fringes — half finance experiment, half internet curiosity. But something changed this year. Activity exploded, media coverage shifted, regulators weighed in, and suddenly these $0–$1 contracts are showing up everywhere from Robinhood dashboards to CNN’s election graphics.

Underneath the noise is a simple idea:
A contract priced at $0.73 implies a 73% chance that something will happen.
If it does, the contract becomes $1. If not, it goes to zero.

Clean. Quantifiable. Crowdsourced.

Now add millions of traders, billions of dollars in volume, and a media industry hungry for real-time signals — and you get one of the most interesting financial trends of the decade.

Let’s break down what’s driving the boom.

THE MECHANICS:

1) Tiny Contracts, Big Implications

Prediction markets run on binary contracts.
They’re small in size — often $1 payouts — but powerful in what they represent.

If “Will gold beat bitcoin this year?” trades at 80 cents, the market is effectively saying:

“We think the odds are 80%.”

The price is the probability.

And because these contracts trade all day, that probability updates instantly whenever new information hits — long before polls, headlines, or experts catch up.

People can enter, exit, use limit orders, or sell positions before the event happens — more or less the same workflow as a normal exchange.

Some platforms charge tiny fees (Kalshi), others make their money on spreads (Polymarket). Some even pay interest on idle balances, turning your unused funds into something like a mini money-market account.

It’s simple… and then it gets complicated.

THE BEHAVIORAL BOOM:

2) Why Bank of America Is Nervous

While prediction markets gain momentum, sports betting has exploded too — and the overlap between “finance” and “entertainment” is starting to blur.

Bank of America’s credit analysts summed it up in one line:
“Easy access and gamified interfaces encourage frequent and impulsive wagers.”

Translation:
When speculation becomes frictionless, the risks pile up fast.

Their research highlights two worrying trends:

A) Personal stress

Younger and lower-income consumers show the highest rates of financial hardship tied to online betting. That puts lenders like Bread Financial, Upstart, and OneMain in the blast zone.

45% of sports bettors don’t have 3–6 months of savings — the standard cushion. Translation: a big slice of this boom is coming from financially thin users.

B) Portfolio stress

When millions of people all speculate at scale, lenders face risks they’ve never modeled before.
Underwriting wasn’t built for 24/7 digital wagers.

It’s not just a markets story anymore — it’s a credit story.

Sports markets on Kalshi have gone vertical — nearly $800M traded weekly, far eclipsing the 2024 election spike. That’s great for volume… and exactly the behavior BofA flagged as a credit-risk hotspot.

THE PLATFORM WARS:

3) Robinhood Wants the Front Row

If banks see risk, brokerages see opportunity.

Robinhood’s prediction-market business is now its fastest-growing revenue line — and the company is building infrastructure to match. Its new joint venture with Susquehanna includes:

A futures and derivatives exchange
A clearinghouse
A 90% stake in MIAXdx, a derivatives venue once tied to FTX

Just one year after launch:

9 billion contracts have traded
1 million+ customers have participated

Prediction markets have gone from hobby to high-volume pipeline. And they’re no longer just a “product” — they’re becoming an ecosystem.

THE MEDIA MOMENT:

4) CNN Puts Prediction Markets on Prime Time

Perhaps the biggest shift is happening in newsrooms.

CNN just partnered with Kalshi to integrate real-time market probabilities into its on-air reporting — giving viewers a data layer that polling can’t match.

This comes during a record streak for the industry:

Kalshi + Polymarket topped $10B in combined monthly volume
Kalshi alone jumped from $4.4B → $5.8B in a month

A niche tool has officially gone mainstream.

Polymarket nearly doubled monthly actives in one month — 246k → 478k, with 38k+ new markets launched in October alone. More users, more markets, more liquidity.

Why does this matter?
Because the media’s job is to frame events.
When that framing includes “the market thinks this has a 63% chance of happening”, people interpret news differently.

SO…

What Are We Really Seeing?

Prediction markets sit at the crossroads of:

Crowdsourced forecasting
Speculation
Behavioral finance
Media narratives
Regulation
Retail risk
Institutional liquidity

They update instantly.
They quantify sentiment.
They reveal expectation shifts before traditional analysis catches on.

Whether you use them or not, prediction markets are becoming one of the most interesting indicators of how people interpret the world — economically, politically, and socially.

THE TAKEAWAY:

Prediction markets aren’t replacing polls, pundits, or traditional models.
But they are giving us something new:

A live, financial readout of collective expectations.

Ten years ago, this was a niche curiosity.
Today, it’s a media tool, a trading product, a credit risk, and a cultural signal — all at once.

The boom isn’t just about money.
It’s about information:
Who has it, how fast it moves, and how markets convert it into probabilities the rest of us can see.

LESSON OF THE DAY:

Binary Contract

A binary option is a simple yes/no bet.

You either get a fixed payout if you’re right or lose your entire stake if you’re wrong. There’s no partial win, no sliding payout — it’s all or nothing.

1) The trade is settled at expiration.
If the event happens → you get the payout.
If it doesn’t → you lose your full investment.
You can’t own the underlying asset with binaries — you’re only betting on the outcome.

2) Regulators don’t love them… but U.S.-regulated binaries do exist — but not many.
Nadex and some exchanges offer legal, standardized binaries.
However, most global markets (EU, UK, Canada, Australia) have banned binary options due to fraud.

3) They’re popular because they seem simple.
“Will price be above X at time Y?”
That simplicity makes binaries appealing to beginners — but also extremely risky.

5) Risk is binary too.
Here’s the part most traders miss:

A binary price is the market’s probability.

If a contract trades at $0.80, the market is saying there’s an 80% implied chance the event will happen.
If it trades at $0.22, odds are priced at 22%.

But the structure is unforgiving.
You always know your max loss (it’s the cost of the contract).
You always know your max gain (the fixed payout).
This makes binaries feel safe, even though they’re not.

The critical takeaway:
Binary markets aren’t about guessing right — they’re about understanding probability vs. price.
A contract trading at 80 cents doesn’t mean “it’s guaranteed,” it means you’re being asked to pay 80 to make 20.
That edge either exists… or it doesn’t.

As a trader, your job isn’t to predict the future. It’s to decide whether the market’s probability is wrong.

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