A Prediction: Trust Will Decide Who Wins

Prediction markets are having their moment. What was once a relatively niche market has become mainstream. Platforms such as Polymarket and Kalshi have turned elections, sport, economics, geopolitics and pop culture into tradable markets, while established operators and financial platforms are increasingly looking at how prediction products might fit into their business models.

The attraction is obvious. Prediction markets take disagreement about the future and turn it into a price. Rather than asking people what they think will happen, they ask them to put money behind that view. In theory, the resulting market price aggregates thousands of individual pieces of information into a constantly changing probability.

It is an extraordinarily powerful proposition, but the long-term success of prediction markets will not ultimately be determined by technology, liquidity or even the number of markets they can offer. It will be determined by trust.

And as the sector grows, there are signs that trust could become its biggest vulnerability. The product is not the market. The product is trust.

Every wagering or trading product relies on trust, but prediction markets arguably require more of it than most.

When somebody places a traditional sports bet on Manchester United to beat Liverpool, there is zero ambiguity about what constitutes a winning bet. The match takes place, an official result exists and the wager is settled.

Prediction markets can be considerably more complicated.

Consider questions such as:

• When will a politician leave office?

• Will a company sell Bitcoin?

• Will a particular person say a certain word during a speech?

Suddenly the settlement is not simply about what happened. It can depend on definitions, timing, sources, wording and interpretation. That creates an unusual challenge. A prediction market may have accurately predicted the real-world event while simultaneously producing an argument about whether the contract should pay out.

And once customers start questioning whether a winning position will be honoured, the credibility of the entire marketplace becomes vulnerable.

The US Commodity Futures Trading Commission itself identifies transparency around settlement as fundamental to consumer confidence. Its guidance says customers should receive clear information about contract terms, including how settlement determinations will be made and who makes them.

That sounds straightforward, but in practice, it can be very different. Without going into the Khamenei dispute here, one of the clearest examples came from a Polymarket contract concerning Strategy. The market asked if Strategy would sell Bitcoin by 31 May 2026.

Strategy subsequently disclosed on 1 June that it had sold Bitcoin during the previous week. 

Hunter Guo, a 20-year-old King's College London student, had bought contracts that he believed should pay out because the sale itself had occurred before 31 May. However, Polymarket subsequently issued what it described as “additional context”. The disclosure had arrived after the deadline and therefore, under the interpretation applied to the contract, the sale did not qualify.

Guo reportedly lost approximately $35,000. More significantly, Polymarket data cited by The Wall Street Journal showed that 1,838 accounts had collectively placed $3.8 million on the outcome that was ultimately deemed unsuccessful.

There are legitimate arguments on both sides. Some experienced Polymarket traders argued that information arriving after a contract's deadline cannot indefinitely be used to retrospectively determine its outcome. Otherwise, markets could remain unresolved while participants waited for new evidence. That is logically defensible, but the reputational problem is equally obvious.

The ordinary customer believed the question was effectively, ‘Did Strategy sell Bitcoin by 31 May?’. Strategy did.

The eventual settlement depended on something more nuanced, whether information establishing that sale became publicly available within the relevant timeframe.

The distinction may make sense to a lawyer, market designer or experienced trader. It is considerably harder to explain to somebody whose apparently winning position has just become worthless.

That gap between what the customer believes they are betting on and what the contract technically says they are betting on is where trust disappears. Clarification cannot become rule-making. Trust is damaged. 

Indeed, researchers examining Polymarket markets resolved through Universal Market Access (UMA), a decentralised system called the Optimistic Oracle that Polymarket uses to establish real-world outcomes for its prediction markets, have estimated that close to $1 billion in trading volume has been associated with disputed events in their dataset. That does not mean those markets were incorrectly resolved, but it demonstrates the economic significance of settlement disputes.

Prediction markets need contracts that can survive unexpected real-world circumstances without requiring customers to become experts in legal interpretation, oracle mechanics or historical settlement precedent.

There is another threat to trust: the nature of the markets themselves.

The technological ability to create markets around almost any objectively measurable event creates an obvious temptation. More markets mean more engagement, more trading and potentially more revenue, but there is a difference between a market that people find provocative and one that damages the legitimacy of the entire category.

Recent controversy surrounding markets connected to wildfires illustrates the issue. US senators have called for regulatory scrutiny of markets allowing participants to trade on wildfire-related outcomes, arguing that some contracts could create perverse incentives. Whether one agrees with that criticism or not, the reputational issue matters.

Markets involving death, conflict, disasters or events that participants could conceivably influence create a fundamentally different trust equation from markets predicting elections, inflation or sporting results.

The question cannot simply be, ‘Can this event be objectively settled?’ Platforms increasingly need to ask, should this market exist at all? That is not censorship. It is market governance.

Every mature regulated industry eventually learns that what is technically permissible and what is commercially sensible are not always the same thing. Integrity has to scale with liquidity.

There is also the question of information asymmetry. Prediction markets are supposed to reward information. That is partly what makes them useful, but there is a point at which superior information becomes inside information.

The CFTC highlighted precisely this issue in February 2026 when it announced enforcement cases involving misuse of non-public information and fraud in prediction markets. Its advisory described cases involving people trading on events they could directly or indirectly influence. This is not theoretical anymore.

Kalshi has since partnered with Nasdaq to strengthen its trade-surveillance capabilities, including technology designed to identify manipulation and market abuse. That is exactly the type of infrastructure the industry needs as volumes increase.

Prediction markets cannot aspire to the credibility of mainstream financial markets while treating surveillance, governance and settlement as secondary functions. Liquidity without integrity simply creates a bigger problem.

There is another part of this conversation that receives far less attention: advertising.

Trust isn't only established when a market settles. It begins with the first advertisement, social post, sponsorship or piece of promotional content a potential customer sees. This is where prediction market companies have an enormous opportunity.

Responsible advertising should clearly communicate what these products are. Marketing should not imply that probabilities are certainties. It should not disguise financial risk. It should not trivialise complex contracts, and where material conditions affect how a market will settle, those conditions need to be understandable rather than buried several clicks away. Most importantly, prediction markets should resist the temptation to build their brands purely around provocation. Controversy may generate engagement, cheap PR and column space, but it doesn't necessarily generate trust. 

Traditional betting operators have spent decades learning this lesson, often painfully.

Advertising standards in mature gambling markets impose detailed requirements around targeting, content and consumer protection.

In Britain, for example, the ASA's June 2026 enforcement notice explicitly warned gambling advertisers against material likely to have strong appeal to under-18s and announced active monitoring and targeted enforcement. Prediction markets entering the mainstream should not wait decades to develop equivalent marketing maturity.

Compliance should enable growth, not obstruct it. Compliance can mean more approvals, and more approvals in the workflow can mean slower marketing.

Slower marketing is particularly problematic for prediction markets because their product is built around events happening right now. A major unexpected political announcement, football transfer, election development or sporting event can create a marketing opportunity that lasts minutes and hours rather than days and weeks. 

The traditional model – marketing creates an asset, sends it to compliance, waits for review, receives amendments, resubmits it and eventually publishes – was not designed for this fast-moving, high-octane environment. The answer, however, isn't less compliance; it’s less compliance friction.

Technology increasingly allows regulatory rules, internal policies and brand standards to be embedded directly into the content creation and approval workflow.

Instead of compliance being the department that says "no" at the end of the process, it becomes the infrastructure helping marketing say "yes" safely at the beginning. Better customer journeys and less friction are major trust drivers. 

Prediction markets have an extraordinary opportunity where trust could become the industry's competitive advantage. They can become much more than another wagering product. At their best, they are information markets capable of turning thousands of competing opinions into a single continuously updated probability, but that promise depends on people believing in the integrity of the number on the screen. 

That means creating markets that deserve to exist. Writing rules ordinary customers can understand. Making settlement criteria explicit before trading begins. Avoiding retrospective interpretations wherever possible. Building serious surveillance against manipulation and misuse of privileged information. Advertising responsibly and embedding compliance into marketing rather than attaching it at the end. The companies that understand this earliest have an opportunity to create something far more valuable than another trading platform.

They can create a trusted market and trust may prove to be the most valuable currency they trade in.

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Author Bio: Barry Orr is an investor and CMO of Solas Compliance. He has a wealth of knowledge and experience in the iGaming industry, having spent 22 years with Flutter Entertainment in marketing and PR roles on the Betfair Exchange brand.

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Sources:  

CFTC Guidance: https://www.cftc.gov/LearnandProtect/PredictionMarkets 

Mint/WSJ Piece: https://www.livemint.com/market/cryptocurrency/how-a-student-s-surefire-bet-on-polymarket-went-to-zero-thanks-to-fine-print-11781353378873.html 

Strategy Sold Bitcoin: https://www.galaxy.com/insights/research/strategy-bitcoin-sale-polymarket-resolution-dispute-may-2026 

ASA Enforcement: https://www.asa.org.uk/resource/enforcement-notice-gambling-ads-with-strong-appeal-to-under-18s.html 

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