♟️ The Metagame #044: Polymarket, Kalshi, and Prediction Markets

Welcome back to today’s edition of The Metagame. Before we get into it, I wanted to share a few life updates:

• I built a new iOS app for homeowners called OneHome. It lets you track and manage your home services, find local businesses, and keep a record of everything that happens to your home. It’s available on the iOS App Store today.

• I signed my first client for my personalized 1-on-1 program teaching people how to use AI to build polished products (like my app).

• I got to be the “uki,” i.e., the test dummy/punching bag for a Krav Maga black belt test. Despite getting the sh*t beat out of me, it was an honor to be asked to participate in the test. Pictures at the end!

Let’s get into it.

Read time: 4 minutes

Nancy Pelosi is one of the most profitable traders in congressional history.

She and her husband, Paul Pelosi, have made over $130 million in stock profits.

How?

Well, it's no secret that she insider trades. She has a history of opening positions right before major announcements are made, like when she reported a sizable Nvidia position back at the beginning of 2024. Since then, the price has nearly quadrupled.

That’s why entire dashboards have been created around Congressional trading, letting you track the stock positions lawmakers take. (Because, unfortunately, in the current administration, insider trading no longer seems like a crime.)

Sure, the assets she bought are valuable.

But I’m not here to talk about her stocks.

I’m here to talk about the real asset: her information.

She knew Nvidia’s stock price would go up (maybe because she writes the law governing their chips, but this is a conversation for another time…)

We're in an age where information has become quite a valuable asset.

Think about how important your data is to these conglomerates like Meta and TikTok.

Selling your data for ad revenue is a controversial topic, but it's how these companies operate.

We're living in a digital textbook, and these companies taught their algorithms how to read it.

Prediction Markets

Enter Polymarket and Kalshi, the two biggest prediction market platforms (for now). These platforms are quickly rivaling stock markets.

Prediction markets are, in a sense, gambling. (Though according to the current laws, they are not. It’s a grey area that is probably going to go through a huge wave of regulation in the coming years.)

These platforms let you “bet” on the outcome of certain events. Whether it's elections, sports, pop culture, Spotify’s top song of the year, if the president is going to fall down the stairs today, literally anything. There is a market for nearly everything, and someone is always willing to put money on it.

Although Polymarket isn’t legal in the U.S. yet, it has had almost $4 billion in trade volume in the past 30 days. (It’s slated to be legalized next year, both according to several news sources AND according to the prediction markets themselves.)

Kalshi just got a valuation of $11 billion, making (name) the youngest self-made billionaire in the world.

Also, Kalshi just partnered with CNN to help them deliver prediction analysis to the news.

This is an absolutely monumental shift in the world that not enough people are talking about.

What this essentially means is that the source of news is partnering with a company that lets you bet on the news.

(Kalshi also just announced a partnership with Coinbase, and I had to come in here and edit in this note, because this news is hot off the press from last night. The prediction markets are quickly starting to take over.)

BetterBets

On the topic of predictions, one of the projects I have been working on over the years is my NBA betting algorithm. I've iterated over this project and developed countless different versions by now. Some worked better than others.

This time, I tweaked it to use Google’s Agent Development Kit (ADK) and built a fully functional chatbot that “talks” to my data.

What's cool about this is the amount of automation involved. Every day, the agent churns through all the data and gives a list of the most likely predictions. In the morning, it sends all the outcomes and whether the predictions were correct.

And then, it learns from these results.

And while this project works and demonstrates the power of data in prediction algorithms, it only scratches the surface. Kalshi and Polymarket are collecting so many data points across the globe and are creating prediction markets that most people didn’t even think existed.

Everything from weather data (you can predict what the high is going to be in New York City one day), to election forecasting (you can bet on who will win the next ,), to company earnings calls (whether or not Costco will mention “hot dog” in their next earnings call. Spoiler alert, they did NOT mention their hot dog prices last Thursday.

If you’re interested in my model, you can find out more here.

The Kalshi x CNN partnership is unprecedented territory.

The way I see this, there are two main outcomes.

One is optimistic—that the prediction markets, where the odds are primarily controlled by the people with the real information, become an extension of the news, helping keep the news sources honest and accurate by delivering valuable data and statistics to viewers. Essentially, there would be no way to hide the truth from the public if the public had all the same data points.

The second outcome is more sinister.

In this scenario, the prediction market economy is rife with insider trading, bribery, violence, and manipulation, to the point where companies lie for profit (even more so than they do today) and news sources can no longer be trusted (even more so than they are today).

It may sound grim, but this is the future we are facing.

With AI, data, and now prediction markets dominating the economy, it is nearly impossible to avoid the capitalistic machine.

The best we can do is buckle up, try to enjoy the ride, and hope the rollercoaster doesn’t fall apart.

Here’s a quote from one of my favorite authors and historians, Yuval Noah Harari. He wrote Sapiens (and Homo Deus and Nexus), which I highly recommend for anyone interested in the past, present, and future of humanity.

Me as the uki, as promised:

Thanks for reading!

If you have any questions, hit me up on LinkedIn or on Twitter/𝕏 at @sam_starkman, or feel free to reply to this email!

— Sam