On the Wednesday, February 11, 2026, episode of The Excerpt podcast:Are prediction markets democratizing information as some argue or are we monetizing reality in a way that incentivizes perverse motives? Alex Goldenberg, Fellow at Rutgers University, joins The Excerpt to explain how these markets work and the risks they pose financially and politically.
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Dana Taylor:
Who will be the Democratic presidential nominee in 2028? What will the price of gold be at the end of the week? Who will win the World Cup? All of these are relatively benign bets you can make today, but there are other bets that maybe aren't so benign. Like will Venezuelan President Nicolás Maduro be removed from office by the end of January? That well-timed bet was made in the hours before the US captured and extracted Maduro, netting the anonymous investor $400,000.
Hello and welcome to USA TODAY's The Excerpt. I'm Dana Taylor. Today is Wednesday, February 11th, 2026.
Are prediction markets democratizing information? As some argue, are we monetizing reality in a way that incentivizes perverse motives? Here to help me dig into how prediction markets work and the risks they pose both financially and politically is Alex Goldenberg, fellow at Rutgers University. Alex, thank you for joining me.
Alex Goldenberg:
My pleasure.
Dana Taylor:
I want to start with a bet that really made the world take notice of political prediction markets, and it's the one that was made on the ouster of Maduro. What are prediction markets, and what happened with this Maduro bet?
Alex Goldenberg:
Prediction markets work great for a lot of things: election forecasting, technology launches, corporate earnings. But when you apply them to military operations, you can create risks that are fundamentally different. That's what got me writing about this. We now have, we'll get into more detail on this, I hope, Ukrainian volunteers, Russian military bloggers, and potentially American security clearance holders now converting potentially insider knowledge of military operations into profit through anonymous crypto wallets. And this isn't theoretical anymore.
As you mentioned, 2:00 AM local time on January 3rd, the US forces captured President Nicolás Maduro in an incredibly complex and dangerous attack, now known to us as Operation Absolute Resolve.
But hours earlier, a newly created Polymarket account had invested $30,000 betting on Maduro's exit. And by that morning, that position had netted roughly $400,000 in profit, which is a 1,200% return in less than 24 hours on a military operation. And the timing suggests that the trader had advanced knowledge of this military operation.
And this isn't the first time. In October, someone placed a $68,000 bet on the Nobel Peace Prize winner hours before the announcement. And while prediction markets theoretically prohibit insider trading, their design creates powerful incentives to monetize non-public information, and the platforms themselves often lack effective enforcement mechanisms, especially those that operate through pseudonymous crypto wallets like Polymarket, for example. We likely will never know if the person who made $400,000 on the Maduro operation held a security clearance.
Dana Taylor:
As you said, this wasn't the only national security bet that's caused some concern in political circles. There were some big bets made in November by a group of traders over a battle in Eastern Ukraine. What was the bet, and why has this alarmed the foreign affairs community?
Alex Goldenberg:
So in November, someone manipulated the frontline map that Polymarket uses to settle Ukrainian territorial bets. They fabricated Russian advance, timed precisely to trigger payouts and then erase the evidence after the settlement. But that's not really what alarms me, someone making money off of military advancements. What really alarms me is the incentive structure that we've created.
Picture this: Polymarket has markets on village-level territorial control, specific train stations, tactical movements in Ukraine. And think of Ukrainian soldiers who earn around 500 a month. I think Russian soldiers earn around 2,000 a month. A $5,000 bet, which is entirely possible on these markets, could represent a 10-month salary for a soldier.
Now, imagine you're an officer making a tactical decision. Do we defend this position or do we fall back? That should purely be a military calculation. But now there's a potential financial dimension that we're introducing. If you or subordinates can access these markets, there's suddenly a way to profit from outcomes you directly influence.
And to be clear, we don't know or have any confirmed cases of Ukrainians or Russian soldiers actually doing this, but that's almost worse. We have no way of knowing. The markets exist, the incentives exist, the capability exists through anonymous crypto wallets. We're just hoping no one acts on them.
This is what economists frequently call an agency problem, a fundamental misalignment between duty and personal incentive. A military commander should answer to civilian leadership and mission objectives. But when there's a financial market on the outcome, we're introducing a competing incentive.
I mean, we banned Pete Rose decades ago from baseball for life because he was betting on his own team. The concern was that the incentive structure was incompatible with his role. That's a situation we're creating, not in baseball, but active war zones. The markets are live, the incentives are incredibly powerful, and we're now have to assume that duty will always win out over a year's salary.
Dana Taylor:
Taking this one step further, betting on war could incentivize state actors to impact outcomes. Russia and China clearly paying attention. What are your biggest concerns here?
Alex Goldenberg:
It's a great question. And look, I can't tell you that Moscow or Beijing are actively exploiting these markets right now, but here's what I can tell you: if I were running a foreign intelligence service, I'd be paying very close attention. These markets are essentially open source signals. You don't need to recruit spies or run risky operations; you just watch for patterns.
When someone places an unusually large bet on low-probability events, what traders or what I call high-conviction bets, that's a signal. For example, if betting volume suddenly spikes on sensitive military operations that's trading at 15% odds, that's interesting. Someone is betting serious money on something unlikely to happen. Either they're foolish or they know something. This wouldn't replace traditional asset recruitment, obviously. That's still valuable for different reasons. But in additional intelligence streams, it's just sitting out in the open, and it's essentially free.
The bigger concern I have is using these markets for active measures or what we call psychological warfare. Here's a scenario that worries me: a state actor places a $5 million bet that China will invade Taiwan in 30 days. That's pocket change for a nation state, but it could move a prediction market pretty significantly. Market odds could spike, media coverage follows, prediction markets show a 70% chance of Taiwan invasion. Does someone know something? You get public anxiety, potential diplomatic tensions, potential military posturing, all triggered by a bet that costs less than their defense budget's rounding error. This is information warfare on the cheap.
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Traditional influence operations that I've studied for years, like troll farms, media buys, cost millions and take months to build. This is instant, global, and quite deniable.
And here's the operational problem for our intelligence community. When these markets move, analysts have to assess, is this legitimate information or is it manipulation, because we can't just ignore the markets, because some of those bets might actually reflect insider knowledge. Adversaries could use these markets to inject noise into our information environment that we can't easily filter out, and that should worry us all.
Dana Taylor:
Alex, there are some who argue that insider information is exactly what makes these markets function more efficiently, that prediction markets are all about commodifying people with exceptional access to information. What do these proponents argue?
Alex Goldenberg:
Most critically, there's a categorical difference between revealing information and creating outcomes. Traditional insider trading is about someone who knows a merger will happen and trading on that knowledge. That's wrong, but it doesn't change whether or not the merger happens. It just turns out whether or not those outside of the company know about it based on insider information. What we're talking about here is people betting on outcomes that they can directly influence: a military commander deciding whether to hold a retreat, a diplomat deciding whether to push for an agreement or walk away. The actors themselves that are trading can create the outcomes that they've bet on.
Dana Taylor:
Prediction markets have been exploding in growth over the past year with billions of dollars being poured into bets on last year's election. According to the Washington Post, there's currently about $200 million in political bets riding on the two dominant prediction platforms, Kalshi and Polymarket. What are the biggest risks in the rapid growth we see here?
Alex Goldenberg:
To understand how big this has become, we need context. Since 2018, the Supreme Court overturned a federal ban on sports betting. And since then, Americans have wagered roughly $120 billion on sports. Problem gambling treatment admissions have increased 30% in states with legal betting, and prediction markets have hit roughly 40 billion in trading volume in 2025 alone. That's roughly a third of the size of the entire sports betting industry. And they've been mainstream for less than two years.
And the financial backing is incredibly significant. Kalshi is valued at $11 billion. Parent company of the New York Stock Exchange recently invested $2 billion in Polymarket. Google Finance, Yahoo Finance, CNN, The Wall Street Journal are now starting to integrate prediction market data into their news coverage. But here's a crucial difference: when you bet on the Super Bowl, nobody dies. But when you bet on Somalia strikes or Ukraine territorial control, you're monetizing human suffering and potentially creating financial incentives for soldiers and officers to influence outcomes that they've wagered on.
We spent the past five years, really post-COVID, building infrastructure to make gambling on sports and even pictures of JPEG monkeys socially acceptable. I'm referring to NFTs. Now we're using that same exact infrastructure to make betting on war feel normal, which should worry us all.
As I wrote in War on the Rocks, the habit of treating everything as a trade seemed harmless when the stakes were fartcoin, but habits of mind migrate, and they seem to be migrating to war.
Dana Taylor:
News organizations are responding to the surge in prediction market interest, with CNN, CNBC, The Wall Street Journal all announcing partnerships so they can share prediction market data with their viewers and readers. But automated screen tickers aren't screening for context. So as Axios has reported, they can end up spreading fake news. How can the news media guard for this?
Alex Goldenberg:
There are two main problems. First, as we just discussed, mainstream legitimization. CNN and CNBC have struck deals with Kalshi to feature betting odds and coverage. The Golden Globes, which some of us may have watched, integrated Polymarket data into their broadcast. Networks are treating prediction markets like polling data, but polls use scientific sampling, transparent, tried and true methodology. Prediction markets, on the other hand, reflect a narrow group of people motivated to wager money, and they're easily manipulated, as we discussed, by political operatives or foreign actors with resources.
The second problem is, in my opinion, even more insidious, low-market cap manipulation, which we've been seeing quite a bit over the past few months. Someone can spend a few thousand dollars to push a thin market to 99% odds, screenshot it, and suddenly millions of people on X think someone has insider knowledge about an impending crisis, whether it's a war on the cusp of breaking out or a bank going under.
Dana Taylor:
And finally, Alex, prediction market bets are essentially binary contracts on future events, right? Yes, this will happen, or no, this won't happen. What are the mental health risks of gamifying war with this kind of betting?
Alex Goldenberg:
It's a great question. When you're checking your "Somalia or Iran position" like checking a stock ticker, you're not thinking about families fleeing air strikes, civilian casualties, humanitarian crises, economic fallout. War becomes abstracted into green and red numbers. The human cost disappears behind odds and returns.
But there's an even deeper psychological problem with these markets: they create an empathy inversion. If someone has placed a bet that a strike will happen, they now have financial reason to hope for violence. Even if they never consciously admit it, there's a part of their brain that's rooting for people to die so they can profit. And this is the opposite of how we should relate to war.
The normal human response is to prefer peace, to hope conflicts deescalate, to want fewer casualties. The financial stakes that we're introducing are fundamentally corrupting that. And it fundamentally changes civic discourse as well. Instead of asking, "Should we strike?" which is a moral and strategic question, we're asking, "What are the odds we strike?" Democratic deliberation is becoming market speculation. Citizens stop being participants in governance and become spectators with financial interests in the outcomes.
And there's a historical parallel here to think about. In Roman times, people were betting on gladiators, literally betting on human death as entertainment, and we've spent centuries moving away from that, recognizing it's fundamentally dehumanizing. Prediction markets on military operations are, in my view, a regression to that same dynamic. The digital interface makes it feel cleaner, more abstract, but at the end of the day, we're still betting on violence and we're still treating human suffering as a tradable commodity, and that should worry all of us.
Dana Taylor:
Alex, thank you so much for joining me on The Excerpt.
Alex Goldenberg:
Dana Taylor:
Thanks to our senior producer, Kaely Monahan, for her production assistance. Our executive producer is Laura Beatty. Let us know what you think of this episode by sending a note to podcasts@usatoday.com. Thanks for listening. I'm Dana Taylor. I'll be back tomorrow morning with another episode of USA TODAY's The Excerpt.
This article originally appeared on USA TODAY:Anonymous political bets on platforms like Kalshi are skyrocketing | The Excerpt
On the Wednesday, February 11, 2026, episode of The Excerpt podcast:Are prediction markets democratizing information as ...
