In our modern world, forecasts shape public opinion, financial decisions, and political strategies. Yet, those making predictions—stock analysts, economists, and pollsters—often face little to no accountability when their projections turn out to be wrong. Their reputation may suffer mildly in some circles, but rarely do they lose their jobs, reputation, or credibility outright. The absence of a robust system to validate or penalize predictions has contributed to a culture where bold claims are made without skin in the game. This is where prediction markets, also known as betting markets, come in as a solution both powerful and overdue.
Historically, the domains of finance, politics, and macroeconomics have been plagued by flawed forecasts.
Stock analysts frequently issue “strong buy” recommendations—only for the companies in question to collapse months later. A stark example of this occurred in January 2009 when Ramalinga Raju, chairman of Satyam Computer Services, admitted to orchestrating one of India’s largest corporate frauds. He confessed to inflating the company’s cash reserves by approximately $1.5 billion. Notably, prior to this revelation, many analysts had issued favorable recommendations for Satyam, contributing to investor confidence. Similarly, in March 2001, Bank of America Securities projected Enron’s stock would soar to $105. By December of the same year, Enron filed for bankruptcy in what became one of the most notorious corporate collapses in U.S. history.
When such recommendations prove disastrously wrong, it is the investors who bear the brunt of the consequences. The analysts, on the other hand, often evade accountability, offering vague justifications or simply shifting focus to new forecasts. This lack of personal risk undermines the integrity of the investment advisory system. To address this, a regulatory shift is needed. Analysts who make public stock predictions should be required to stake a significant portion—perhaps 20% to 50%—of their compensation on the accuracy of those forecasts. These stakes should be structured as binary bets, where failure to meet the target price within a specified timeframe results in a total loss of the wagered amount. A system akin to options trading could provide a transparent mechanism for such disclosures.
More importantly, this requirement would align analysts’ incentives with those of the investors who rely on their guidance. If analysts are confident enough to issue public target prices, they should be equally confident to risk their own money on those predictions. Transparency around these positions would add credibility to forecasts and provide the public with a clear measure of conviction behind each call. Given that regulatory bodies such as the SEC in the United States and SEBI in India impose strict rules on accounting, insider trading, and disclosure requirements for investors and company insiders, it is only reasonable to extend similar scrutiny to analysts and financial institutions. Investor protection should include safeguards against reckless or misleading recommendations that are issued without any personal financial consequences for those making them.
Accountability must accompany influence. If analysts expect to shape market behavior and investor decisions, then they must also be prepared to stand by their projections in a tangible, measurable way.
Economists, whether in academia or central banks, are tasked with predicting the future trajectories of inflation, GDP growth, unemployment, and broader economic trends. Yet, time and again, these forecasts fall short—sometimes disastrously so. More troubling is the lack of accountability that follows such failures. Consider the 2008 financial crisis, a seismic event that mainstream economic models failed to anticipate. Despite this monumental oversight, few economists lost their positions or reputations. Many retained their academic tenure or advisory roles and continued as respected voices in public discourse.
A more recent example came in early 2021, when leading economists—including U.S. Treasury Secretary Janet Yellen and Nobel laureate Paul Krugman—dismissed rising inflation as “transitory.” Their assessments were based on models that attributed inflationary pressures to short-term disruptions caused by the COVID-19 pandemic. However, inflation proved to be far more persistent and damaging than predicted, contributing to significant economic and political ramifications. These misjudgments are not without consequence to the public. Policy decisions influenced by faulty forecasts affect interest rates, wage growth, investment strategies, and consumer confidence. At worst, inaccurate predictions can create feedback loops of panic or inaction—turning flawed forecasts into self-fulfilling prophecies.
The time has come to consider a new standard of accountability for economists who influence public policy and markets. Imagine if prominent economic forecasters were required to stake a portion of their personal wealth on the outcomes they predict. For example, if an economist asserts that inflation will remain low, they could be required to invest in an index that rises with inflationary pressure—thereby placing financial skin in the game. Such a mechanism would not only compel greater rigor in economic modeling, but also introduce a layer of discipline and humility into a field too often shielded by abstract theory and academic detachment. The credibility of the economic profession depends not just on producing theories—but on being willing to stand behind them, financially and reputationally.
Pollsters have increasingly come under scrutiny for their repeated failures to accurately predict election outcomes—failures that have far-reaching implications for public trust, media narratives, and voter behavior. High-profile misses in the U.S. presidential elections of 2016 and 2024, as well as recent Indian general elections, underscore the systemic flaws in the current polling ecosystem. Despite these errors, there is little accountability. Polling organizations often respond with technical post-mortems or updated methodology reports. Occasionally, a public op-ed is penned to explain away the inaccuracies. But rarely do these missteps result in any meaningful consequence. The same firms and experts return for the next election cycle with their credibility largely intact and their media influence undiminished.
This lack of consequences stands in sharp contrast to the impact polls have on real-world outcomes. Polling results shape campaign strategies, dominate media coverage, and even influence voter turnout through perceived momentum or inevitability. When those forecasts are wrong, the ripple effects can be profound. To introduce a much-needed layer of responsibility, a new model of accountability should be considered. Imagine if polling firms were required to stake a substantial portion of their capital—whether investor funds or internal treasury—on the accuracy of their predictions in regulated betting or prediction markets. For example, they could be required to back their forecasts with wagers on the number of seats a party will win, or the outcome in key constituencies.
Such a system would incentivize greater precision, transparency, and methodological rigor. If pollsters stood to lose financially from inaccurate forecasts, they would likely invest more in sample diversity, non-response adjustments, and the quality of fieldwork. The mere act of betting on their predictions would force pollsters to take their work more seriously—because the cost of being wrong would no longer be limited to reputational hand-wringing.
Accountability is not about punishing failure—it’s about aligning incentives. If polling is to retain its relevance and value in modern democracies, it must evolve beyond a consequence-free exercise. A system where pollsters are financially invested in the accuracy of their forecasts could be a powerful step toward restoring public trust in the numbers that shape our elections.
Why Prediction Markets or Betting Markets Work
Prediction markets work on a simple premise: individuals bet real money on outcomes. These bets, aggregated, represent the “market’s belief” about the probability of an event. Because participants are risking capital, they have incentive to be accurate. There’s no reward for loud punditry—only for being right.
Markets don’t care who you are—they care what you know. And that’s a radical shift from our current system, where prestigious titles and media appearances often matter more than historical accuracy.
In a prediction market:
- If you say a recession is coming, put money on it.
- If you claim a particular candidate will win, buy shares on that outcome.
- If you believe inflation will exceed 5% in a given quarter, back it with a trade.
- If you believe a stock will go up within 6 months, buy an option on that stock with that price and 6 months expiry for a substantial hurtful amount.
The beauty of this system is that it naturally filters out noise. Empty rhetoric gets punished. Well-reasoned analysis gets rewarded. This is the ultimate meritocracy of information.
Underground, Then Decentralized: The Rise of Prediction Markets
Due to restrictive laws in many jurisdictions, prediction markets have historically operated in legal gray zones. Sites like Intrade and PredictIt tried to create real-money betting environments but were constantly battling regulators. Because these markets were considered “gambling” rather than valuable information aggregators, their potential was stifled. There are bookies all across India who take bets on cricket as well as elections. They provide some odds and you get paid if you choose the right one. The problem with such underground centralized providers is that it works on trust and if they calculated odds wrong and they don’t have the money to pay you, they just leave town or you do not have recourse of the law.
Enter decentralized technology. With Bitcoin, Ethereum and smart contracts technology has made it possible to make a bet like with anyone anywhere in the world and the platform protects your money and will pay you when the outcome is in your favor.
Platforms like Polymarket founded by Shayne Coplan, powered by blockchain, changed the game. Suddenly, people could participate in prediction markets without centralized gatekeepers. No one could shut them down, and anyone with internet access could trade on real-world events—from politics to sports to science to entertainment. The Biden administration DOJ and FBI raided Shayne Coplan’s apartment but even that cannot stop the genie that is out of the bottle now.
And more importantly, these markets became shockingly accurate in forecasting events, often outperforming experts and traditional polling averages because there was rewards and punishments associated with it. Almost four billions dollars worth of contracts were riding on Polymarket for the US Presidential Elections of 2024.
Following this wave of billions of contracts on Polymarket for US elections, Kalshi became the first U.S.-based, fully regulated prediction market approved by the Commodity Futures Trading Commission (CFTC). Kalshi and their founder Tarek Mansour had to fight against the CFTC for three years in the Supreme court to get such a service approved. Kalshi focuses on “event contracts”—from inflation to election results to sports betting—bringing prediction markets into the mainstream with the stamp of legitimacy.
Kalshi is a centralized platform and you can participate only from the US whereas with Polymarket you can participate from anywhere in the world because of smart contracts and decentralized technology. Kalshi can be taken down by the government whereas Polymarket and its idea exists even if the company does not exist.
This transition—from underground, to decentralized, to legally sanctioned—shows the demand and necessity for such platforms.
A French bettor known as “Théo” made headlines after earning $48 million in profits by wagering $30 million on Donald Trump’s victory in the 2024 U.S. presidential election through the crypto-based prediction platform Polymarket. You can participate and get paid if you think you know what will happen. If you are right, you get paid and if you are wrong it forces you to get feedback on why your assumptions were wrong about a stock or an election. Having money riding on an outcome will keep you more engaged in the process too. In fact, I even read he even contracted a polling or survey company to get better results with more appropriate questions to make this bet.
Legalization Means Accountability
The key argument for legalizing prediction markets is accountability. In a world where every forecaster had to stake money on their views:
- We would see fewer clickbait headlines and more thoughtful analysis.
- Forecasting would become a discipline grounded in market discipline.
- Media outlets could rely on market odds rather than partisan pollsters.
- Voters and investors could gauge real-time consensus with monetary backing.
It also creates a public scoreboard. If a famous economist consistently bets against the market and loses, their credibility would naturally erode and he will lose his hard earned money also. If a little-known analyst consistently outperforms, they gain recognition—and perhaps capital.
Legalizing these platforms also allows for regulation, transparency, and consumer protection, avoiding the pitfalls of underground gambling while preserving the public good that prediction markets offer.
Critics and the Moral Argument
Critics argue that betting on elections or disasters is unethical. But this assumes that prediction markets are about exploiting tragedy rather than informing decisions. In reality, these markets:
- Help insurers and policymakers assess risk.
- Aid investors in hedging against political uncertainty.
- Guide businesses in making supply chain or hiring decisions based on macroeconomic forecasts.
In short, they allow us to plan better. The alternative is trusting flawed models, pundits with no accountability, and headlines designed to stir emotion rather than convey truth.
The other argument by regulators and moral policemen are platforms like this will make ordinary people gamblers. Gamblers will always find a venue to find an illegal den to bet no matter what and might get into tussles with criminal elements also. It’s like assuming prohibition will stop a drunkard from drinking. The drunkard will just pay more to the smuggler or illegal bootlegger.
Conclusion: Skin in the Game is the Future
We live in a noisy world where everyone has an opinion. But not all opinions should weigh equally. Prediction markets offer a natural filter—only those willing to stake their capital can meaningfully contribute to the forecast. This is a revolutionary idea in politics, economics, and finance.
It allows you to get the right information ahead of time. On March 24th, yahoo news reported Polymarket has 94% accuracy in predictions. Which means if you knew Trump was going to win by 60%
\on polymarket you could decide to adjust your stock portfolios based on which industries a republican president would help. Four billion worth of money into this betting contract means a large number of people have put their money and markets generally tend to be correct in the long run. Which means someone had enough information to bet a large amount of their money into this. Markets always talk to you about the future if there is a way for it. Prediction market allows you to get information from the larger pool rather than just relying on some conceited economist or academic.
Platforms like Polymarket and Kalshi are not just gambling sites—they are the beginning of a future where truth is financially incentivized and falsehoods come at a cost.
The more we embrace prediction markets, the more we’ll move toward a world where analysts, economists, and pollsters are finally held accountable. And that’s a bet worth taking.
If we can allow sports betting or fantasy sports and stock markets why not event based predictions in economics and politics.
People from India are already on Polymarket making bets winning and losing. It is not as easy for most folks since this involves sending your money as crypto. You need a crypto wallet and some bitcoin, Ethereum or tether on that wallet to connect and make the bet.
Will India get the equivalent of a Kalshi?
Or will Kalshi setup shop in India?
The illegal cricket betting in India it seems crosses 100 billion dollars a year and growing at 30% per year. That is great consumer market out there for a prediction market just for cricket.
Nithin Eapen is a technologist and entrepreneur with a deep passion for finance, cryptocurrencies, prediction markets and technology. You can write to him at neapen@gmail.com
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