All prediction markets are assassination markets
In recent years prediction markets have gained renewed attention through platforms such as Polymarket and Kalshi, which allow users to place bets on political outcomes, economic indicators and other real-world events.
On the one hand, supporters argue that these markets aggregate dispersed information and produce more accurate forecasts than polls or experts. On the other hand, critics warn that prediction markets raise serious ethical concerns, especially when they involve harmful or violent events.
Perhaps one of the most provocative takes comes from Timothy C. May, an American engineer and cryptography expert who is widely regarded as the founding father of the cypherpunk movement. In 1994, he published a manifesto for cypherpunks titled The Cyphernomicon, in which he discussed the possibility of anonymous assassination markets.
May argued that cryptographic technologies and digital cash could enable systems where individuals profit from predicting or incentivizing the death of public figures. Later, the cryptoanarchist and electrical engineer Jim Bell elaborated on the idea in his essay Assassination Politics, providing a more detailed description for such markets.
The central argument raised by May and Bell is the problem of incentives. If a market provides financial rewards when a harmful event occurs, participants may gain a financial motivation to help bring that event about.
Although companies such as Polymarket or Kalshi insist that their platform prohibit violent contracts and that every bet needs to be signed off by regulators, the problem with this is that almost all predictions that involve human behavior could become assassination markets, not only bets that predict the death of someone.
More broadly, the concern is not only limited to assissination markets. In fact, bets on real world outcomes can be understood as a form of moral hazard, in which a certain system incentivizes immoral behavior. Participants may be encouraged to influence those outcomes in subtle or indirect ways. This can include markets on regulatory decisions, corporate performance or political instability, which could result in manipulation, misinformation, insider trading or other types of immoral behavior.
Another well-known issue is the so-called oracle manipulation. Most predictions depend on specific measurements and data sources. Oracle manipulation describes a situation, in which whoever reports the official number or whatever system is the trusted source of "truth" becomes a target for manipulation, influence, blackmail, coercion or even murder.
Just recently the Commodity Futures Trading Commission (CFTC) ordered the arrest of a U.S. military service member, who was involved in the capture of Venezuela's president Nicolas Maduro and who earned 400,000 USD due to a bet placed on Polymarket.
In another incident the French national meteorological agency filed a complaint involving a prediction bet on the temperature of Paris after they found abnormal temperature spikes at the Charles de Gaulle Airport. Later, a surveillance video was released that shows a man holding a hair dryer next to the temperature sensor at the airport.
The structural risks can be also observed in sports betting markets with several well-documented cases of fraud and manipulation. One of the biggest scandals was the 2011 Turkish football match-fixing scandal that resulted in the largest corruption investigation in European football. A variety of clubs created a network of club officials and intermediaries that manipulated results by bribing players and opposing teams, offering incentives for underperformance and coordinating outcomes based on their betting strategies at a massive scale.
What seems to be completely out of control nowadays is the problem of insider trading of politicians and government officials, such as the trading activity of figures like Nancy Pelosi, a useless politician who has constantly outperformed genius investors like Warren Buffet.
And the problem here is not only insider trading, where policies affect trading decisions, even more problematic is when trading decisions shape voting behavior. Investment ties may create conflicts of interests, where votes on regulations and policies indirectly affect personal wealth.
In other words, prediction markets have become a fertile ground for fraud and corruption. In extreme cases, financial incentives may result in violent outcomes. But even more broadly, however, they reveal a deeper structural problem, which is the risk that systems designed to predict the future may also create incentives to influence and potentially distort it and to encourage immoral behavior.