Prediction markets have quietly moved from the fringes of finance into boardrooms, central bank research papers, and regulatory debate.
What started as a niche corner of the internet is now processing billions in contract volume and attracting serious institutional attention.
But with that growth comes a harder set of questions: about insider trading, market manipulation, and whether these platforms can tip from forecasting tools into instruments of influence.
Invezz spoke with Ryan Kirkley, Co-founder and CEO of Global Settlement Network, to cut through the noise.
Kirkley brings a sharp lens to the structural risks that most observers are still catching up to.
From the regulatory blind spots that could allow policy insiders to quietly monetize sensitive information, to the uncomfortable possibility that financial incentives are already shaping real-world outcomes, his perspective is both sobering and timely.
Excerpts:
Invezz: Let’s start with the basics: What actually is a prediction market, and why is it more than just a glorified betting platform?
Ryan Kirkley: The standard critique is that prediction markets are just betting platforms with better branding.
That misses the point. When Polymarket processed over $1 billion in contract volume for the 2024 US election, it produced a real-time probability signal that outperformed most polling aggregators.
The mechanism that makes this work is simple: insiders, using internal polling and expertise, were able to profit from large bets.
The real question isn’t whether people are “betting,” but rather whether the market structure is actually producing useful and ethical signals about future events, or if it’s just a way for a new version of the “house” to be created as insiders across industries profit without regulation.
Invezz: Central banks are now referencing these markets in their research. What does that shift tell you about where prediction markets stand in the mainstream financial conversation?
Ryan Kirkley: It tells us that policymakers are starting to take the information produced by these markets seriously, albeit there are some significant conflicts of interest.
For years, prediction markets were treated as fringe experiments or academic curiosities, but as liquidity improves and more participants enter, they begin to produce signals that can complement traditional forecasting tools.
The challenge is that policymakers tend to focus on the informational value of the price signal, while the market itself is still evolving.
Once these platforms grow large enough to attract institutional capital, they stop being purely informational tools and start behaving like financial venues with real incentives attached.
That’s the transition regulators and policymakers are now beginning to grapple with.
Invezz: When serious institutional money starts coming in, how does the whole dynamic change? Are these still the same markets they were two years ago?
Ryan Kirkley: Two years ago, Polymarket was largely an underground retail product. The activity was small, the positions were small, and the incentive was mostly profit-driven.
Kalshi’s CFTC-approved launch attempts to change the calculus.
When institutional players enter with proper balance sheets and hedging mandates, the market stops functioning as a crowd poll.
Positions get larger, information gets priced faster, and the structural demands of the market starts looking more like a traditional financial venue, which means you need the infrastructure to match.
Settlement, custody, and clearing matter in a way they simply didn’t when the stakes were lower.
Now we see fees approaching 4% on markets, at takers make 2% on either side, and price action can swing 3-5% on either side of the transaction.
Invezz: You’ve flagged the risk of sensitive information being quietly monetized through pricing. Can you give us a concrete sense of how that plays out?
Ryan Kirkley: Think about a government official with early knowledge of a central bank decision. In equities, trading on that information is insider trading.
In a prediction market with a contract on ‘Fed raises rates by Q2,’ there is currently no equivalent rule that clearly prohibits the same behavior.
The market moves on the trade, and by the time the decision is public, the position has paid out.
The information was never leaked in any traditional sense – it was simply monetized through pricing. That gap exists today.
There’s no clean regulatory analog to SEC Rule 10b-5 covering political and policy event contracts, and that’s a problem that grows with every dollar of institutional capital that enters the space.
Now take political bets, a scary scenario could play out where, with millions on the line, an assassination could lead to an easy victory for the opponent or a guaranteed primary win thus creating financial incentives to harm democracy around the globe.
With prediction markets, the complication is that the underlying events are often political, geopolitical or regulatory decisions.
That means sensitive information related to policy or national security could theoretically influence pricing before the public ever sees it.
It’s not a guaranteed outcome, but it’s a structural risk that becomes more relevant as these markets grow.
Invezz: Here’s the uncomfortable question: Can a market built to predict an outcome also start pushing it in a certain direction? And is that already happening?
Ryan Kirkley: Markets don’t just observe the world; they can influence behavior.
If enough money is attached to a specific outcome, participants may begin trying to shape that outcome rather than simply predict it.
That’s something financial markets have dealt with in many forms before, from commodities to currency markets.
Prediction markets introduce a new dimension because the contracts can reference political events, policy decisions, or geopolitical developments.
Once financial incentives are tied to those outcomes, the line between forecasting and influence becomes more complicated.
That’s a governance question regulators need to address as soon as possible because it very well could be happening right now with the ongoing war in the Middle East.
Invezz: Regulation tends to show up late to every new financial venue. What are the biggest blind spots right now with prediction markets?
Ryan Kirkley: The biggest blind spot is treating them purely as information tools rather than financial markets or even more accurately, insider trading and fraud.
Once liquidity grows and institutional capital participates, you’re dealing with price discovery, market integrity, potential manipulation risks, and information asymmetries, the same issues that regulators worry about in other asset classes.
Right now, the conversation is still focused on whether these markets produce useful forecasts.
The more difficult questions around oversight and governance tend to come later, which is another massive blind spot, as the market is already evolving quicker than expected.
Invezz: If you were advising a regulator today on building a governance framework for these platforms, where would you start?
Ryan Kirkley: Personally, I would start with examining the feasibility of banning them, on average, the average user loses money faster than any current form of gambling, without even getting into the potential damages to society from insider actions and financially incentivizing bad actors.
The next point and most realistic outcome would be acknowledging that these are markets, not just data sources.
That means focusing on the same fundamentals that apply to other financial venues: transparency around participants, safeguards against manipulation, and clear rules around the use of privileged information.
It’s also important to recognize that prediction markets touch on areas outside traditional finance, particularly when contracts reference political or geopolitical outcomes.
Building a governance framework that balances informational value with market integrity will be the central challenge as these platforms scale.
https://invezz.com/news/2026/03/09/interview-prediction-markets-blur-forecast-and-influence-says-analyst-kirkley/
