A sudden surge in Nobel Peace Prize odds hints that prediction markets may be less about wisdom and more about who knows first. (Photo Illustration by Thomas Fuller/SOPA Images/LightRocket via Getty Images)
SOPA Images/LightRocket via Getty Images
At 5 a.m. Eastern Time on Friday, the Norwegian Nobel Committee announced that this year’s Peace Prize would go to Venezuelan opposition leader María Corina Machado for her “tireless work promoting democratic rights for the people of Venezuela and for her struggle to achieve a just and peaceful transition from dictatorship to democracy.”
It came as a surprise. On the two largest prediction markets, Polymarket and Kalshi, Machado had been running behind Yulia Navalnaya, the widow of Russian dissident Alexei Navalny, and President Donald Trump, whose brokering of a ceasefire between Hamas and Israel this week generated calls for him to get the award.
But, something odd happened Thursday night. At 6:30 p.m. ET, Machado’s odds of winning sat at 3.6 percent. By 7:00, they jumped to 39 percent, then 65 percent by 7:30, topping out at 73 percent by 8:00. Less than ten hours later, the Nobel Committee made it official.
Economist Jason Furman, a Harvard professor and former chair of President Obama’s Council of Economic Advisers, wrote on X that the sudden spike sure looked like insider trading.
He’s not the only one thinking that. And there’s a certain irony to the Nobel Peace Prize having insiders willing to trade on what they know.
The catch is, that isn’t necessarily against the rules.
Prediction markets are mostly unregulated territory. As Molly White wrote in her Citation Needed newsletter on September 16, 2025, insider trading laws enforced by the SEC don’t apply. These aren’t securities, they’re contracts overseen, when at all, by the Commodity Futures Trading Commission (CFTC).
That gap creates plenty of room to operate. Last month, billionaire Bill Ackman suggested on X that New York mayor Eric Adams could “place a large [Polymarket] bet on Andrew Cuomo and then announce [his] withdrawal” from this November’s race. “There is no insider trading on Polymarket,” Ackman wrote.
Polymarket received a $2 billion investment from New York Stock Exchange parent company Intercontinental Exchange this week valuing the company at $9 billion making its founder Shayne Coplan the world’s youngest billionaire. In 2022 Polymarket was fined for offering unregistered event-based contracts and now runs offshore, still handling billions in bets. Kalshi, its U.S.-regulated counterpart, has CFTC oversight but little enforcement and no clear ban on insiders using private information. Kalshi recently announced it had completed a $300 million funding round that values the company at $5 billion.
Some experts argue insider trading is an important feature of prediction markets. In the crypto publication Decrypt last October, Robin Hanson, an economist at George Mason University and one of the earliest advocates for prediction markets, said allowing insiders to trade makes the odds more accurate. “If the point of [prediction] markets is to get accurate information,” he said, “then you definitely want to allow insiders to trade.”
Others say that’s bad economics. Eric Zitzewitz, a Dartmouth economist, told Decrypt that insider trading discourages regular participants, which in turn hurts accuracy.
Either way, no one’s really policing it. Prediction markets exist somewhere between futures exchanges and gambling sites, and regulators treat them more like the latter. So, buyer beware. These markets can be fun and even useful, but sometimes the people placing the biggest bets already know the outcome.
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