On June 11, Kalshi released a buzzy ad featuring noted New York Knicks fan Timothée Chalamet. It was a zeitgeist-capturing moment for prediction markets, akin to the 2022 Super Bowl, when seemingly every commercial featured a celebrity shilling crypto.

Yet when I brought Chalamet’s spot up with attendees at Manifest, a recent festival for prediction markets, I was mostly met with blank stares. These conference goers—a mix of academics, startup founders, job seekers, and players in the markets—hadn’t even heard about it. They were too busy thinking about the bigger picture and the risks facing markets.

Their confusion was the perfect encapsulation of a battle that I observed again and again that weekend: The way forecasting philosophers see the markets (tools for the greater good) is very different from how the vast majority of the world sees them (a way to bet on sports).

“We were all waiting for so long to be in the world we're in now,” Dan Schwarz, the cofounder and chief executive officer of FutureSearch, an artificial intelligence research and prediction startup, tells me. But the platforms have run into problems, from insider trading to sports contracts that, Schwarz worries, are fueling addiction. To outweigh these harms, “prediction markets would have to deliver a lot more value than they are now.”

The prognosticators, it turns out, are concerned that the very thing that's made prediction markets a global phenomenon could be their undoing.

This year’s iteration of Manifest took place at Lighthaven, an idyllic compound in Berkeley, California. The campus, which takes up about half a city block, also functions as the epicenter of the rationalist movement, which, among other things, prioritizes the safe development of AI and effective altruism.

The vibe skewed heavily male but was still eclectic. Clusters of twenty- and thirty-somethings huddled over laptops in the Tudor-style main house, and someone told me I looked like a guy who would have a stick of gum. Talks about markets jostled for attention alongside sessions about the odds that AI will kill us all and lessons on how to optimize your sex life. There was a furry meetup and watch parties for the first US World Cup match and game 5 of the NBA Finals. (I couldn’t find anyone who had put money on either event, though a few attendees told me they knew of folks who had made bank.) There were markets on play-money platform Manifold about the festival itself, like whether someone would break a bone (still unresolved) and whether Caroline Ellison would show up (yes).

Still, the broader background conditions were wildly different from previous years. Though Kalshi and Polymarket had sponsored the event in past years, they were AWOL this year. Both companies declined to comment on the change. Last year, Kalshi held a session on sports markets, which it had launched just six months earlier. This year, the companies are facilitating billions of dollars in sports trades during an especially friendly political era at the national level.

Sports were also conspicuously absent during a session on strategies for mastering markets around world events and politics. I caught up with David Bensoussan, the session’s organizer, who has made $1.6 million in profits on the platform, under the boughs of one of Lighthaven’s trees.

“The truth-seeking mechanism that prediction markets can have in terms of predicting things and making the population more informed—what on Earth does that have to do with sports?” he asks, wrapped in a blanket to ward off the chill of Bay Area shade.

The way Bensoussan and nearly everyone else I spoke with sees it, Kalshi and Polymarket have played a good hand over the past few years. They’ve made inroads with a friendly administration. They work with news organizations like Fox and CNN, and partner with X, Substack, Madison Square Garden, and Robinhood.

But sports betting is what FutureSearch’s Schwarz, who previously launched Google's internal prediction market, refers to as “degenerate gambling.” The legalization of online sports gambling sites like FanDuel and DraftKings has created growing concern about a surge in addiction. Kalshi and Polymarket have painted themselves as nothing like sportsbooks, saying their primary role is finding signal through the noise.

"Kalshi is different from sports betting from the way our exchange operates on a structural level, which has significant effects on our products and business model,” company spokesperson Jacki McGavick writes in an email. “Sports betting operates like a casino, where everyone is playing against the ‘house.’ Kalshi works like the stock market, with customers trading against other customers. Unlike a casino, Kalshi doesn't win when our customers lose.”

Researchers writing in Science in April, however, said prediction markets feature a “gambling-like design” that raises “public health concerns.” The study also suggested that rather than providing better information, prediction markets could be used for “democratic manipulation.” A recent wave of insider trading is reflective of that risk. A handful of state-level lawsuits are also looking to get markets banned in part due to consumer protection concerns.

These trends have started to sour public opinion. Kalshi and Polymarket could be easy targets should the political winds shift, and the philosophers have taken notice.

Bensoussan suggests that the companies could go on the lobbying offensive with Democrats, much like how the crypto industry has found enough open minds on Capitol Hill to keep regulations mostly at bay. There are signs this is already happening, with a trade group advised by a former Democratic lawmaker and a board that includes someone on leadership at Crypto.com.

If the crypto playbook doesn’t sound like the move, there’s another option: Kill sports betting entirely. “Maybe the perfect world is the US government bans sports gambling, but then leaves the [other] prediction markets,” says Schwarz.

That would create deep cuts to Kalshi and Polymarket’s business, with sports accounting for roughly 80 percent and 39 percent of trading volume on the respective platforms since July 2024, and it would probably upset more than a few venture capitalists looking for returns on their investments. But it would also keep the door open for the types of markets many Manifest attendees see as valuable, like world happenings. Indeed, the biggest news at Manifest wasn’t any of the three major sporting events that took place that weekend—yes, I’m including the UFC fights at the White House, and no, I don’t like it either. It was the deal between the US and Iran to open the Strait of Hormuz.

“If you're some sort of decisionmaker or some policymaker high up in DC, and you have to do something about Israel or Iran, a betting market is plausibly useful,” says Bensoussan.

Other things that attendees believed were better for the world than sports betting? A way for insurance companies to hedge their bets and a prediction market that offers contracts on the success rates of clinical trials. The latter is already happening at a relatively new market dubbed Endpoints Arena, which currently isn’t available for real-money trading in the US.

“A sports market isn't very useful,” the company’s founder Michael Fischer tells me, “but if you have a probability of success of a certain type of drug, it's extremely useful.”

Time will tell if these narrower markets actually provide actionable information, let alone become part of terminally ill patients’ medical plans.

If all this sounds very pie-in-the-sky, well, this is a festival that featured a market about whether an attendee wearing “the Panda Hat” would find someone to make out with while wearing said hat (yes) and where the conference’s top quote, as chosen by Manifold users, was “I still have not received nudes from her, except in a professional capacity.”

It may be a stretch to say the conference will help produce better versions of prediction markets. But at a festival where there’s so much hope for what markets could be, there was also a real sense of alarm about what they are right now.

“The apps are just straight-up predatory,” says Schwarz. “They are absolutely trying to trick you into thinking you're not going to lose money when you, in fact, of course, are.”