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Articles by Oliver

Oliver Shale

Investment Specialist, US | Ruffer LLC registered representative

11 December 2025

Do you have a strong view on the next chair of the Federal Reserve? Perhaps the highest grossing movie of 2025? Or even how many times Elon Musk will tweet in December? Well, now there are platforms that allow you to bet on these views, and more.

Many investors would consider themselves to be in the game of forecasting but the explosion of prediction markets sheds new light on this endeavour. They may be another embodiment of the fundamental shift in the structure of financial markets.

Prediction platforms, such as Polymarket and Kalshi, are peer-to-peer exchanges that allow users to trade contracts on a variety of real-world events. They operate with low technical barriers and in some cases blockchain-based anonymity. Contracts provide a payoff based on a binary result, with the current price reflecting the collective belief in the probability of that particular outcome. Though they have much in common with traditional derivative contracts, they allow users to bet on a much wider range of predictions.

These new exchanges rose to prominence through the US presidential election, on which Polymarket traded around $4 billion of volume. Following a series of successful court verdicts around the definition of ‘gaming’, as of November 2025, both platforms are to be federally regulated by the Commodity Futures Trading Commission (CFTC), transforming a once niche academic experiment into the financial mainstream. As this month’s chart shows, volumes have reached a record high, with Kalshi and Polymarket trading nearly $10 billion in November 2025.

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Proponents champion these markets as innovative tools for hedging and information discovery, or ‘truth-seeking’. Investors can use these platforms to insure themselves against the outcome of real-world events. By requiring users to put skin in the game, they harness the ‘wisdom of crowds’, transparently generating a collective forecast. Indeed, their success in predicting certain high profile events such as elections may well indicate an accurate reflection of public sentiment.

Their usefulness has not gone unnoticed, and their integration with traditional finance is accelerating. In partnership with Kalshi, Robinhood has launched a prediction market within its existing brokerage app. Google has announced plans to integrate prediction odds into its finance platform. Even the Intercontinental Exchange, parent company to the NYSE, has announced plans to invest $2 billion in Polymarket, valuing the company at $8 billion. These endorsements reflect growing recognition that this crowd-sourced information can provide a valuable signal.

Yet these innovations arguably represent another step in the ‘gamification’ of finance. The contracts appear to have much in common with gambling, particularly on sports. The structures encourage users to view markets as venues for instant gratification, as prices become increasingly divorced from fundamental value.

The philosopher Nick Land coined the term hyperstition, where collective belief (or hype) acts as a self-fulfilling prophecy. In this way, betting on single outcomes might build expectations which feed momentum and lead to action. Could major prediction contracts ultimately influence market prices, investor behaviour or even public perception and policy? Furthermore, these odds can be swayed by sufficient capital, and there are few guardrails in place against opaque insider manipulation. So called ‘whales’ have been known to place large, market moving bets, winning many millions on events such as the US election.

At Ruffer, we have spoken about the risks of reflexivity in markets, where price becomes a narrative itself, driving fundamentals. It is a dynamic amplified by algorithmic trading, volatility targeting and now perhaps real-time measures of public belief. In our portfolios, we seek truly uncorrelated assets that can protect against the unravelling of these reflexes. All in, prediction markets are yet another innovation making the financial system look more like a high stakes casino.

Articles by Oliver

Oliver Shale

Investment Specialist, US | Ruffer LLC registered representative

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Piers Wheeler

Director – Institutional

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Developing and executing asset management strategy for capital raising and strategic relationship management. Coverage includes EMEA, Asia and Australia. Piers joined Ruffer in 2021, having previously worked with asset management firms including Eastspring, AMP Capital and LEK as a strategic consultant. He holds a MA from the Bayes Business School and a BA (Hons) from the University of Oxford.

Annabel Paterson

Senior Associate – Institutional

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Joined Ruffer in 2021, having graduated with a first class honours degree in land economics from the University of Cambridge. After two years working with the UK Private Wealth team and completing her IMC and CFA Level I qualifications, she now supports Ruffer’s global business development and client servicing efforts.

Articles by Annabel

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