Major prediction market platforms Polymarket and Kalshi have both opened markets on the Hantavirus. The operators have rapidly expanded the range of markets on offer and promote the idea that you can bet on anything. Is trading on a pandemic a viable economic hedging opportunity, or is it a step too far for the industry?
Polymarket was first up with its markets on a possible pandemic emerging from cases of Hantavirus on board a Dutch cruise ship.
The company sent an email to subscribers on Thursday, titled, “A new pandemic?“
Inside, it sent the ominous message, “Odds of a Hantavirus pandemic this year are ticking higher following reports of transmission outside the MV Hondius cruise ship.”
Its market shows a spike in trading on Wednesday, briefly pushing the chances of a pandemic up to 32.9%. The odds have since fallen back to 9%.
Over $2.7 million has already been traded on the market. The company has not shied away from offering wagering on controversial subjects, even if they are officially prohibited under US law. It continues to promote wagering on the war in Iran.
The Commodity Exchange Act (CEA) prohibits markets related to war and death, but these are generally available on Polymarket’s international platform.
Polymarket’s rules do not mention the death count as any evidence that a pandemic has emerged. Instead, it will be settled “if the World Health Organization explicitly characterizes Hantavirus…as a ‘pandemic’“.
There are no explicit rules against trading on health crises or pandemics.
Kalshi Also Opens Pandemic Betting
Kalshi, as a fully regulated exchange in the US, has largely steered clear of controversial markets involving war and death.
It had a market on the ousting of Iranian leader Ali Khamenei, but in the aftermath of his death, it attempted to establish clear rules that trading on death will not be a way for users to profit.
It also ran an ad campaign that appeared to be a dig at Polymarket, which allows wagering on wars and conflicts.
Trading on a pandemic would appear to toe the line on that topic, but it launched a market on whether there would be a pandemic of any kind back in March. The odds of yes are now at 18%, although the market has seen only $166,000 in trading, far less than the Polymarket market.
The Argument for Pandemic Prediction Markets
Some researchers have advocated the use of prediction markets for infectious diseases. A study back in 2007 proposed “that prediction markets may be useful for tracking and forecasting emerging infectious diseases, such as severe acute respiratory syndrome and avian influenza, by aggregating expert opinion quickly, accurately, and inexpensively.”
The researchers added, “Information revealed by prediction markets may help to inform treatment, prevention, and policy decisions.”
The markets may also serve as a way for companies to hedge against a pandemic with wide-reaching economic consequences. Businesses or local governments could use the markets to limit the damage that a major outbreak, such as COVID-19, would cause.
That has traditionally been the argument of prediction market platforms on why these are valuable tools. Michael Selig, the chair of the Commodity Futures Trading Commission (CFTC), promoted the idea that people with medical conditions use prediction markets to “manage the potential risk of having a future treatment or medical costs.”
Arguments Against Betting on the Hantavirus
On the other side, opponents of pandemic wagering would argue that it creates perverse incentives. As one user on X stated, those wagering on the pandemic are now actively supporting it happening.
The open promotion of markets on wars in the Middle East has spurred a strong reaction from lawmakers. Senator Adam Schiff introduced the DEATH BETS Act (Discouraging Exploitative Assassination, Tragedy, and Harm Betting in Event Trading Systems) in March.
“Betting on war and death creates an environment in which insiders can profit from classified information, our national security is jeopardized, and violence is encouraged. There is no justification for gambling on lives, or public benefit to be derived by such a market,” said Schiff when introducing the legislation.
In an age when pandemics may be created in labs, wagering on their spread could be problematic. Additionally, these markets are argued to provide valuable information about the likelihood of a pandemic.
This information would be most valuable if it came from those on the front lines dealing with the pandemic, who are in a position to fully understand how likely it is to develop. Yet, if those individuals traded on prediction markets, they may be accused of insider trading.
A case emerged this week of political campaign staff using unreleased poll data to profit from election prediction markets before the data’s publication. This has raised serious questions about whether this should be acceptable.
“While they offer informational and liquidity benefits, prediction markets also pose risks of systemic instability and predatory financial exploitation,” stated a critical article on prediction markets last year.
Kalshi has run ads with the tagline “Trade on anything,” while Polymarket promotes similarly with “Trade on Everything.” Neither company looks likely to change anytime soon.
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Major prediction market platforms Polymarket and Kalshi have both opened markets on the Hantavirus. The operators have rapidly expanded the range of markets on offer and promote the idea that you can bet on anything. Is trading on a pandemic a viable economic hedging opportunity, or is it a step too far for the industry?
The post Hantavirus Betting: Viable Hedging Opportunity Or a Step Too Far for Prediction Markets? appeared first on CasinoBeats.