It seems like you can wager on almost anything these days through prediction market platforms, from who will win the World Cup and the upcoming midterm elections to today’s weather and even military operations. Soon, you will also be able to bet on the success of potentially lifesaving experimental drugs.
Kalshi announced Thursday that it is launching a pilot of prediction markets tied to clinical-trial outcomes and decisions made by the U.S. Food and Drug Administration (FDA).
Prediction markets allow users to buy contracts based on whether they believe a future event will happen. The price of a contract reflects the market’s estimated probability of that outcome.
Both Kalshi and its competitor, Polymarket, have previously offered some health-related contracts, including bets on when a drug might get regulatory approval. However, these new markets will focus more specifically on whether a clinical trial meets its primary endpoint, the main outcome researchers designed the study to measure, or whether the FDA approves a drug for a particular medical use.
Kalshi is pitching the markets as a way to make information about drug development and a treatment’s chances of success more publicly available. The company argues that this info is typically kept behind closed doors and, once made public, often comes with some level of corporate spin.
In a press release, the company said that a publicly listed market on a drug trial “produces a continuously updated, public probability that reflects the weight of the evidence rather than the preferred messaging of the trial sponsor.” Kalshi said the markets will allow investors, clinicians, and patients to weigh in.
“Drug development is one of the most important and most information-constrained industries on earth. The data that determines which drugs advance and which don’t is largely locked away from the people who need it most,” said Kalshi CEO Tarek Mansour in the press release.
The pilot is being conducted in partnership with AppliedXL, a public intelligence company that uses AI to track developments across various industries. AppliedXL will help curate these markets and determine how contracts are settled.
For clinical-trial markets, Kalshi and AppliedXL will use the primary endpoint registered to ClinicalTrials.gov. FDA-related contracts will be settled using documents such as an FDA approval letter or the recorded vote of an agency advisory committee.
Still, drug-development markets appear especially vulnerable to insider trading and efforts to influence the real-world outcomes to which they are tied. These concerns have repeatedly come up for Kalshi and Polymarket, which promote the idea that “experts” can use their knowledge to place better-informed bets, and in turn, improve a market’s accuracy.
Some lawmakers have even introduced a bill that would ban trades on these platforms tied to outcomes that can be manipulated, following high-profile cases of users making large profits on suspiciously timed trades tied to global conflicts. In the latest example, ABC News reported on Thursday morning that “Gabriel Perez, a technical assistant to the president who has been operating Trump’s teleprompter since 2016, is in talks with federal regulators to settle allegations he used his inside knowledge of the president’s speeches to win more than $100,000.”
For its part, Kalshi says it is adding additional safeguards for its drug-trial markets. The platform is limiting markets to late-stage clinical trials, arguing that earlier studies with exploratory endpoints have a greater insider trading risk. The company also says it will wait until enrollment in a clinical trial is closed before listing a market as a precaution designed to avoid influencing doctor referrals and recruitment. Kalshi will also require traders in these markets to verify their employment.
The news also comes as Kalshi continues to push prediction markets into all aspects of life, including travel. Earlier this week, the company filed paperwork with the Commodity Futures Trading Commission (CFTC) regarding potential plans to offer marketed products tied to the percentage of flights canceled at specific airports.
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