Ten years ago, betting your life savings against the success of Elon Musk would have seemed like financial suicide. A year after DOGE’s disastrous collapse, one man who did exactly that is cashing out bigtime.
New reporting by the Wall Street Journal detailed the story of Alan Cole, an ivy league tax economist who bet $342,195.63 — the sum of his life savings, he says — on a bold gamble on the prediction market Kalshi.
The bet, placed in 2025, was simple: if Musk and his DOGE boys failed to cut federal spending in 2025 below what it was in the fourth quarter of 2024, Cole was due for a huge payout. Of course, that’s exactly what happened — though Musk cut a boatload of government workers during his short stint in Washington, he fell far short of the $2 trillion in cuts he originally promised.
So of course, Cole got his payday. Per the WSJ, at Cole’s peak, he had over 3 percent of one $12 million “federal-spending” book under his control. Given that prediction markets are wagers against other bettors, rather than the platform itself, he was positioned to win big.
“The virtue of the matching market is that you can take the good side of a bad bet — someone else’s bad bet,” he told the WSJ.
Good side, indeed. When the federal government’s final tally from 2025 hit on February 20, Cole’s ridiculous gamble looked more like a sure-fire bet. Per the WSJ, the lowest spending ever got in 2025 was still $66 billion above the threshold Cole needed it to maintain.
Kalshi ended up paying out $470,300, a profit of around 37 percent — which, depending on how how strong a stomach you have, isn’t bad for a year’s worth of risk.
“There’s a little bit of that feeling of vindication,” the tax economist said.
While Cole’s bet might look obvious in hindsight, it’s a pretty substantial fortune to put up on such a long-term bet. That set-up makes Cole relatively unique among prediction markets’ headliners, many of whom are suspected of exploiting insider info to dupe rubes for short-term gains.
Particularly egregious incidents include the Venezuelan air-strike bets, in which a suspected US government insider won over $400,000 for a wager placed just hours before the deadly strikes on Caracas. Elsewhere, a group of Israeli civilians and military members were arrested after walking away with over $150,000 obtained from well-timed bets anticipating Israel’s upcoming strikes.
So while Cole’s bet may have been risky, he can at least take comfort knowing that, in the sleazy world of prediction markets, he’s nowhere near the bottom.
More on prediction markets: It Seems Almost Statistically Impossible That This Polymarket Bettor Didn’t Profit Off Inside Knowledge About the Super Bowl Half Time Show
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