Gambling addicts aren’t the only ones being taken for a ride by prediction markets.
As gambling platforms like Polymarket and Kalshi become have more popular than ever before, financial criminals are also using prediction markets to unleash fraud and graft on an unprecedented scale.
According to the Wall Street Journal, this phenomenon was identified as far back as February, when a payment processing company contracted by Polymarket flagged a massive rise in bets made with stolen debit cards.
Essentially, fraudsters began by plugging stolen financial information into the prediction market to make wagers. If they won, the perpetrators would then withdraw the funds, syphoning them into alternative payment methods under their control.
As the WSJ reports, criminals tried to make off with at least $10 million using this method — causing the third-party payment processor to reject over 80 percent of its incoming transactions as fraudulent, which is vastly over the industry norm of around 1 percent.
Following what has arguably become the business model of the day, the WSJ revealed that Polymarket CEO Shayne Coplan essentially told his horrified compliance team to keep raking in the cash and deal with the consequences when they come — if they ever come at all, that is.
Financial policy experts say the level of graft on display is without parallel. As Joe Konizeski, a former attorney for the Commodity Future Trading Commission put it, “in the regulated space, this kind of thing does not happen.”
“You have adults who handle customer funds and make sure they’re sourced appropriately and handled appropriately,” Konizeski continued.
More on gambling: DraftKings Is Using AI to Identify Problem Gamblers and Get Them Hooked
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