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Prediction market companies Kalshi and Polymarket have been criticised for allowing bets on deportation, famine, war, and now clinical drug trials. Kalshi co-founder Tarek Mansour has said his long-term vision is ‘to financialize everything and create a tradable asset out of any difference in opinion.’ The prediction markets are getting billions in backing from private equity, however when it comes to ethics, opinion is divided.
Is betting on a clinical trial any less ethical than buying shares in the company running it?
This month, Moderna (MRNA) and Merck (MRK) announced a scientific breakthrough: positive Phase 3 results for their personalised melanoma vaccine, an mRNA treatment designed specifically for each patient's tumour.
Long before the US Food and Drug Administration (FDA) makes a decision, investors and prediction market traders are already placing bets on whether treatments like Moderna and Merck's melanoma vaccine will ultimately succeed. To some people, that feels uncomfortable.
Should people really be able to financially profit from whether a cancer treatment works?
But then consider the share market. Investors have long bought and sold shares in biotech companies based on their expectations of trial outcomes. When good news arrives, biotech shares can soar. When trials fail, prices can fall just as quickly. The only real difference is that prediction markets strip away the company, and focus purely on the question.
Supporters argue that prediction markets can aggregate information and create a transparent forecast of an outcome. Investor and 23andMe founder Anne Wojcicki has argued that ‘The opportunity to have an open, transparent dataset about trial probabilities is extremely promising and empowering for people.’
Critics argue that packaging life-changing events into colourful, tradable contracts risks turning human suffering into entertainment. But haven't biotech investors have been placing bets on drug approvals, trial results, and medical breakthroughs for decades? Maybe the uncomfortable truth is that we've already monetised uncertainty. Prediction markets are just making it harder to ignore.
If betting on a cancer treatment feels wrong, is buying shares in the company developing it really any different?
Read more: Can Biotech beat cancer?
We’re not financial advisors and Hatch news is for your information only. However dazzling our writing, none of it is a recommendation to invest in any of the companies or funds mentioned. If you want support before making any investment decisions, consider seeking financial advice from a licensed provider. We’ve done our best to ensure all information is current when we pushed ‘publish’ on this article. And of course, with investing, your money isn’t guaranteed to grow and there’s always a risk you might lose money.
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