Prediction Markets Getting Press

Market Overview

Markets struggled to find direction this week. The S&P was down 1% on the week and the Nasdaq was down 2%, but as has been the case in many weeks recently, the weekly performance belied significant intra-week volatility driven by the war in Iran, swings in crude prices (Brent swung between ~$95-111/bbl this week), and tech share volatility on continued AI-related announcements in chips and software. YTD, the S&P/Nasdaq are down 6.2%/8.8%. Our NPM Private Market Tracker*, which shows the average price performance of the 50 largest names in our internal Tape D® data, is up 6.1% YTD. (Bloomberg; NPM)

Feature

Prediction Markets Getting Press
The US ouster of Nicholas Maduro in Venezuela and the war with Iran have shone a spotlight on defense tech this year. But prediction markets have also received plenty of press as a result of these major events as well as the Final Four. Amidst the US-Iran conflict, contracts on the probability of a strike, the direction of oil markets and numerous other events have become a live showcase for how prediction markets might be used, and potentially abused (CNN, New York Times). The 2026 NCAA tournament has also become Kalshi’s single most popular product category, and analysts have been using Kalshi’s real-time implied probabilities alongside traditional odds (Bloomberg).

Polymarket and Kalshi are the two primary prediction market platforms. Below, we summarize their key differences. Kalshi raised a round in March 2026 at a $22 billion valuation, while Polymarket is reportedly seeking funding at a $15 billion valuation (Reuters, Yahoo Finance).

(Sources for table: Morgan Lewis, Reuters, Wall Street Journal, Blockhead, The Guardian, Company Reports)

Prediction markets are facing pushback and litigation relating to both their ability to operate in certain arenas and the outcomes of certain trades. There are numerous ongoing cases about whether sports-based event contracts fall under the regulatory jurisdiction of federal authorities or state gambling regulators, with Arizona being the most aggressive with criminal charges brought against Kalshi in March 2026. Eleven other states have issued cease-and-desist orders against the prediction market operators (Alvarez and Marsal, Morgan Lewis). A class action suit was filed in March on behalf of retail participants alleging that a prediction market failed to pay out contract holders for an event based on whether Ayatollah Ali Khamenei would leave office (Bloomberg). There are also multiple investigations underway regarding an Israeli journalist who was threatened numerous times over whether a story he wrote corroborated certain bets regarding an Iranian attack on Israel (Wall Street Journal). Finally, several bets timed suspiciously close to major events and political/corporate announcements have raised concerns regarding insider trading (CBS News, Politico).

Regulation is likely coming. Many experts believe that regulation of prediction markets is inevitable and imminent; key questions are whether they are regulated at the state or federal level, and whether those regulations legitimize or constrains the industry. On March 12, the CFTC issued an “Advanced Notice of Proposed Rulemaking for Prediction Markets” seeking insight on how to appropriately classify even contracts (i.e. as swaps or futures), as well as costs and benefits in adopting regulation. It also issued an advisory letter to prediction markets reminding them of their obligations to self-regulate and promote market integrity (Alvarez and Marsal). On the legislative front, at least seven bills have been introduced at the federal level to regulate aspects of prediction markets, from prohibiting federal employee participation to banning contracts on non-financial government actions and cultural events such as the Oscars and the Super Bowl. Last week the Banning Event Trading on Sensitive Operations and Federal Functions (BETS OFF) Act was introduced, and this past week the bipartisan Prediction Markets Are Gambling Act was unveiled to ban prediction markets from listing sports bets or casino-style games on their platforms (The Hill, Business Insider, Reuters).

Are prediction markets here to stay? Supporters of prediction markets argue that they can quickly and efficiently incorporate new information to provide accurate views on events and announcements (New York Times), and that they can offer a way to hedge other investment positions. Proponents of regulation argue that they are vulnerable to insider trading and manipulation and that they exploit a regulatory loophole to compete with sports betting (which provides tax revenues to state governments) and tribal gaming operators (which generate revenues in Native American tribal nations). (Yahoo Finance, Brookings Institute). We believe it is likely that they are here to stay given the size and popularity they have gained over a relatively short period of time, but we think regulation is likely in light of current state and federal efforts.

BIGGEST MOVERS AND TOPICAL NAMES

Based on our proprietary Tape D® data, the best performers of the large cap names in the private market thus far in 2026 have been:

• Cerebras (+141%)
• Neuralink (+48%)
• Clickhouse (+47%)
• OpenEvidence (+46%)
• Stripe (+27%)
• Kalshi (+20%)

Based on our proprietary Tape D® data, the best sector performance in the top 100 names have been Industrials, Cybersecurity and Healthcare (Cerebras’ performance is a major driver of Healthcare sector returns).

RECENT EVENTS

• An LA jury found Meta and YouTube negligent in the design and operation of their platforms as they related to social media addiction of a young user and were ordered to pay $6 million in damages. Separately, a New Mexico jury found that Meta willfully violated the state’s unfair practices laws by failing to protect children from sexual predators and awarded $375 million of civil penalties. (CNBC, 3/25 and New York Times, 3/26).
• Meta now plans to spend $10 billion on its AI data center in El Paso, Texas, up from a prior commitment of $1.5 billion (CNBC, 3/26). Blackstone is nearing a deal to buy Rowan Digital Infrastructure, a data center developer, at a valuation of over $10 billion (The Information, 3/25).
• Circle’s stock fell 20% after a new draft of the Clarity Act signaled a ban on paying rewards for simply holding stablecoins (StrictlyVC, 3/23).
• Elon Musk said Tesla and SpaceX will build a “Terafab” facility to manufacture chips in Texas (The Information, 3/23).
• The Trump administration released a framework detailing its policy approach to the AI industry, calling for federal regulation that would override state regulation (The Information, 3/23).

NOTABLE CAPITAL RAISES

• Reflection AI, backed by Nvidia, is in talks to raise $2.5 billion at a $25 billion valuation (Wall Street Journal, 3/26).
• Shield AI, a developer of drones and autonomous software, is raising $1.5 billion in Series G equity and $500 million in fixed return preferred equity financing at a $12.7 billion post-money valuation; proceeds will fund the acquisition of Aechelon Technology, a defense software simulation company (Company reports, 3/26).
• Drone maker PDW raised $110 million in series B funding (Axios, 3/26).
• Harvey, a legal tech startup, confirmed that it raised $200 million at an $11 billion post money valuation (StrictlyVC, 3/25).
• eMed, an employee telehealth company, announced $200 million in new funding at a valuation north of $2 billion (Axios, 3/26)
• Granola, which transcribes conversations and turns rough meeting notes into summaries, raised $125 million at a $1.5 billion valuation (StrictlyVC, 3/25).
• Periodic Labs, a startup using AI and autonomous robotic labs to discover new materials, is reportedly raising hundreds of millions of dollars at a valuation of roughly $7 billion (Bloomberg, 3/25).
• Zipline, which operates autonomous drone delivery systems, raised a $200 million Series H at a $7.6 billion post-money valuation (StrictlyVC, 3/23).
• Vultr, one of the oldest independent cloud providers and backed by chipmaker AMD, is seeking to raise $1 billion of capital (The Information, 3/25).

Notable Exits

• SpaceX could file for an IPO as soon as this week (Business Insider, 3/25).
• Health ring Oura is reportedly interviewing bankers for an IPO that could take place as soon as this year (The Information, 3/24).
• Meta hired the founders and team behind the AI startup Dreamer (Bloomberg, 3/23).
• Amazon purchased Fauna Robotics, a New York startup that is developing kid-sized humanoid robots for home use. (StrictlyVC, 3/23).
• Chinese humanoid robotics startup Unitree has filed for an IPO to raise ~$610 million in Shanghai (The Information, 3/23).
• Arxis, a defense electronics maker, filed for an IPO that could raise $400 million (Axios, 3/25).
• Aevex, a drone maker, filed for an IPO that could raise $200 million (Axios, 3/24).
• X-energy, a developer of small modular reactors, filed for an IPO (Axios, 3/23).