Aura Kasih
The burgeoning landscape of prediction markets presents an unprecedented ethical quandary for the journalism profession, as these platforms transform information into a tangible commodity with direct financial implications for those who create and consume it. With the rise of sophisticated platforms like Polymarket and Kalshi, virtually any event, from pop culture phenomena to geopolitical shifts, is now subject to speculative wagering. This development has thrust news organizations into a complex and often uncomfortable position, forcing a re-evaluation of long-standing ethical principles in the face of a rapidly evolving information economy.
Prediction markets, which allow users to buy and sell contracts based on the likelihood of future events, claim to offer a more accurate barometer of public sentiment and future outcomes than traditional polling methods or even established media analysis. This assertion has led some proponents to position these markets as a potential replacement for news reporting, suggesting that market-driven odds provide a more objective and predictive form of insight. However, this purported objectivity is complicated by the fact that many of these same platforms are actively forging partnerships and advertising deals with major news entities. Organizations such as Fox News and The Associated Press have entered into agreements with prediction market exchanges, while platforms like Polymarket and Kalshi are simultaneously engaging with independent journalists and Substack creators through sponsored content and promotional placements. This dual approach – positioning themselves as superior to news while simultaneously co-opting news organizations – creates a fundamental tension.
The core of the ethical dilemma lies in the inherent monetization of news. When journalistic endeavors, including the information uncovered and disseminated by reporters, can be directly translated into financial gains or losses on a prediction market, a potent conflict of interest emerges. The very act of reporting on an event, or even possessing non-public information about an impending story, suddenly carries a quantifiable monetary value. This realization has prompted some leading journalistic institutions to proactively address the issue. ProPublica, a renowned investigative journalism organization, has recently updated its code of ethics to explicitly address the use of prediction markets by its staff. While its existing policies already restrict employees from investing in companies they cover, the updated directive now unequivocally prohibits any staff member from wagering on the outcomes of news events, irrespective of their direct involvement in reporting on those specific events.
Diego Sorbara, Assistant Managing Editor at ProPublica, articulated the rationale behind this policy revision, citing instances where individuals have reportedly amassed substantial sums by betting on significant geopolitical developments, such as military actions in Iran. The concern is not merely about potential financial enrichment derived from reporting, but also about the integrity of the newsgathering process itself. Sorbara drew a direct parallel to the prohibition against buying stocks in companies that a journalist covers, emphasizing that betting on news events represents a similar, if not more direct, form of financial entanglement that compromises objectivity. This prohibition extends to all staff, including those on the business side, acknowledging that knowledge of upcoming stories can be pervasive within an organization.
ProPublica’s updated policy maintains a nuanced approach, permitting certain forms of speculative engagement, such as office pools for events like the Academy Awards or legally sanctioned sports betting, provided the organization does not actively cover the outcomes of these events. The rationale here is that if a news outlet is not a direct participant in reporting on the subject of speculation, the conflict is less pronounced. However, this distinction becomes blurred when a reporter’s work directly intersects with the subject of a wager. For example, a journalist who has covered the financial practices of sports league owners would be precluded from betting on the outcomes of games within that league. This illustrates the intricate web of potential conflicts that arise when the line between observer and participant becomes financially motivated.
The challenge of defining what constitutes a "news event" becomes particularly acute when considering peripheral aspects of larger happenings. When asked about the permissibility of wagering on elements surrounding major sporting events, such as the performers at a halftime show or attendees at a high-profile game, Sorbara indicated that such activities could easily veer into the territory of news reporting. The decision of who performs or attends an event can be influenced by a myriad of factors, including ideological stances, organizational affiliations, or public statements, all of which can become subjects of journalistic inquiry. Therefore, even seemingly tangential wagers can carry implications that intersect with journalistic responsibilities, necessitating caution.
Beyond the direct conflicts of interest for individual journalists, there is a broader concern regarding the influence of news reporting on prediction markets themselves. As journalists publish their findings, the odds on these platforms can shift, creating a feedback loop where coverage directly impacts speculative outcomes. In some cases, the very act of news reporting becomes an opportunity for financial gain on these markets. The example of over $55 million in trading volume on Polymarket related to the selection of Time magazine’s Person of the Year highlights how journalistic processes, such as editorial decision-making, can become subjects of intense financial speculation.
In response to these evolving dynamics, media organizations are adopting varied strategies to navigate the ethical minefield. Time magazine, for instance, explicitly prohibits its employees and their households from participating in prediction markets that speculate on non-public information gained through their employment or on Time announcements. Other outlets, like The Verge, currently interpret their existing ethics policies, which prohibit reporters from covering individuals or companies with whom they have a personal conflict, as encompassing activity on prediction markets. The editor-in-chief of The Verge has indicated a willingness to implement more specific policies should the need arise, demonstrating an awareness of the developing nature of this issue.
The New York Times, through its comprehensive ethical journalism standards, prohibits staff from making "any form of investment" in entities or industries that are likely to be covered by their reporting. This broad prohibition, which includes derivatives and speculative instruments, inherently extends to the activities on prediction markets. While insider trading is illegal in traditional financial markets, its prevalence on prediction markets is widely acknowledged, even being implicitly promoted by some influencers who hype these platforms. The very concept of prediction markets functioning effectively relies, to some extent, on the presence of individuals with privileged information—insiders—who can trade on non-public data before it becomes public knowledge. Journalists, by virtue of their access to embargoed news, confidential sources, and unpublished reports, are uniquely positioned to act as such insiders. The CEO of Polymarket has, in fact, expressed that the environment his company fosters, where insiders can disclose information, is "cool." This perspective directly confronts the legal and ethical frameworks that aim to prevent the exploitation of non-public information for financial gain.
The paradox deepens when one observes the increasing trend of media outlets entering into licensing and advertising agreements with these same prediction market platforms, even as their own staff are restricted from participating. This creates a perception of a compromised editorial stance. CNN, for example, has a partnership with Kalshi but prohibits its employees from betting on prediction markets. While CNN maintains that prediction markets serve as a supplementary data source rather than a replacement for traditional reporting and that editorial independence remains uncompromised, the optics of such arrangements are undeniably complex.
Dow Jones, the parent company of The Wall Street Journal, has engaged in a data partnership with Polymarket. The company has issued guidance prohibiting employees from using confidential work information for trading and requiring them to avoid any prediction market activities that could create a conflict of interest. News employees and their households are specifically barred from betting on markets related to their coverage areas. These measures underscore a recognition of the potential for ethical breaches, even as the organization seeks to leverage data from these platforms.
The deliberate strategy of prediction markets to seek institutional adoption through partnerships with established media entities, sponsorships of sporting events, and prominent placements in popular culture is undeniable. This concerted effort aims to legitimize their operations and integrate them into the broader informational ecosystem. However, the perception of these partnerships, even if solely for data licensing, raises significant ethical questions for news organizations. The inherent duty of journalists to maintain impartiality and avoid even the appearance of impropriety is paramount. When the public can no longer trust news organizations to be objective truth-tellers, their fundamental role in society is undermined. The embrace of prediction markets, with their inherent financial incentives and potential for conflicts, risks eroding that trust, leaving journalism with diminished credibility and influence. The ongoing expansion of these markets necessitates a continuous and rigorous ethical examination by all stakeholders in the information landscape.
Ayu Aulia
