Trump just told the Navy to shoot Iranian boats on sight. Kalshi is now embedded in Fox News, CNN, and CNBC, beaming real-time prediction odds into living rooms across America. John Oliver devoted a segment to the industry. ProPublica banned its journalists from placing bets. Forbes created a prediction market on a children's mass shooting. And our fictional portfolio just crossed +63.6%. This week, prediction markets stopped being a niche curiosity and became the news itself.
On April 23, President Trump ordered the US Navy to "shoot and kill" any boats caught laying sea mines in the Strait of Hormuz. The order came after Iran seized two more ships and fired on a Greek-owned cargo vessel with rocket-propelled grenades, despite having given it permission to transit.
The Strait remains effectively closed. The US naval blockade of Iranian ports, which began on April 13, has now turned back 31 Iran-linked vessels. Iran says reopening Hormuz is impossible while the blockade continues. The impasse is total: the US won't lift the blockade until Iran stops mining, and Iran won't stop until the blockade lifts.
Oil is at $95/barrel. Roughly 20 million barrels per day normally transit the Strait, representing 20% of global seaborne oil trade. None of it is moving.
Portfolio impact: The "shoot and kill" order makes May normalization even less likely. When we opened our May NO position on April 20, YES was at 69.5%. It's now at 33.5%. Our position is up 117.9% on that leg alone. The question we're wrestling with: do we take profits now that May is within our original fair value range (25-35%), or do we hold? Our answer: we hold. The military escalation has fundamentally changed the calculus. A "shoot and kill" order is not the language of de-escalation. We now estimate fair value for May normalization at 15-20%, not 25-35%. There's still room to run.
Something shifted this month. Prediction markets stopped being a thing you explain to people at dinner parties and became something they see on the news every night.
The media deals: Kalshi has signed partnerships with CNBC, CNN, Fox News, and the Associated Press. Fox Corporation announced in April that it will weave Kalshi's real-time forecast data through Fox News Channel, Fox Business Network, Fox Weather, and its streaming service. When you watch cable news, you now see prediction market odds alongside stock tickers and weather forecasts.
The journalism beat: Nieman Lab published a piece on April 21 titled "Prediction markets are breaking the news and becoming their own beat." Kate Knibbs at Wired has established herself as a dedicated prediction markets reporter. Polymarket struck a partnership with Substack in February and Dow Jones in January. The infrastructure of mainstream coverage is being built.
The late-night segment: John Oliver devoted a segment on Last Week Tonight to prediction markets, questioning the industry's rapid expansion and regulatory gaps. When a comedian is covering your industry, you've gone mainstream.
Why this matters: Media integration is the distribution moat that turns prediction markets from a crypto-native experiment into a permanent fixture of how Americans consume information. When CNN shows Kalshi odds on-screen, millions of viewers learn what prediction markets are without downloading an app. This is the Polymarket/Substack partnership scaled to television. It is also, arguably, the most bullish signal for the industry's long-term survival: once prediction data is embedded in the media ecosystem, banning prediction markets becomes like banning stock tickers.
Not everyone is celebrating the mainstreaming of prediction markets.
The Forbes incident: On April 20, 404 Media reported that Forbes created a prediction market that effectively gamified a story about a mass shooting that killed eight children. The backlash was immediate and severe. This is the dark side of "a prediction market for everything": some events should not be turned into betting opportunities, and the platforms are struggling to define where that line falls.
The ethics codes: ProPublica added a new section to its ethics code prohibiting staff from betting on news events through prediction markets. The concern: when journalists can bet on outcomes they cover, the language of forecasting begins to influence the language of reporting. If a prediction market contract settles on a specific phrase, reporters may unconsciously frame stories to match the market rather than the messy reality.
The Columbia Journalism Review weighed in with a deep analysis of binding news and prediction markets, warning that the CFTC's current pro-prediction-market posture may not survive a genuine crisis of public trust.
The tension: The prediction market industry needs mainstream adoption to grow, but mainstream adoption brings mainstream scrutiny. The Forbes incident, the DOJ prosecution we covered last issue, the $143 million in suspicious trades identified by Columbia and Haifa researchers, the children's mass shooting gamification: each scandal pushes regulators closer to action. Kalshi's self-policing (fining politicians, banning insiders) is a calculated bet that voluntary enforcement forestalls mandatory regulation. Whether it works depends entirely on whether the next scandal is worse than the last.
| Position | Entry | Current | P&L |
|---|---|---|---|
| Hormuz April NO | YES 38% | YES 2.9% | +56.5% |
| Hormuz May NO | YES 69.5% | YES 33.5% | +117.9% |
| Cash reserve | $200 | $200 | -- |
| Total | $1,000 | $1,636 | +63.6% |
The call is working. In Issue #1, we said April normalization at 38% was overpriced, estimating fair value at 5-10%. It's now at 2.9%, effectively resolved in our favor. We said May at 69.5% was overpriced, estimating fair value at 40-50%. It's now at 33.5%, already below our initial estimate.
Are we taking profits? No. The "shoot and kill" order on April 23 represents a meaningful escalation. Iran seized two more ships and fired RPGs at a Greek cargo vessel. The US has turned back 31 ships since the blockade began. Negotiations are deadlocked: Iran's chief negotiator says Hormuz can't reopen while the blockade continues, and the US won't lift the blockade while Iran mines the Strait. We're revising our May fair value estimate down to 15-20%. The position stays open.
June Hormuz is at 57.5%, down from 68.5% when we started tracking. If the current deadlock holds, June normalization is also unlikely. We may open a June NO position in the coming days.
Weekly prediction market intelligence. Portfolio calls. Market analysis.
Subscribe free