Kalshi will offer sports-style betting on drug trial results

Kalshi Inc. is expanding in biotechnology by offering wagers on the outcomes of clinical trials and regulatory decisions, giving traders a more direct way to bet on key industry catalysts.

The prediction market platform says the move will allow investors to isolate binary events like drug approvals from a company’s overall stock performance. Kalshi launched 13 new biotech contracts last night in partnership with AI-powered intelligence firm AppliedXL, including bets on whether US regulators will approve medicines made by companies like Sanofi and Gilead Sciences Inc.

Biotechnology is a highly speculative corner of the market that is prone to massive stock swings and much uncertainty. While Kalshi and rival Polymarket have offered some healthcare-related contracts in the past, this expansion fits into Kalshi’s ongoing effort to show that prediction markets can provide socially useful information, rather than just an outlet for sports gambling.

Bloomberg reported Wednesday that Kalshi is evaluating whether to offer wagers on flight-cancellation rates at specific airports.

While prediction markets are federally regulated under U.S. law, the vast majority of their volume comes from sports contracts, which have been accused by states of violating gambling laws.

Healthcare is so far a relatively small market for Kalshi. In the last week of June, the platform hosted $3.6 million of trading on all science and technology topics, while sports attracted $5.4 billion, according to user-compiled data from Dune Analytics.

Drug development is often characterized by fragmented information, delayed disclosures and optimistic corporate messaging around trial results. Kalshi says data generated by prediction markets can provide clearer signals to investors about the likelihood of success, helping them make better decisions.

Michael Selig, the chair of the Commodity Futures Trading Commission that regulates prediction markets, has also touted drug-trial contracts as a potential way for sick people in need of medicine to hedge their future treatment costs.

But critics say these kinds of bets create an incentive to trade on nonpublic information, potentially influencing ongoing clinical trials or distorting thinly traded markets. Kalshi plans to use employment verification to monitor for insider trading, similar to how it handles other wagers about corporate data.

The company says it spent months consulting physicians, pharmaceutical researchers, bioethicists and other experts before launching its biotech initiative. They included former Eli Lilly & Co. scientist Alpheus Bingham, who helped build an internal prediction market in the early 2000s to forecast the success of various drugs and research projects. The goal wasn’t gambling but rather to aggregate dispersed knowledge from across the company into a single probability estimate. Bingham later founded Innocentive, an open innovation and crowdsourcing platform that spun out of Lilly in 2005.

Anne Wojcicki, the co-founder of genetics-testing firm 23andMe, also provided input as an unpaid consultant. In an interview, Wojcicki said she sees Kalshi’s initiative as a valuable tool for patients.

“It will help people evaluate their healthcare options” by highlighting which clinical trials are most promising, she said. At the same time, Wojcicki said flexible guardrails will be needed to ensure that the wagers don’t affect study outcomes, for instance by encouraging patients to pull out of trials with low expectation for success.

Kalshi says it won’t offer contracts tied to pediatric studies or trials that are still recruiting participants.