Kalshi and Polymarket now let you bet on drug approvals, and not everyone is thrilled about it

You can now bet real money on whether the FDA will approve a drug. Kalshi launched a suite of biotech prediction markets on July 16, letting users wager on Phase 3 clinical trial outcomes and full FDA approvals from major pharmaceutical companies. Polymarket has been hosting similar biotech-related contracts since as early as May.

Trading volume on Kalshi’s new biotech offerings exceeded $100,000 shortly after launch, covering around 13 specific markets tied to companies like Sanofi, Eli Lilly, and Gilead Sciences.

How pharmaceutical prediction markets actually work

Kalshi’s contracts are binary: a drug either gets approved or it doesn’t, a trial either succeeds or it fails. You buy a position at a price that reflects the market’s implied probability, and if you’re right, you get paid.

Kalshi partnered with AI firm AppliedXL to source data and resolve contracts. For now, Kalshi is limiting its offerings to Phase 3 trials and full FDA approvals only. Phase 3 is the final stage of clinical testing before a company submits its application to regulators.

Polymarket, which operates in the crypto-native prediction market space, has taken a less structured approach. Its biotech contracts have been live since May, and the platform’s decentralized architecture means anyone with a crypto wallet can participate. Kalshi, by contrast, operates as a CFTC-regulated exchange in the US.

The insider trading problem nobody has solved

Traditional stock markets already struggle with insider trading in biotech. The SEC has prosecuted numerous cases involving people who traded pharmaceutical stocks based on nonpublic clinical trial data. Adding prediction markets to the mix creates another venue where that same information can be monetized.

Kalshi’s CFTC regulation requires the platform to monitor for suspicious trading activity and share data with regulators. Polymarket’s crypto-based infrastructure makes surveillance significantly harder, as blockchain transactions are pseudonymous.

What this means for crypto and prediction market investors

For the broader crypto ecosystem, Polymarket’s architecture uses smart contracts on Polygon to settle bets. For now, the $100,000 in early volume on Kalshi suggests retail curiosity rather than institutional conviction.