Kalshi opens prediction markets to FDA drug development decisions, clinical trial outcomes
Kalshi, the online prediction market, has begun allowing users to wager on U.S. Food and Drug Administration (FDA) regulatory activity, including if and when new pharmaceuticals will be approved, the outcome of clinical trials and more scenarios related to drug development.
Within 24 hours of launching the betting options, users placed hundreds of thousands of dollars in wagers. Kalshi said bets can be narrowed to the current status of a single drug, with up-to-date data coming in through AppliedXL, a company that analyzes and aggregates public record information.
Currently, there are over a dozen ways to put money on FDA activity related to drug development and policy, with options including when compounds will be added to the bulk drug substances list and predictions about the date when camizestrant will be approved for use as a breast cancer treatment.
The number of ways in which users can play will only continue to grow, as Kalshi is known as the place where people can bet on practically anything, including when the U.S. government will confirm that space aliens are real and when OpenAI will release the next iteration of ChatGPT.
However, at least for now, drug approval gambling is limited to the outcomes of Phase 3 clinical trials, as that is the most accurate and readily available data the company can get from AppliedXL.
Early stage clinical trials are not currently approved for listing on the market, though that can change in the future as gambling heats up and users inevitably want more options on the table.
Kalshi is also limiting drug approvals to large companies, specifically those with a market cap of at least $500 million. For example, users can bet on when Eli Lilly’s new weight loss drug will get the green light to go to market.
Drug approval situations not related to any specific company or drug have a lot more freedom in terms of how users can bet. Do you think a new, currently unknown cure is coming down the regulatory approval pipe at the FDA? Well, you can wager when that will happen along with other users, and Kalshi will take a percentage of any winnings.
Inside the system
One of the concerns with this form of online betting has been the ability of those with inside information to tilt the odds. Kalshi said in this case it will be taking additional steps to mitigate market manipulation, such as by getting employment verification from anyone who signs up.
It remains to be seen if the company’s efforts to crack down on insider betting will be successful.
Kalshi launched in 2021 and is not considered gambling under federal law. Instead, it is regulated by the Commodity Futures Trading Commission, a government agency established in the 1970s to monitor the trading of stock options.
Chad is an award-winning writer and editor with over 15 years of experience working in media. He has a decade-long professional background in healthcare, working as a writer and in public relations.