How Prediction Markets Will Become a New Frontier in Information Warfare
By Darjan Vujica
I'm thrilled to welcome our very first guest contributor to The Connection! A former senior official at the State Department working at the nexus of technology and foreign policy, Darjan Vujica most recently served as the Emerging Technology Coordinator at U.S. Embassy New Delhi and Director of the Global Engagement Center’s Analytics Directorate. Recognized as an "Automation Innovation Leader – Government" at the AFCEA Bethesda Innovate IT Awards, Vujica leverages his deep government expertise to address information warfare. He identifies this domain as an underreported national security issue that now determines the outcome of strategic objectives across domestic and foreign politics in the digital age.
It is 2028, and for the executives at Boeing, the stakes are high. After a decade defined by safety crises and eroding public trust, the rollout of the American aerospace giant’s next plane—the long-rumored "797" jet—is a bet on its future. The company needs a flawless launch and market confidence to reassure investors and reassert American dominance in the skies. But days before the unveiling, a problem emerges from an unexpected source: a decentralized betting platform hosted on a server overseas.
A new question is being bet on: "Will the Boeing 797 program be officially paused or delayed until 2030?". There is no whistleblower, no failed test flight, and no leaked memo. There is simply a sudden, anomalous surge in betting volume. Millions of dollars pour into the "Yes" side of the bet, driven by a network of anonymous accounts.
To the outside observer, this may look like "insider" knowledge bleeding into the market. The probability of a delay, common in aviation, spikes from a negligible 15 percent to a decisive 65 percent. The signal migrates from the betting platform to the broader market. Financial news outlets report the surge as a potential indicator of "insider skepticism," validating the data point. The effect is psychological but decisive. Downstream suppliers, already sensitized by Boeing’s history of stoppages, view the smart money consensus as a credible risk warning. To protect their own fragile cash flows against a potential cancellation, they quietly deprioritize Boeing’s tooling orders in favor of safer contracts. A genuine supply chain bottleneck ensues. The 797 is delayed—not by an engineering defect, but by a manufactured reality.
Beijing’s state-owned competitor, COMAC, capitalizes on the volatility. By pointing to the delay as further evidence of American industrial unreliability, COMAC courts unsure customers, effectively converting a financial influence operation into tangible market share.
A Growing, Murky Market
While this scenario is hypothetical, the vulnerability is increasingly real. Prediction markets, platforms where users bet on the outcome of future events, have exploded in popularity, transforming from niche academic experiments into – seemingly – global arbiters of reality. By the end of 2025, the usage of prediction markets exploded in popularity, with the broader market recording an all-time high of $5.3 billion in weekly trading volume. Kalshi, one of top companies in this space, alone processed $23.8 billion in volume for the year—a staggering 1,108 percent increase from 2024—while executing nearly 97 million individual trades. With this explosive trajectory, analysts now project that the sector could reach $1 trillion in annual volume by the end of the decade.
These platforms currently sit in a murky ethical valley between politics and gambling, blurring the line between financial forecasting and casino-style speculation. But for a state actor, they offer something far more valuable than a gambling payout: the ability to buy credibility or a narrative.
Prediction Markets as a Tool of Information Warfare
To better understand this threat, we must view it under the umbrella of information warfare – the strategic use of information and technology by state and non-state actors to gain an advantage. Prediction markets represent a new and specific tool within an existing arsenal that include cyber operations, disinformation campaigns, psychological operations, narrative laundering, and other methods. Prediction markets operate alongside these tools, can help amplify them, or act as a feedback loop. By manipulating the odds, adversaries can shape a new, counterfeit reality—fabricating a statistical consensus that serves as potent fodder for the rest of their influence machine. A manufactured "80 percent probability" of disaster effectively launders a lie into data, providing the objective "proof" that bot networks cite, news outlets amplify, and victims ultimately internalize.
The threat is just as severe for geopolitics, particularly regarding the upcoming 2026 U.S. midterm elections. While traditional influence operations focused on hacking voting machines or leaking emails, prediction markets may allow adversaries to target voter expectations. The mechanism for this is "reflexivity"—a feedback loop where market signals do not merely reflect reality but actively shape it. An adversary like Russia need not infiltrate election infrastructure to potentially sow discord within the legislative branch – they can simply flood illiquid prediction markets with capital. By driving up the implied probability of specific, divisive "prop bets"—such as Will the Pennsylvania Senate race be contested? or Will election violence occur in Michigan? — they can artificially manufacture a consensus of chaos. When news outlets report these surging odds as objective warnings, they can inadvertently validate the manipulation, creating a self-fulfilling prophecy where voters stay home and donors pull funding—instability engineered entirely through financial brute force.
First Steps to Defend Against Manipulation
Defending against this new frontier will require government agencies that counter malign foreign influence to expand the perimeter to include the financial marketplaces where “reality” is now being traded. First, the private sector should treat prediction markets as a critical surface area for attack. Just as cybersecurity teams monitor the dark web for leaked credentials, corporate risk officers must monitor prediction markets for "narrative leaks." A sudden, unexplained bet against a product launch or a supply chain node is no longer just gambling; it should be treated as a potential signal of a coordinated information operation. Companies need to integrate this data into their crisis response frameworks, preparing to counter financial disinformation with transparency before the narrative hardens into a market consensus.
Second, the intelligence community should integrate prediction market forensics into its indications and warnings (I&W) architecture. Anomalous spikes in the probability of geopolitical conflict or civil unrest should not be dismissed as noise; they must be analyzed as potential "pre-bunking" signatures—evidence that an adversary is attempting to prime the environment for a kinetic or political disruption.
Finally, regulation must evolve to address the intersection of finance and national security. The Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) must work with national security agencies to establish "informational circuit breakers." Just as the stock market pauses trading during extreme volatility to prevent panic, prediction markets on sensitive national security topics need mechanisms to halt trading if forensic analysis detects non-economic, state-sponsored manipulation.
Defending against this threat requires a comprehensive strategy: corporate risk officers must monitor markets for narrative leaks, the intelligence community must treat betting anomalies as pre-bunking signatures, and regulators must implement informational circuit breakers to halt manipulation. Yet, the essential first step in navigating this new frontier is the establishment of a robust public-private partnership. Only by fusing private sector information with government threat intelligence can we build the detection and resilience necessary to ensure the future remains a subject of prediction, rather than a target of finance.