How AI Will Save Prediction Markets

Prediction markets like Kalshi and Polymarket have devolved into sports betting platforms, with ~65% of volume in sports over the past year, because they lack the market structure to support higher-value applications—sharps won't trade without uninformed gamblers, and gamblers prefer short-duration sports contracts. Aelix argues AI agents solve this by functioning as cheap, forced-participation sharps that dramatically lower minimum viable liquidity, enabling micro-markets and private institutional forecasting that could finally unlock the original vision of prediction markets as truth machines, though it remains unclear whether markets retain their current form in an AI-dominated future.