Betting on AI models becomes new trend in gambling industry
What's the story
The rapid development of artificial intelligence (AI) has led to a new trend in the gambling industry. Betting platforms like Kalshi and Polymarket are witnessing a surge in wagers on the performance of top AI models. The trend is fueled by an "AI arms race" that plays out across social media, ranking sites, and other online spaces where enthusiasts look for clues about upcoming developments.
Betting boom
Day trader makes $10,000 profit
Traders are now placing huge bets on the performance of different AI models. For instance, in early August, day trader Foster McCoy made $10,000 by betting against OpenAI's GPT-5 release. He placed a $4,500 bet on Google's Gemini after noticing a misinterpretation of an online ranking site that seemed to promote GPT-5. As other bettors followed his lead and the contract price rose, McCoy cashed out with a profit.
Market growth
Trading volume in AI prediction markets
The trading volume in AI prediction markets has skyrocketed to about $20 million this month. Kalshi, the only platform available in the US, is witnessing a tenfold increase in AI trades compared to earlier this year. Each bet or "contract" is priced in cents to reflect odds. Bettors can cash out before the final outcome as more people join their bet and raise its price.
Betting strategies
Social media interactions impact AI betting markets
Social media interactions can significantly impact AI betting markets. After GPT-5's launch, a series of Elon Musk posts touting his xAI Grok chatbot sent the "Grok to Win" market surging over 500% in hours. Bettors often scour lesser-known researchers' X accounts for obscure information. Harvard undergraduate Rishab Jain even scrapes source files from Google's apps and monitors public GitHub repositories linked to its products for potential clues about upcoming Gemini models.