uring 2025, we saw an explosion in hype surrounding prediction markets, which are platforms for placing wagers on future events like elections, sports games, or how much it’s going to snow in Chicago next month.

The shifting odds on AI-focused prediction markets, which are kind of like sports betting for people who use Cursor, illustrate how popular perceptions on the AI race changed over the course of this year. Perhaps no chart is more telling than this one:

When Kalshi’s prediction market for the best AI model (as measured by the LMArena leaderboard) opened in November 2024, there was broad agreement that ChatGPT would take the cake. However, trust in OpenAI’s model waned throughout the year, while belief in Google Gemini slowly picked up steam.

Interestingly, xAI’s Grok surged to 35% odds to be the best AI model by the end of the year for two weeks in March, surpassing both ChatGPT and Gemini. This was around the time that Grok-3 was released, which outperformed rivals on multiple benchmarks. The lab continued to push improvements for the model over the next couple weeks, but after DeeperSearch and an image editing tool were released, Grok fell behind Gemini — although it interestingly traded more or less in lockstep with ChatGPT’s odds for the rest of the year.

As you can see, prediction markets were bullish on Gemini far before Gemini 3’s release led OpenAI boss Sam Altman to declare a code red at the company. However, Gemini’s chances of victory leaped to over 91% shortly after Gemini 3 was made public.

Other AI-themed prediction markets tell their own little stories. After crossing 40% in the wake of DeepSeek-R1’s release, the odds that a Chinese AI model claims the #1 spot are now around 2%. Bettors were caught off guard by OpenAI’s decision to restructure as a for-profit company, giving the company’s odds of ditching its non-profit structure just a 24% chance. The chances Congress passes an AI law have slowly declined, as have the odds that OpenAI announces it has achieved AGI by 2030.

There is one set of odds that have been increasing though: The New York Times’ chances of winning its lawsuit against OpenAI.

Are prediction markets the future of AI news?

For many AI-adjacent folks, relying on prediction markets for truth instead of antagonistic legacy news is a compelling idea. But while prediction markets are useful tools for gauging public sentiment, AI-themed betting markets also create significant potential for corruption and trickery.

A case in point came recently: When a group of prediction market users collectively cashed out over $10,000 on the bet that OpenAI would release a new model by December 13, suspicions arose that the winners had access to privileged information about OpenAI’s product plans, according to The Information.

While it can be suspicious to see bettors win big on somewhat-niche propositions, it’s a bit hard to think anything untoward actually happened. If someone either worked at or had close access to OpenAI, why risk being fired or cut out from one of the most valuable companies of all time for a few thousand bucks?

Either way, for some prediction market boosters, insider trading is actually a feature, rather than a bug, because it guides the market to the truth as efficiently as possible (since prediction markets are not securities, insider trading laws are a little murkier than with the stock market).

Still, these tools are undeniably useful in the right contexts. Both Google and Anthropic have built internal prediction markets where employees can bet with fake money on things like when a given team will finish a project, per The Information.

Prediction markets favor Google over OpenAI

Google had a banner 2025, and prediction markets think that momentum will carry into 2026.

Despite expectations that OpenAI’s "code red" will end in January, bettors aren’t counting on Gemini’s downfall. Polymarket gives Google a 74% chance of having the best AI model by the end of March and a 65% chance of leading the race by the end of June. Prediction market bettors’ Google bullishness extends to the public markets. Polymarket gives Alphabet a 36% chance of being the world’s largest company by market capitalization at the end of next year, tied with Nvidia.

The markets don’t see things moving very quickly over at Google’s main chatbot rival, OpenAI. Bettors give the next-generation GPT-6 model a 49% chance of launching by the end of June. They also assign only a 33% chance of OpenAI pulling off an IPO by the end of 2026. And for those jazzed up about Jony Ive’s new consumer device, patience may be required. Polymarket gives OpenAI just a 35% chance of launching a consumer hardware product by the end of 2026.

Interestingly, bettors see a non-trivial chance of AI M&A over the next couple of years. Polymarket gives Perplexity, Anthropic, and OpenAI a 41%, 36%, and 29% chance of being acquired by the end of next year. Apparently, they haven't looked too closely at the eye-watering valuations of those companies, which make an acquisition very difficult.