When will the U.S. invade Venezuela? When will that country hand over oil to the U.S.? Will Colombia be invaded next?

A flurry of bets have been placed on those questions this week on platforms known as prediction markets, following the U.S. military operation in Venezuela last weekend which removed President Nicolás Maduro.

The huge sums of money swapped have reignited attention on prediction markets, which allow users to bet on nearly any kind of event, and have shot from small startups to major companies in recent years.

But how to prediction markets work, and how are they regulated? Here’s what you need to know.

How do they work?

Bets on prediction markets are usually binary — wagers on a yes/no or higher/lower outcome.

On Polymarket, for example, users can bet on everything from whether certain movies will get Oscar nominations, to the fate of the Iranian regime, or the highest temperature in Toronto on a given day.

“The long-term vision is to financialize everything, and create a tradeable asset out of any difference in opinion,” said Tarek Mansour, CEO of the prediction market Kalshi, at a conference in late 2025.

While there are many such websites, Polymarket and Kalshi are two of the biggest. And the amount of money moving through the sites has skyrocketed — according to a report by crypto firms Keyrock and Dune, the monthly value of bets placed on five of the top prediction markets has grown from $100 million US in early 2024, to over $13 billion US.

Gambling, financial product, or news?

The difference between sports betting platforms and prediction markets is that there is no “house” with the latter, says gaming analyst Dustin Gouker, who publishes the Event Horizon newsletter about prediction markets.

Sports betting sites like DraftKings and FanDuel “are the house. If you lose, you’re losing to them. If you lose on a prediction market, you are losing to another person or a market maker,” he said.

Instead, prediction markets make money by taking small transaction fees, Kalshi spokesperson Elisabeth Diana told CBC News in an email.

But on a practical level, there’s really no difference, Gouker says.