An important part of crisis communications is the use of traditional- and social-media monitoring both to discover early warning signs of a crisis and to monitor the public’s reaction to a crisis-response effort. Crisis communicators should consider an additional tool for these purposes: prediction markets.

Prediction markets (whose regulatory status is admittedly a bit iffy) allow participants to buy and sell contracts based on the outcomes of future events. Popular areas include sports but also politics (Who will win the election?), economics (Will the Fed do a rate cut?) and business (Will that merger go through?). The most popular platforms are Polymarket and Kalshi.

For crisis communicators, prediction markets offer a way to monitor how the public is “betting” on your organization and even a way to learn about a potential crisis. They give insight into the probability the crisis will occur or how it might play out.

For example, if a market suddenly appears around whether your CEO will survive at the company, there’s probably some chatter somewhere on that. Other business-related questions could concern product safety and recalls, FDA drug approvals, layoffs and outcomes of regulatory investigations.

OpenAI’s Altman

After Sam Altman’s unexpected ouster as CEO of OpenAI in November 2023, traders on Kalshi predicted he would return to the company, which he ultimately did.

Sticking with business, a contract on Polymarket that ended Feb. 6 concerned what the market cap would be for an IPO by Blackstone’s Liftoff Mobile platform. But 96 percent bet the IPO wouldn’t happen before April; Liftoff Mobile withdrew its IPO Feb. 17. A current contract to run throughout this year asks “Which companies will be acquired before 2027?” Caesar’s Entertainment is in the lead at 71 percent (at press time).

Just as you can judge how the crisis response is going based on social-media sentiment, you can track how sentiment is shifting by tracking how the probability is shifting on prediction markets. For example, if the market is on whether your product will fail, a jump from 10 percent to 30 percent that it will fail is a bad sign. If the betting goes against your public messaging, it’s clear the public isn’t buying what you’re saying, and those messages need to be re-evaluated.

New Information

On the other hand, a big spike in probability could also signal that new information is being traded privately, and it would be wise to try to find out what that information is.

Of course, prediction markets pose risks and could lead to crises for companies. For example, an employee could trade on prediction markets based on insider information. It’s wise to have internal policies on that, such as banning employees from trading in markets involving the company.

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