Crypto: The US Partial Shutdown Highlights the Limits of Predictive Markets

As the US government slides into partial paralysis, crypto prediction platforms Polymarket and Kalshi find themselves at the heart of a troubling controversy. Their contracts, meant to allow traders to bet on this event, reveal major flaws in their formulations.

When Crypto Betting Contracts Lead to Confusion

The US Senate approved a crucial funding bill on Friday night. Problem: the House of Representatives, on parliamentary recess, will only be able to vote starting Monday. This unprecedented situation places the government in a state of partial paralysis throughout the weekend.

On Polymarket, a contract named “US Government Shutdown Saturday?” shows a 99% probability. But reading the fine print reveals a troubling subtlety. The contract is not based on the effective shutdown, but on an announcement from the Office of Personnel Management (OPM). 

In other words, without official communication from the OPM, the contract could state “no” even if services are actually paralyzed.

Kalshi is not immune to this ambiguity. Its contract “Government shutdown today?” requires a notice to appear on the OPM website on January 31 at 11 AM (Eastern Time). 

This reliance on a web announcement rather than administrative reality perfectly illustrates the current limitations of these decentralized platforms. Traders find themselves betting not on an event, but on its digital representation.

The Puzzle of Counting the Days

Confusion reaches its peak with contracts concerning the duration of the shutdown. A Polymarket contract allowed betting on periods of 1+, 2+, or 3+ days, all showing scores above 99%. But what does “three days” really mean? Discussions ignite specialized forums.

If President Trump signs the funding bill on Monday, does that count as three full days? Some traders argue that 72 full hours are required to validate this option. 

Others believe any signing before midnight Monday would automatically invalidate the third day. This legal uncertainty turns what should be a simple calculation into a real mathematical and temporal puzzle.

On Kalshi, the contract “How many days will the federal government be paralyzed before March?” shows over 98% chance for the “more than two days” option. But again, the terms remain unclear. 

These rapidly expanding platforms struggle to precisely define the events their contracts cover. A troubling paradox for services meant to offer transparency and certainty to users.

This issue arises as predictive markets experience spectacular growth. Kalshi recorded $466 million in transactions on January 12, representing 66% of the sector’s total volume. But without standardization of rules and clear definitions, these crypto platforms risk losing the trust of the institutional traders they ardently court.