Prediction markets like Polymarket and Kalshi are becoming harder to profit from as proprietary trading firms deploy AI agents to price outcomes faster and more accurately. Ahead of the Federal Reserve's July 28-29 rate decision, traders are positioning across bonds, currencies, crypto and event contracts that settle directly on the central bank's announcement. A Reuters poll of 104 economists conducted July 21 found unanimous expectations for the Fed's move, leaving little uncertainty for participants to exploit. As sophisticated automated systems enter these venues, the mispricings and slower reactions that once let manual traders capture easy returns are shrinking. The trend reflects a broader maturation of prediction markets, where professional firms increasingly compete for narrowing margins, mirroring dynamics long seen in traditional financial markets. Retail and less-resourced participants may find fewer opportunities as algorithmic efficiency tightens spreads and accelerates price discovery.
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