Can’t afford a Klimt? Now you can bet on it
Predictions platform Kalshi has entered the art auctions arena — though not everyone is convinced it’s a winner
As the art world flirts with financialisation and prediction markets soar in popularity, it was perhaps inevitable that the two areas would find common ground. So it was last week that Kalshi, a predictions platform that was valued at $22bn earlier this year, revealed its official entry into the auctions arena — though not everyone is convinced it’s a winner.
People can now put their money on whether Vincent van Gogh, Andy Warhol or Jean-Michel Basquiat will break their auction record prices this season or if Gustav Klimt’s elegant and elongated “Portrait of Gertrud Loew” (1902) will sell for more than $40mn, one of a few works on Kalshi’s art offering from the prized Lewis Collection auction at Sotheby’s later this month.
The point, Kalshi says in a statement, is that “the majority of the population is priced out from speculating on [art]. With derivatives on Kalshi, investors of all financial backgrounds can now access the asset class.”
Prediction markets have the look and feel of traditional gambling but they are not the same. Wagers are not made against a “house” setting the odds but are instead matched by them. So each financial contract is between two players — one saying that, for example, Warhol will break his record and the other saying otherwise. The prediction firms take a small cut of each paired trade (Kalshi’s standard fee ranges from $0.07 and $1.75 for 100 contracts).
This determines the type of question, always a binary, either-or outcome. The winning settlement for any contract on Kalshi, priced between $0.01 and $0.99, is $1, making the odds of success clear. At time of writing, for 47 cents you could take a punt on the Klimt selling for more than $40mn, but there is a 53 per cent chance that you are wrong. Contracts on this painting are available from the $20mn level.
Sport and, increasingly, politics have been the main drivers of volume in prediction markets. Current questions on Kalshi include whether New York or San Antonio will win the 2026 Pro Basketball Finals or who will be the 2028 Republican presidential nominee. Kalshi is a US firm that operates worldwide, though individual national regulation means it can’t be accessed by all (including in the UK).
Many in the art market, a notoriously opaque industry, have pointed to the potential for insider trading. An auction house employee could know now that a major Warhol is coming to market ahead of Kalshi’s January 1, 2027 cut-off date. It could also be known that this work had, in effect, sold before its live auction via a pre-arranged guarantee that is higher than Warhol’s current $195mn record.
Christie’s, Sotheby’s and Phillips have all extended their policies regarding employee activities in their auctions. These stipulate restrictions on bidding and the use of confidential information, which, as Sotheby’s puts it, applies to “all forms of investment and speculative trading or wagering, including event-based trading and betting products offered through prediction markets and similar platforms”.
Kalshi too is on the case. “We go beyond the legal definition of insider trading, which can be a bit of a grey area when it comes to prediction markets,” a spokesman says. He explains that their prohibitions govern people with advanced information, including auction house employees and journalists (noted). Kalshi “has surveillance systems that flag if someone places a suspiciously large or specifically timed trade” and that, given the identification processes needed to sign up, “we know who you are,” he says.
Even if illegal activity can be prevented, art market experts don’t think it is a level playing field. “For sport, you can make an educated guess, based on available tables and statistics,” says Anders Petterson, founder of analysis firm ArtTactic. “The art market doesn’t have those tools, there is a built-in asymmetry of information, a knowledge gap, of the things that we understand but that people who play might not.”
A venture capital investor who has been looking into the auctions predictions area, and asked to remain anonymous, notes that such a situation played out last year through Kalshi competitor Polymarket. This platform ran trades on works in the Leonard A Lauder auction at Sotheby’s in November, two of which caused confusion because of the difference between a hammer price — the price called during an auction when the gavel comes down — and the higher price that includes an auction house’s fees and is the number that gets reported publicly afterwards. These two prices distinguish between what the seller gets and what the buyer pays and are a familiar differential to those in the art market.
Less so for those playing the game. Two of the Lauder works — Henri Matisse’s “Figure decorative” (a sculpture of a woman leaning on a plinth, conceived in 1908) and Ernst Ludwig Kirchner’s vibrant painting “Fränzi with Bow and Arrow” (1910) — had a strike level of $15mn and $3mn respectively on Polymarket. Both hammered at prices that made one side of the wager win —$14mn and $2.6mn respectively — but, once premiums were added in, their $16.7mn and $3.2mn prices swayed the results to the others side. Polymarket had specified “hammer price” but the outcomes on both contracts were disputed twice, while trading apparently continued for “several hours” after the auction closed, “giving those with knowledge of the market an edge,” the investor says. Polymarket did not comment on the situation.
As if this wasn’t off-putting enough, Petterson notes too that there isn’t enough activity in the lumpy art market to keep people engaged. “Sports, politics and macroeconomic events are 24/7. The art market is highly seasonal, with maybe two or three major seasons a year that get reported on,” he says.
Volumes on Kalshi would suggest it is slow going. As of June 1, wagers on the Klimt trade had reached a value of $29,790. For the Pro Basketball final and Republican nominee these were $243mn and $45mn respectively.
Meanwhile, attempts to harness crazes in the financial markets to the art world — whether non-fungible tokens, fractionalisation or mutual funds — have proved limited, at best. Art’s questionable status as the “asset” Kalshi wants it to be does not help such projects get off the ground.
“It isn’t so much an issue of speculation,” Petterson says. “The problem is how to get the masses into an area that struggles with liquidity and visibility. You might get people curious at first, but they need guardrails and education, which means in the long run they could get bored and just move on.”