Economic phenomena like meme stocks, SPACs and cryptocurrencies are often presented as the new wave of financial markets. But beneath the surface, what is emerging looks less like a stock exchange and more like a casino.
Theo4. That was one of the big winners of the U.S. presidential election.
After Donald Trump clinched the victory, the pseudonymous Theo4 made a fortune on Polymarket, an American prediction market. For correctly forecasting the outcome, he pocketed more than 78 million dollars.
Is Theo4 a political mastermind? Or simply lucky? In an interview with the Wall Street Journal, the anonymous Frenchman shared his thinking behind his bet:
“My intent is just making money.”
Theo4 is far from alone.
Despite the flood of new financial phenomena – from crypto currencies to meme stocks – many function primarily as pure speculation.
In other words: a casino.
Traditional financial analysis has been replaced by a form of wagering.
Prediction markets are not new. The concept is simply to let people speculate on the outcome of very specific questions. Will Jerome Powell cut rates at the next Fed meeting? Will there be a coup in Iran before August ends? Who will buy TikTok?
By betting money on one outcome or another, a miniature stock exchange is created. In theory, the cash at stake ensures participants are genuine in their views.
At times, prediction markets have been framed as an alternative to polling, occasionally showing higher accuracy. Could this be a new way of taking society’s pulse?
Well, probably not.
What once looked like a promising tool for gauging public sentiment has quickly become something else. In June, Polymarket drew 15.9 million visits.
But that surge was unlikely to be driven by a newfound civic interest.
In practice, it is gambling – only with a vastly wider menu of options than conventional bookmakers could ever offer.
Polymarket transactions are often denominated in cryptocurrency, making it a natural bridge for a cohort already comfortable with risk and accustomed to large-scale speculation.
They are also accustomed to losing money fast.
Take Coinfessions.
The X account – a play on “confessions” and “coin” – shares anonymous stories of crypto investing, most about the smaller crypto currencies that have appeared in the back waters of Bitcoin and Ethereum. So called “altcoins”.
A post from June summed it up in a single sentence:
“Got into crypto to avoid getting a job forever, now I need a job to get out of crypto.”
Compared with a global index fund, the price of Bitcoin has moved like a rollercoaster . For those dabbling in altcoins, it looks almost sedate. Altcoins can wipe out an entire stake in minutes.
Their prices move on little more than supply and demand. They serve no broader purpose and have no underlying value beyond the hope of flipping them to someone else at a higher price.
Take the childishly named Fartcoin. Its market cap is just above $1 billion – roughly on par with Swedish confectionery maker Cloetta or the investment firm Creades. Unlike those companies, Fartcoin has no assets and no function beyond speculation.
Skeptics might shrug and say such speculators have only themselves to blame. Perhaps. But the more pressing question is why people are drawn to altcoins and prediction markets in the first place.
Something seems to have shifted. When did these investors give up on savings strategies that ordinary households have used for generations? And why do they risk their savings on crypto tokens and guessing games?
A possible clue lies in Mark Zuckerberg’s inbox.
Back in 2019, Nick Clegg – then Meta’s head of policy and formerly the UK’s deputy prime minister – exchanged emails with board member Peter Thiel. In a reply about millennials’ attitudes, now public, Thiel observed why so many were skeptical of capitalism:
“There seems to be a pretty straightforward answer to me, namely, that when one has too much student debt or if housing is too unaffordable […] and if one has no stake in the capitalist system, then one may well turn against it”
Thiel was describing a political shift, but his analysis can be applied more broadly. If you don’t believe capitalism will work as well – or better – for you as it did for your parents, you may simply stop believing in it.
In that scenario, alternatives become appealing. A sense of resignation can lead to betting on something new. If savings accounts and index funds no longer seem like a viable path to affording a home, what do you do? You try something else.
Housing has become more expensive in both the U.S. and Sweden. Even after Sweden’s recent correction, prices are roughly double what they were in the late 1970s, adjusted for inflation.
The fallout is not just individual.
Society and businesses lose too.
Funds have been a reliable way for households to build savings buffers, but the purpose has always been dual. Money has been invested in companies that created growth and jobs. For the companies it has paid off to have strong and growing financials, since that makes the cost of financing decrease.
What happens with this when people buy altcoins instead? Or when stocks like GameStop skyrocket – not because of faith in its business model, but to squeeze short sellers? Which was exactly what happened in 2021.
It used to be that financing companies generated returns for investors.
Now it’s a guessing game where many get burned.
And it looks set to get worse as these worlds continue to overlap.
In late June, the Trump administration announced that Fannie Mae and Freddie Mac – the mortgage giants now infamous from the 2008 financial crisis – must count cryptocurrency holdings as assets when assessing new borrowers’ creditworthiness. In practice, owning Fartcoin can now help secure a U.S. mortgage.
New reports also suggest that Trump wants to make it easier to buy crypto with your retirement funds, lifting today’s restrictions.
The blurring of lines between the establishment and these speculative arenas is also reinforced by Trump himself. The president launched his own Trumpcoin – which has lost about 50% of its value in the past six months.
When the world’s most powerful man signals this, it is hard to pin the blame entirely on a disillusioned generation of young adults. Is it naïve to think you can gamble your way to prosperity? Perhaps. But it is not unique to this generation.
What is unique is how deeply gambling has seeped into so many corners of society – and how a new financial order now exists alongside the old, increasingly overlapping.
Welcome to casino capitalism.
This column was first published in SvD Näringsliv, in Swedish, on July 18, 2025.