Prediction markets, despite their rapid growth and hype, face significant structural challenges, according to IOSG. Polymarket, a leading platform, has seen over $36 billion in trading volume and recently raised funds at a $9 billion valuation. However, IOSG points out that these markets depend on discrete, non-recurring events, which are low-frequency and scarce, unlike stock markets that have fundamental value. The report highlights issues such as long settlement periods and information asymmetry, particularly in political events, which affect liquidity and fairness. Additionally, the subjective nature of event definitions and the risk of information bubbles pose further challenges. While prediction markets can attract new users, IOSG advises caution regarding their scalability and long-term viability.