Recently we have many financial instrument or i will call it platforms such as prediction markets, event-based contracts, and futures trading have gained attention across crypto enthusiast in our Muslim community. These systems are often promoted as tools for forecasting, hedging, or improving market efficiency. However, for Muslims, the key question is not innovation but permissibility under Islamic jurisprudence (fiqh).

This post is written to raise awareness, encourage thoughtful discussion, and clearly explain why most contemporary Islamic scholars consider prediction markets and futures trading impermissible (haram), while also addressing the minority opinions circulating within parts of the Muslim online community.

What Are Prediction Markets?

Prediction markets are platforms where participants buy and sell positions on the outcome of future events. These events may include:

• Elections and political outcomes

• Sports results

• Economic indicators

• Policy or regulatory decisions

Participants profit if their prediction is correct and lose money if it is not. Well-known examples include:

Polymarket, Kalshi and other election betting platforms. Event-based crypto prediction protocols and similar systems

Although these platforms are sometimes framed as “information markets” or “forecasting tools,” their core mechanism remains financial gain or loss tied to uncertain future outcomes.

The Dominant Islamic Ruling: Impermissible (Haram)

Most contemporary scholars and Islamic finance bodies agree that traditional prediction markets are impermissible. This position is grounded in their resemblance to gambling (maysir/qimār) and their reliance on excessive uncertainty (gharar).

1. Zero-Sum Betting (Maysir) in a standard prediction market:

• One participant’s gain comes directly from another participant’s loss

• No tangible asset, service, or productive activity is involved

• Wealth is transferred purely based on uncertain outcomes

This aligns with the classical definition of gambling in Islamic law, where profit is earned without trade, ownership, or labor.

2. Excessive Uncertainty (Gharar)

Prediction market contracts depend entirely on future events that are:

• Unknown at the time of agreement outside the control of participants

• Not tied to a defined deliverable

Islamic commercial law requires clarity, defined subject matter, and fairness. The uncertainty involved in these contracts exceeds what is acceptable.

3. Absence of an Underlying Asset or Ownership

Unlike investing in a company where ownership, risk, and reward are clearly established a “share” in a prediction market represents a wager on a future state of the world rather than ownership of a productive asset. This further reinforces its speculative nature.

Quranic Guidance on Gambling

Allah says in the Quran:

“They ask you about wine and gambling. Say: In them is great sin and some benefit for people, but their sin is greater than their benefit.”

Surah Al-Baqarah (2:219)

Islamic jurisprudence consistently holds that potential benefit does not justify an activity when the harm outweighs it, a principle directly applicable to gambling-related systems.

Minority Discussions and Common Misunderstandings

While the dominant ruling is prohibition, some Muslim influencers, traders, and community leads publicly argue that prediction markets and futures are not haram. These views deserve examination, especially because they influence younger audiences.

1. Shallow Engagement With Islamic Rulings

Many permissive arguments:

• Focus on surface-level economic outcomes

• Rely on Western financial terminology

• Overlook foundational Islamic contract principles

In several cases, forecasting accuracy is confused with permissibility, without properly addressing maysir, gharar, or zero-sum wealth transfer.

2. Self-Interest and Incentive Bias

It must also be acknowledged that:

• Some advocates profit directly from these platforms

• Others hold tokens, partnerships, or reputational stakes

• Financial success can cloud objective legal judgment

While this does not automatically question sincerity, Islamic rulings cannot be shaped by personal benefit, popularity, or market trends. Shariah is grounded in principles, not profitability.

A. Information-Only Use (Limited and Narrow)

Some scholars accept that if a forecasting mechanism is used:

• Internally within an organization

• Without personal financial gain

• Strictly for planning or research

Then it may fall outside the definition of gambling. However, this does not apply to public, profit-driven platforms like Polymarket or Kalshi.

B. Hedging (Tahawwut) vs. Speculation

Islam distinguishes between:

• Speculation: Risk-taking for profit based on uncertainty

• Hedging (Tahawwut): Protection against an existing economic risk

While some theoretical discussions compare limited risk mitigation to takaful, this view:

• Is not widely accepted

• Requires strict cooperative structures

• Does not justify open prediction markets

Our Approach and Methodology in Sihaad Community

Before taking this position, we have spent time engaging directly with users, contributors, and discussions around prediction markets, and carefully examining how these systems function in practice. This includes understanding their technical architecture, incentive design, settlement processes, and how profits and losses are realized—both on-chain and off-chain.

Our stance is not based on fear of innovation or blind rejection of new financial tools. It is based on informed analysis and sincere effort to evaluate modern systems through established Islamic principles. Where doubt exists, Islam teaches caution, deeper inquiry, and restraint—not rushing toward permissibility for convenience or personal gain.

This has always been our approach when discussing Islamic rulings on emerging technologies: understand first, assess carefully, then take a principled position, even when that position is unpopular.

A Firm Position on Futures Trading

Beyond prediction markets, futures trading presents similar—and often greater—Shariah concerns.

Most futures contracts involve:

• Selling what one does not own

• Deferred exchange of both payment and delivery

• Profit driven primarily by price movement

These characteristics fall under:

• Maysir

• Gharar

Bay‘ al-ma‘dum (selling what is not owned or does not exist)

For this reason, we stand firmly against futures trading as permissible for Muslims, as it mirrors the same speculative behavior found in prediction markets.

Our Community Position

As a Muslim community engaging with finance, crypto, and emerging markets:

Ethical earning must take priority over trends and not every profitable system is permissible.

Innovation does not override clear Islamic principles.

Both prediction markets and futures trading, in their common forms, conflict with Islamic commercial ethics.

Fiinal ebuka's thoughts

Technology is neutral. Financial contracts are not.

Until prediction markets and futures systems are fundamentally redesigned to remove gambling-like structures, excessive uncertainty, and zero-sum wealth transfer, the Islamic ruling remains clear.

We encourage learning, sincere discussion, and consultation with qualified scholars but also caution against normalizing systems that contradict established Islamic principles.