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Analysis & Reasoning
A dusty 1807 law sits at the center of a prediction market puzzle—and the smart money might be on the wrong side.
In the annals of American legislation, few laws carry more dramatic weight than the Insurrection Act of 1807. Originally signed by Thomas Jefferson to give presidents the power to deploy federal troops on domestic soil, it's been invoked just 30 times in over two centuries. That's roughly once every seven years—and not once since Rodney King's name became synonymous with Los Angeles burning in 1992.
Yet right now, prediction markets are pricing in a 62.5% chance that Donald Trump will invoke this extraordinary measure by the end of 2027.
That number should make you pause. And possibly reach for your wallet.
What the Market Is Actually Asking
The Kalshi market ticker KXINSURRECTION-29-27 poses a deceptively simple question: Will Trump invoke the Insurrection Act during his presidency, specifically by the end of 2027?
A "YES" share currently trades at roughly 62.5 cents. A "NO" share, therefore, costs about 37.5 cents. If you buy NO and Trump doesn't invoke the Act by 2027, your 37.5-cent share pays out a full dollar—a potential return of 167%.
But here's where it gets interesting: our Maytrix forecasting system—an advanced AI model that analyzes markets from multiple perspectives—unanimously agrees the market has this wrong. Not by a little. By a lot.
Their consensus probability? Around 20%.
That's not a rounding error. That's a 42-point gap between what the market believes and what systematic analysis suggests.
The Weight of History
To understand why this gap exists, you need to understand what invoking the Insurrection Act actually means—and how rarely presidents have been willing to cross that Rubicon.
The Act grants the president sweeping authority to deploy the military domestically when "unlawful obstructions, combinations, or assemblages" make it impractical to enforce federal law through normal means. It's the nuclear option of domestic policy.
Consider: During the summer of 2020, with protests erupting in cities across America, Trump publicly considered invoking the Act. Defense Secretary Mark Esper opposed it. Military leaders expressed discomfort. Trump ultimately backed down. The political and institutional barriers proved too high even during what many considered a genuine crisis.
Or look further back: George H.W. Bush invoked the Act during the 1992 LA riots—the last time any president has done so. Before that? Eisenhower used it in 1957 to enforce school desegregation in Little Rock. The pattern is clear: invocation requires not just a willing president, but a genuine breakdown of civil order that creates political cover for extraordinary action.
The historical base rate of roughly 15% per four-year term already suggests the market is running hot. But the specific circumstances matter even more.
What Maytrix Found
Our Maytrix forecasting model independently assessed this market from different angles—some playing devil's advocate for the "bull" case, others analyzing from a bearish stance, and quantitative models crunching the historical numbers.
The verdict was unanimous: BUY NO.
The reasoning converges on several key points:
The legal bar is high. The Insurrection Act isn't a blank check. It requires specific conditions—domestic violence, obstruction of federal law, or conspiracy that deprives citizens of constitutional rights. Rhetorical threats are cheap; actual invocation requires justification that would survive intense legal and political scrutiny.
The political costs are enormous. Deploying federal troops against American citizens would trigger immediate legal challenges, potentially fracture Republican coalition support, and create lasting institutional damage. Even a president inclined toward dramatic action must weigh these costs.
Past behavior is instructive. Trump had arguably his best opportunity in 2020 and didn't pull the trigger. The institutional antibodies—military leadership, cabinet opposition, political calculation—proved stronger than the impulse.
The quantitative analysts noted something particularly striking: at current prices, the market implies a near-certain invocation over Trump's full term (the longer-dated contract trades at 69.5%). That would make Trump's presidency the most likely Insurrection Act event since the Civil War. The historical prior simply doesn't support that conclusion.
The Trade Thesis
So why is the market so wrong?
Prediction markets, for all their vaunted wisdom-of-crowds efficiency, suffer from predictable biases. Dramatic, emotionally salient events get overweighted. The Insurrection Act sounds like something that could happen in our polarized moment—it's been discussed in countless news cycles, debated on cable TV, threatened in political speeches.
But salience isn't probability. The gap between "often discussed" and "actually executed" is where trading opportunities live.
At 37.5 cents, NO shares offer asymmetric upside. If the council's 20% probability estimate is even close to correct, these shares are worth roughly 80 cents—more than double the current price. Even if you're more cautious and assign a 40% probability to invocation, NO shares still offer meaningful expected value.
What Could Go Wrong
Intellectual honesty demands acknowledging the risks.
Black swan events exist. A major terrorist attack, widespread civil unrest following a contested election, or some unforeseen crisis could create conditions where invocation becomes politically feasible or even necessary. History isn't always a reliable guide to unprecedented situations.
Trump's second term may differ from his first. With different cabinet members, potentially more aligned institutional support, and the knowledge that this is his final term, the political calculus could shift.
Market resolution ambiguity. Prediction markets occasionally resolve in unexpected ways. The precise legal definition of "invocation" could matter if Trump takes some intermediate action short of full deployment.
Liquidity and timing. Money tied up in NO shares until 2027 (or longer) has opportunity costs. The market could also move against you before eventually proving you right.
The Takeaway
Warren Buffett famously said to be greedy when others are fearful. In prediction markets, the corollary might be: be skeptical when others are certain about dramatic outcomes.
The Insurrection Act market exemplifies a common pattern—the probability of something sensational gets inflated because it's easy to imagine, frequently discussed, and emotionally resonant. But imagination isn't analysis.
Thirty invocations in 217 years. Not once since 1992. A president who had the opportunity in 2020 and blinked. Institutional resistance from the military establishment. Legal requirements that go beyond mere desire.
Against all this, the market prices in a 62.5% chance by 2027.
Sometimes the smart money isn't about predicting what could happen. It's about recognizing when the crowd has priced in drama that, more likely than not, won't materialize.
The Insurrection Act may remain exactly what it has been for three decades: a dramatic possibility discussed endlessly, invoked never.
And at 37.5 cents, that's a bet worth considering.
Disclaimer: This analysis is for educational purposes only and does not constitute financial advice. Prediction markets involve risk, and past performance of analytical models does not guarantee future results.