With prediction markets? Next to impossible. The markets being tied to crypto makes it even worse - things get harder to track, jurisdictions get blurry, proving becomes a ping pong between bureaucracy. And proving something becomes moreso a question of free will - if I decided to do X and then someone bets millon dollars on me doing X when odds are low, how do you prove I haven't decided to do X before? Will you prevent me from exercising my free will because of suspect insider trading? What if I am a president/senator?
Years ago, I was a kid who discovered online betting - often it was the only time I could place bets on MMA events, especially because it wasn't as popular as it is now. Even then, the gambling sites had "Other" options where you could bet on presidents, popes, landing on mars etc. The new markets aren't that much different, but are just using a nicer way to talk about it.
It isn't gambling, it's prediction.
You aren't a gambler, you're a "hyperinformed high iq individual predicting the geopolitical moves". Just like crypto gave people the identity crutch of a "tech investor", this gives them the identity crutch of a "geopolitical strategist".
But in the end, it is still just gambling - wrapped in a nice ego stroking suit, but gambling none the less.
Other forms of insider trading can be problematic: What if someone (could be an individual or even an uncoordinated group) bets millions of dollars on you not doing X, in the hopes of you taking the opposite bet and doing X?
The most extreme that I've seen presented so far are markets where people can predict the death date of a person. On the surface, that just seems like a morbid bet. Once you consider the above form of insider trading, you realize that this can act as a reward for someone who can accurately predict the death date of said person, for example because they're making the counter-trade from a phone next to a high-powered rifle on the rooftop across the street - and like in the bribe example above, the people on the "losing" side of the bet might not mind too much. https://en.wikipedia.org/wiki/Assassination_market
But surely the answer is just that governments can and should ban prediction markets that are deemed to directly incentivize a crime. Where exactly to draw the line is challenging, sure, but no more challenging than all the other stuff that legal systems have to deal with. After all, pretty much any existing market (like stock markets) could be influenced by murdering certain people.
You may say "oh, but assassination markets are unique in that they're hard to ban those markets because they use cryptocurrencies and other decentralized/anonymous/censorship-resistant communication technologies." Well, okay, but if those technologies are so effective than people can already just run normal murder-for-pay markets.
From their POV, that's the purest form of voting with money. If you do X, they're presumably happy with the outcome they just paid for; if you do the opposite of X, they at least have their payouts as consolation prize.
If the market is efficient and aware of the bribery effect, others will bet that you will do X up to the point where the indirect bribe is equal to the cost of you doing X. If you have private knowledge that a bribe would be taken, you probably have the access to do it far cheaper off market (and you can still use crypto).
If the risk taken can, in principle, be shifted in your favour (i.e. to produce positive expectation) through application of skill, then it isn't gambling. For example, in my mind, betting on whether you will win a game of chess is not gambling. On the other hand, if you cannot influence the outcome in your favour through skill, then it is gambling. Roulette is generally a good example of this (with the caveat that in some very specific circumstances it's possible to beat with skill).
If we're limiting the definition to merely risk-taking (you might win or you might lose) without factoring in skill, then virtually everything in life becomes gambling. For example, you gamble when you deposit money in the bank because it might go bust.
There's also the legal definition, in which case it's just a matter of checking whether the jurisdiction you are in considers the activity to be gambling or not.
If you can obtain an edge through a skill component (card counting in blackjack), some people wouldn't call this gambling anymore, but I would still call it gambling myself. Someone doing this for a living is a professional gambler.
What for me would be a sensible definition is that a bet/gamble has no other goals. Putting money in the bank/investing in a stock reallocates capital, which can be invested by someone. The fact that it is a risk-taking endeavor is merely a side effect. I would say the same goes for selling/buying insurance for your car.
So for me, the difference between betting and putting money in the bank/investing is that the primary goal is something different than the risk-taking activity.
It would be more accurate to say you're working, really: spending time and effort to earn money. Though the "work" here, assuming you're a skilled poker player sitting with lesser-skilled marks, is similar to a crypto bro performing a rug pull. You're enabling other participants to gamble in the hope of an uncertain win, while they actually are pretty much guaranteed to lose in a zero-sum game where the house will always earn its keep.
One could say that if everybody else at the table is gambling and you're working, it's still gambling. Lunch is lunch, whether you're the customer, the chef, or the lamb.
"real gambling", random game like Roulette
"unreal gambling", game with incomplete information like Poker which allows you to get a better outcome based on skill & experience
Prediction markets in general can make anyone feel like it’s about data and skills. If they lose, then they didn’t have the good enough information, so clearly they should improve their skill, right?
From my understanding, purely natural events aside, the probability of you betting against the “house” will always approach 1. If the platform is centralised, they have a strong incentive to influence the stakes, or (this has been documented) straight up limit your ability to bet if you are winning “too much”—enough to cost them real money. If the platform is open and decentralised, “house” is another player with much more capital and personal influence in the matter than you (for example, some president can bet that he would invade a country—and then invade it; some footballer can bet that he wouldn’t score N times—then score N-1 and fake an injury at the most favourable time; of course, they would use intermediaries, and only the careless ones will get burnt).
It’s the money aspect that makes it gambling. Just ask Pete Rose.
of course if you had the skill to win big why would you not make that your job thus making too much.
Saying that the house is playing the game against you is equivalent to saying that Nintendo is playing Super Mario Bros against you.
But even in player-banked games like poker, the house is an agent participating in the game through the dealer. They can still exercise their right to free association and not play with you.
A corrected analogy would be Nintendo banning you from Mario Kart Online for suspected cheating. Yes, Nintendo isn't playing, but they still have that authority as the facilitator.
e.g. a transaction to buy paper towels is not introducing risk, since I pay an amount and get something.
If I have a chance of not receiving those paper towels if I put money in, then it's considered gambling because the inherent activity introduces risk. It's the same reason the lootboxes were considered gambling at first, and the same reason I classify betting on a chess game as gambling. You're player may potentially not win.
As a general rule it is considered gambling not if skill is involved, but if there is any uncertainty involved.
And because there is not such thing as a perfect application of skill, all applications of skill have a degree of uncertainty to them. And you don't necessarily know how much your skill and luck will be in effect in the game.
In the context of Chess. Do you get to choose who you play against or is there a random draw? How close is the other player to you in skill? If you are both alike in skill then the skill application will be less important to the outcome.
I once lost a game at a tournament that had the rule that usage of en passant required saying en passant before doing it, so I was playing this guy whose skill was abysmal, we walked into a scenario where the very next move he did was going to allow me to do en passant, he had to take that move, or do something else that would lead to me taking his queen in the next move, and then folding up pretty all of his pieces and coming out two queens ahead. If he did the en passant move his position was worse, it was checkmate in like 10 moves.
If he had seen it and had any politeness and grace he would have just resigned. I mean it was extremely painful to have gotten into this position because it could be seen 20 moves before we were going to end up here and yet, he laboriously walked in to it, he could have gotten out before, by sacrificing a horse, and then a bit later he could have gotten out by sacrificing a horse and a knight, and then a horse and a knight and a castle, etc. etc. But nope, he just made move by stupid move into this position.
So then he made the move that I should make en passant with and ... I forgot the term "en passant" I couldn't remember the term to use, my brain froze, I probably let the clock run for ten minutes trying to remember the word, it's also not like I didn't know the move and the phrase, I had known it that 20 moves ago when I was thinking I do A, he do B I do C... and then en passant. But I couldn't remember.
Now if I had been not such a stickler for rules I might just have done it anyway hoping for him to accept and not require me to say it, but I didn't. So he won. Later my friend played him and he said "You lost to that guy?!" and I said "fuck I froze up and forgot the word to en passant, I had him setup to take all his stuff but because I forgot the word he had me. Damn it"
Despite differences of skill other factors can prevent the skill from being deployed to its greatest effect. If someone knew Bryan is skillful, but he does have a habit of choking up or sometimes losing focus in longer games, whereas that guy there sucks so the odds are 4 to 1 in Bryan's favor (which I was very much more skillful than this guy, so embarrassing), but that guy is skillful enough to drag it out a bit, and he will never give in, therefore it might make sense for me to bet a small amount in this case to leverage the uncertainty.
Because of course that kind of gambling is itself a form of skill.
If you only consider gambling on things that do not have any skill component, you then essentially say that gambling does not take any skill, which then leaves you with a large sphere of skilled activity, that many people have taken part in for many years of human society and that has traditionally been known as gambling, which now does not have a name to identify it.
What should this field of activity that you have rendered nameless by your fiat be called then?
1) Dismissal: Feigning or having a profound misunderstanding of how statistics work by poking at the methodology like “N=200? That’s meaningless.”
2) Apathy: “So what if some people get addicted? We can’t babysit everyone.”
3) Rationalization: “Yeah but it helps Native American reservations, so...”
4) Downplaying: "Ok problem gambling is bad, but how prevalent is problem gambling really?"
I have had family members addicted to drugs and/or alcohol and friends that have been addicted to gambling at various times. I've seen similar reactions anecdotally, but that isn't societal or scientific.
I believe it increased it about 10%.
Creating a campaign doesn't prove in anyway the specific problems caused by gambling, especially at the societal level. It only shows that there is a group willing to fund programs against gambling addictions.
In no way am I questioning the intent or value of such programs, I hope it doesn't read that way. It just isn't necessarily relevant with regards to evidence.
My point absolutely wasn't that gambling has no known negative side effects. I was asking out of curiosity if there were studies someone could link to that actually tried to test it in a controlled way.
This isn't true.
each 10 per cent increase in gambling expenditure in NSW results in more than
4,500 additional assaults
2,800 additional home break-ins
1,300 additional break and enter (non-dwelling) offences
1,400 additional motor vehicle thefts
2,300 additional stealing from motor vehicle thefts
3,800 additional fraud offences each year
> Stock market integrity is important because of their function in the economy
Some might argue that people - including gambling addicts, and those impacted by their addiction - might possibly be more important than one of many possible financial mechanisms for free enterprise.
The part the article OP linked to would be based off the line:
To put these percentage changes in terms of interest to policy makers, a 10% decrease in gambling expenditure in NSW would result in 4579 fewer ASS offences; 2867 fewer BESD offences; 1380 fewer BESND offences; 1398 fewer MVT offences; 2361 fewer SFMV offences; and 3793 fewer FRD offences 2 each yearSecond, these markets are generating new gambling addicts, which is wildly and provably detrimental to society.
It certainly is at scale.
I used to believe that. With the legalization of all the sports betting and how fast it can drain a gambler which can then affect the gambler's family, I'm now pretty much on the other side of the fence.
Just like we banned public smoking because of the effects of secondhand smoke, I'm pretty convinced that the secondary effects of gambling means it needs to go back to being banned. I don't see an obvious way to legislate gambling to prevent the auxiliary victims. It doesn't help that getting maximum profit as a bookie means being part of a group of the scummiest people on the planet who will stoop to anything to drain people of their money as fast as possible.
> "We've done so much experimenting at Zynga with VIP. We know what's the frequency of contact. We know what call types work. We know what times to call. We know exactly who to call and when. We know who has a higher propensity to be more susceptible to our call."
You're encouraging people to waste their money just so that you can use the Wisdom of Crowds to predict something completely worthless.
If a huge enough portion of the population try to solve the statue quo of their economic problems by betting all on red, that's not gonna be great for society, including those who don't gamble.
What is the societal benefit provided by it?
Same as beer or any other drug - just a way to have some fun and not destructive provided you can control yourself.
Though, the one time I opened a CSGO gun case and felt the dopamine rush, it was way stronger than any drug I've done. Not that I'm a "highly-experienced individual", but alcohol, weed or adderall don't come close to a CSGO case. Gambling feels much riskier.
The costs to society due to alcohol and the like are massive for essentially no real benefit.
Yes, I know what happened during prohibition. That still doesn’t mean alcohol is good for society.
How would you like it if people who didn't care about your hobby started questioning the social benefit of allowing you to do it?
In this hypothetical scenario, is my hobby actively harmful to society?
Some people would enjoy killing people but we don’t let them do that.
If some people who like gambling are harmful to society in other areas of their life, that's on them.
I've personally witnessed domestic violence from a gambler taking heavy losses as they realize they're about to be in a really bad place financially. I've never seen someone get violent over messing up a few rows of knitting.
In a counterfactual where someone was doing some gambling and not doing some domestic violence, would you be still upset about the gambling in and of itself? Who does it harm?
And sure, the same could be done with lots of things. But gambling is incredibly addictive.
I've watched family members gamble themselves into homelessness before. Isn't this a harm as well? Aren't the kids harmed when they lose their home and have no college savings despite the household having a net value of several million dollars a few years before?
Don't get me wrong, I'm not 100% against all forms of gambling. I gamble from time to time myself. What I'm against is this current wave of constant, relentless push of gambling into damn near everything, all the time. Back when gambling meant you'd have to go to the riverboat or fly halfway across the country or you're only dealing with small stakes poker between friends, its radically different to apps on our phones pushing notifications all the time, every sports game spending a significant amount of screen real estate to showing betting odds, news outlets talking about polymarkets all the time.
Could one have still been a problem gambler back before smartphone betting? Sure, one of those family examples I know about related to flying out to Vegas a few times a long time ago. But the rates of that happening were far lower before.
Perhaps society should continue to restrain such hobbies.
Yes, you should be allowed to do those things as long as you do it without harming others.
>How would you like it if people who didn't care about your hobby started questioning the social benefit of allowing you to do it?
Gambling? Is people questioning gambling a new thing? Seems like the opposite is the case. Again, this is where being purposefuly obtuse gets us.
Yes, of course.
Selling drugs is also a private transaction between two people that does no harm to anyone else.
If the people buying or selling drugs are harmful to others in the rest of their life, that's on them. It shouldn't be used as a fig leaf to negatively impact people who can buy and sell drugs responsibly.
It's also the only vice you don't have to ingest an outside substance for.
And finally, here it is: The one guy who won the Venezuela bet by being hyperinformed-high-iq-predicting-the-future: https://futurism.com/future-society/polymarket-venezuela-ins...
(btw: you forgot to add AI and blockchain!)
Any sort of announced intention to "somehow stop the bad actors" became laughable after 2008-2009. We had bankers and financiers kick the monetary legs out from under an entire generation and unless they did something blatantly illegal (read: were Bernie Madoff) none of them faced a consequence.
That's why you have the current situation in the US where scammers can take advantage of distrust in any and all of society's institutions, up to and including the federal government.
Maybe a number of some kind?
I'm trying to understand what the criticism is here, because the example seems to support the point that these are meant to be a way of learning the future, not oppose it. I thought the whole point was that yes, people with inside knowledge will bet large sums of money on things they expect to happen, and that's what makes the prediction useful. The market is meant to incentivize people who know things to act on them in a way that makes them known.
If I knew someone wanted me dead, of course I would want a prediction market on it, and if the odds suddenly shifted dramatically in favor of my death, I would use that as a trigger for whatever defense strategies I had in place. Someone has really good reason to bet a lot of money on the prospect that I'm about to die. It's probably someone who knows of an active plot in motion to try to kill me! The sooner I can find out about that, the better. I would much rather give them an incentive to make that known somewhat earlier than wait.
I feel like there must be some big piece of this puzzle that I'm missing that makes it so these cannot operate the way I imagine them, but I haven't heard anyone explaining what it is. Someone fill me in on what I'm missing here?
The people "betting against" you dying just paid to have you killed.
See, there are two major flavours of pro-market attitudes. The first one is "if we allow many independent individuals to try their own approaches to a problem and let the people with "better" approach to personally profit from it handsomely and make them compete against each other in an environment with objective-ish judgement of "what is better" instead of "impress the (inevitably corruptible) officials to be judged victorious and awarded the fortunes", and also manually guard and regulate against several universally known ways to sabotage such competition, then we'll be able to channel human ingenuity into solving difficult to solve technical problems while also rewarding those who are able to come up with (and implement) such solutions with low overseeing overhead". Of course, such an attitude isn't strictly speaking "pro-market", it's been around since ancient times; hell, the USSR of all places had this attitude in spades until about the 70s or so.
The second one is "Nah, we don't have to try and think about anything ourselves, just let people fend for themselves, they'll figure it out, and it won't have any unforeseen bad side effects, why would it; markets are magical like that!" Yeah, about that...
Markets failures do happen, and when they do it can be helpful to have an external force step in to nudge the market back onto the rails. But even without such interventions they work remarkably well on balance.
Markets, as they are understood today, are more like about 300 years old, even less in some places. The bulk of world economy has been sustenance farming for most of the human history, with some communal mutual help (based on favours and mutual indebtedness) thrown in.
> with no central oversight and almost no regulation
Lol what? E.g. Roman Republic (and later empire) tightly regulated its markets, especially food trade, during all of its existence.
Essentially it's a big straw goat in Sweden that vandals sometime set on fire.
Right towards the end as the probability approaches zero there's a huge profit incentive, "done deals" usually go under well under 1¢ meaning 100-200x returns.
A US man once traveled to Sweden to set the goat on fire, he was caught, fined $20k(?) and then fled the country before paying the fine.
Risk reward in a situation like this absolutely creates a situation for prediction markets similar to the observer effect in physics, it's no longer predicting the future and instead altering it.
There's already lots of examples where they are of sufficient scale, like paying the press secretary to shut up after 64 minutes. Or paying someone to falsify ISWs map of the front line in Ukraine.
Many newsworthy events (and even more events that actually reach prediction markets, many of which are at best marginally newsworthy) are actions ultimately pivot on a human decision, so the first part isn’t true.
> And no person in a position to start a war would do it to affect a Polymarket bet.
Are you saying “no one would start a war with personal financial gain being part of the motivation”, or “it is impossible for the payoff of a prediction market bet to be of sufficient magnitude to alter the calculus in even the tiniest iota in that case”?
Because the first seems extremely clearly false, and the second seems improbable in the case where the first is false.
No person in position to start a war and to influence economic policies would become a crypto scammer... erm wait...
Causing real world problems with prediction markets would probably be about ego and trolling.
I also find a clear political bias in the naming of some of the markets, but that could be simply because of the demography of the user base.
Are you fucking kidding? Based just on current events, that is absolutely not a statement you can make without at least trying to prove it.
If you do try to prove that you will fail as the idea that people would start wars for profit is as old as wars.
Just evaluate the sentence you've just created. How many people exist who have the capability to start wars or influence the start of wars? It's a lot. What else do you know about these people and their motivations?
Imagine if 10 million people bet on starting a war vs 5 million who say no war. Those net 5 million people are going on social media saying why the war is justified. They’ll vote in war mongers. They’ll support the military. The bet literally influences the result. It’s a self fulfilling prophecy.
See also: one can have very high economic efficiency with very high inequality, war, disease, misery, etc.
It requires that they put down collateral (the purchase of the the yes bets) that they lose if they don't meet the contract, so they do have to have starting capital.
> because other people have to take the opposite side.
That is to say that there must be people offering the bounty.
The size of the bounty isn't defined by the price of the contract, but the total upside available in the order book.
> and as the odds move, they make less money.
They have to put up more collateral for the remainder of the contract if they want that upside - but they make all the money that they already put up collateral for.
But one person doesn't get the whole thing. ALL the people holding that side of the contract split the payout, in proportion to the size of their holdings in that side of the market.
I think if I use hypothetical numbers, it will help me explain how I think it works, and maybe this will help someone figure out where my error is.
Let's imagine the market is about whether I will die by the end of the day. So far, there are $500,000 in total bets in the market, and there are 5,000 shares in this market. Let's say it's currently sitting at only 10% odds that I'm going to die. I think that means 4,500 shares, or $450,000, is on the "No" side and 500 shares, or $50,000 is on the "Yes" side. Do I have that right so far?
If nothing changes about the market and I'm still alive at the end of the day, everyone who holds a "No" share splits the $500,000 pot, correct? There are 4,500 of them, so they each get $111.11 per share.
But suppose someone has a solid plan to kill me by the end of the day. They decide they want to dump $50,000 in on the "Yes" side. That's not going to buy them 500 shares, because they would need someone willing to sell 500 shares at the current price. They'll actually get well under 500 shares, and probably not even half that many, and they'll still be splitting the pot among the other people who already have the 500 shares on the "Yes" side. So they're still at not even half the "Yes" side of the market. They can probably double or triple their money, but we're talking about making another $50-100k on top of getting their own $50k back. It's not like they get the whole $500k.
That's what I mean when I say it's "not a bounty." A "bounty" makes it sound like, "If you're the one who kills smeej, you get $500k," but that's not what's happening here.
Lots of people might be willing to try to kill me for $500k. A heck of a lot fewer are going to be willing to try to kill me for 2-3x whatever capital they can come up with right before the hit.
Am I at least understanding this part of it correctly, how the payouts actually work? If I'm not, that would go a long way toward helping me figure out what I'm missing.
No - there's always an equal number of contract outstanding on both sides of the bet. A contract is a promise from the person who sold "no" to pay the person who bought "yes" a dollar if the outcome happens. These contracts can trade from anywhere between 1 cent to 99 cents corresponding to a 1% chance to a 99% chance that you would die*. The odds the market reports is just whatever price the last contract traded at (or alternatively whatever price sits between the current open offers to buy/sell contracts. In liquid markets these tend to be the same).
> If nothing changes about the market and I'm still alive at the end of the day, everyone who holds a "No" share splits the $500,000 pot, correct? There are 4,500 of them, so they each get $111.11 per share.
They each get $1 per share. Their profit is $1 minus how much they paid for the share. It's not (meaningfully) a shared pot which is divided up, it's a fixed amount per share.
> They decide they want to dump $50,000 in on the "Yes" side. That's not going to buy them 500 shares, because they would need someone willing to sell 500 shares at the current price.
Ignoring the numbers at this point - you're generally right that they need to find someone willing to sell them the contracts. The existence of a large number of outstanding contracts doesn't guarantee this - they might be held by someone who is holding them to minimize the payout a hitman could get for killing you for instance.
The most direct guarantee is the order book The order book is the collection of open offers "I'm willing to sell X yes-contracts at Y price" that the market has for potential purchasers. The hitman can look at this and snatch up all of these simultaneously (up to some race conditions in the market - we can mostly pretend those don't exist but they do introduce some risk on the hitmans side). This can be thought of as the size of the currently available bounty.
There's a chance the market will continually over-price these yes contracts - and the hitman will never kill you as a result. That would be a huge mistake on all the financially motivated holders of yes contracts though - their positions go from worth something (if they sell to the aspiring hitman) to worth nothing if they don't price them low enough. In general you should expect the market to find the price at which a hitman will carry out the contract - so long as there's enough money in the market in the first place.
* Ignoring transaction fees and the time value of money, it's close enough for this discussion.
I think I understand what you're saying about the pricing. Am I correct in saying, then, that if the odds are 90% in favor of my living through the contract, the "No, smeej won't die today" price should be close to $0.10 (again, ignoring fees and the time value of money)?
If the hitman tries to buy in with 10% of the total funds already in the market, the odds/price are going to shift hard. It's going to devour a huge chunk of the order book. Any market that suddenly has someone come in at 10% of the whole market value is going to get a massive trading wick. So yeah, he'd get some shares at $0.10, but he's probably going to eat the open order book to a much higher cost. He can 10x some very small portion of his money (however many shares are on the book at $0.10), but he can only 5x his money at $0.20, or 3x at $0.33.
Even if we assume he does have $50k to dump into the market, I still don't see how he's going to more than triple his money, which is a heck of a lot less than taking the entire market's value as though it were a bounty.
(I don't know how much volume is available, nor do I endorse betting on either side of things like this)
The hitman shouldn't expect to capture the value of the entire open interest. The market here is serving to negotiate the bounty with speculators betting that too much was offered taking the rest (a privilege they pay for by buying contracts that only pay out if they don't take too much). It's a curious form of negotiation since the people paying for the murder don't participate... but should (in a very theoretical efficient market) come to a "fair" (large enough to get the job done, and no larger) payment for the hitman.
2xing your money in a night is a huge payout, I think you're overestimating how high the multiplier on the capital requirement needs to be. That said, if you aren't, and you need a 5x payout to find a hitman then no rational speculator would purchase contracts for more then $0.20...
If someone already has significant money backing, and especially if that person already has some other specific reason to want you dead, I can see how it might be added incentive, but even so, you also now have to tip your hand. To buy in hard, you have to send a signal saying you have reason to be confident I'm about to die. You're basically shooting yourself in the foot right before trying to shoot me in the head.
Plus, it's not like the markets are anonymous. Polymarket isn't trading with Monero. You're not just tipping your hand ahead of time. You're pointing the investigators right at yourself.
I just don't see how the calculations end up falling in favor of killing somebody if you weren't already planning to do so.
Because that's what money is for, to purchase things, like hitmen (apparently).
Why go through the "prediction market" at all then? The hitman still killed someone, payments are not anonymous in this market, and its certainly not clean. Further, you share the pot with however many are involved, proportional to the allotted bets on each side and presuming binary prediction. And if the winds change on the market for the bet proportional to the "hitman's" side, you lose out on dollars that would otherwise be paid to you (the hitman).
And it'd be so easy to stiff the hitman just by equalizing the positions by timing it.
All that risk for something that's far simpler to just pay directly?
It's there. It's not actually easy to find hitman for hire. This is a publicly advertised market for it.
Plausible deniability. We weren't paying for the witness to be murdered, we were expressing our confidence that no one would murder the witness.
Price discovery. The market tells you how much you need to pay a hitman (if you overpay hedge funds swoop in and take the difference, telling you for next time. If the hedge funds underestimate the cost they end up paying a significant penalty to the people who they prevented from hiring a hitman).
Crowd funding. The market means that every can chip in however much they want towards paying the hitman, and they only end up paying if its enough. In fact the middlemen who accepted the bets in the meantime may promise to pay some small amount of damages if enough isn't collected.
It is impossible to stiff the hitman, and there is no risk for the hitman that the "winds change". The hitman takes out the entire "yes" position before committing the murder. If it's not enough, they don't commit the murder.
You're correct in your understanding of prediction markets with respect to traders using insider information. There are a couple things going on here. One is the subtext from most news media now that Technology Bad. New technologies are treated as guilty until proven innocent, because that is a more engaging narrative for readers. So in this case, those covering this stuff immediately latch onto the rich get richer, insider trading viewpoint, and that gets reported without any analysis of why that might actually be desirable.
Second, prediction markets, in trying to become broadly accessible to "normal" people and desiring liquidity, need a marketing strategy that is understandable. They can't put out a Robin Hanson article as marketing material. So they market by appealing to something people do already understand, which is gambling. The public has this idea now of prediction markets as a way to make money, not as a tool for learning information. So the default perspective on insider trading is now one of unfairness: somebody used their privileged position to make money. The correct perspective is, in fact, that prediction markets are providing users with value by eliciting information from those insiders, information that the public would not otherwise have. The latter perspective is mostly foreign to degenerate gamblers, and the marketing campaigns of Kalshi and Polymarket aren't helping.
The criticism is about the systemic risk of converting prediction markets into "Assassination Markets"—mechanisms where the payout is not a reward for foresight, but a bounty for action.
In the case of Maduro, the operation cost around $300 million so a $400,000 payout isn’t providing a financial incentive.
But in the case of assassination, a $400,000 payout is sufficient motivation.
It is if you are spending someone else’s $300 million, and getting the $400,000 yourself.
I think there's a pretty good chance the person who took that money was opportunistic, this time, but $400k isn't a trivial sum of money, it's not impossible it was the difference between this happening and not.
Except the paragraph you quoted nullify this benefit
> The suspiciously well-timed bets that one Polymarket user placed right before the capture of Nicolás Maduro
So we learnt nothing. For the entire duration the stock is online, its pretty much 50/50 then suddenly 1 day before, the ticker spikes to yes.
That's the whole point, isn't it?
And if you're going to tell me the paragraph I quoted nullifies what I've said, would you please explain how? Obviously I don't currently understand it the same way you do, and I have asked for help understanding what I'm missing. Saying, "You're missing it," isn't helpful.
Indeed. Insider trading is a feature of prediction markets, not a bug. There are two kinds of people who participate in prediction markets:
1. People who have insider information, or at least more sophisticated predictive capability than your average person.
2. Gamblers.
In effect, prediction markets are a way to move wealth from the second group to the first. If you understand that and still want to participate, cool. It's your money, and you're allowed to gamble it away if you find that entertaining.
At any rate, given the relatively small-potatoes level of bets going on at Polymarket and Kalshi, the article author's breathless anxiety about this is a bit overblown.
This bucket as you've defined it is too broad.
There are a few different kinds of non-gambler participants in prediction markets:
1. People with "insider information" as we think of it - they "know" the answer to the market because they are "involved" somehow.
2. People who aim to do superior analysis of publicly available information to produce an edge. For example, an AI firm with better hurricane prediction modeling may try to monetize that by betting on whether or not a hurricane will impact an area.
2b. People who do the work to create new information. For example, the Trump 2024 election market on polymarket famously had better odds for Trump than polling. It turned out that a mega whale was bidding Trump up because he had paid for his own private polling in battleground states and that gave him confidence Trump was going to win.
In short, it's mostly incorrect to suggest that prediction market participants are either illegitimate insiders or gamblers; there is a third class of actors that are a very important cohort: those who do the work to create better predictions and monetize their work by betting in the markets. This third cohort of professional predictors is the most important in long-term prediction market growth.
I mean, most stock trading prevents insider trading, unless of course you're a in congress.
Seemingly regulators consider this a bug in every other market type, but suddenly this gambling market allows it?
> breathless anxiety about this
All fun and games until people start dying from it.
The CEO and executive team has fiduciary responsibility to act in the financial best interest of the shareholders. Your broker too.
If you have insider info (Obtained legally) but no fiduciary responsibility you can act on it. That’s why congress members trading US equities based on decisions they’re privy to is not, from a legal perspective, insider trading. They don’t have a fiduciary responsibility to their constituents
1. The misappropriation theory of insider trading covers anyone who trades on material non public information sourced through a trusted relationship regardless of any fiduciary duty to the company. For example, if I tell my personal attorney a non public fact about the company I work at, and they trade on that information, they absolutely can be found guilty of insider trading despite having no relationship to the company at hand.
2. Congress is explicitly covered by insider trading law, which was affirmed in the STOCK Act of 2012. The fact that they’re rarely indicted has more to do with the legal and political challenges associated with doing so, not the legality of the act.
Huh. The lawyer example works because attorneys have a very specific, enforceable duty of confidentiality. Swap that relationship out and the conclusion may change. As written, the comment slides from "duty-based misuse of information" to "any private knowledge you shouldn’t have," which is not the same thing.
A lawyer (not my lawyer) gave me his off-the-cuff opinion on this scenario:
A pharmacologically-literate clinical trial participant for a novel new drug strongly suspects he did not receive the placebo/comparator drug, based on the subjective effects, plus their own pharmacology knowledge, experience with the placebo, and the research on the candidate drug.
However, this drug was not therapeutic for him, the side effects were onerous, or perhaps he believes the trial will be halted. Whatever their reasoning behind his inference, no details of others’ experiences were leaked to him, blinding was maintained; protocol was followed. He didn’t base this on a lab readout.
Based on his understanding of published research on the candidate drug, and projecting from his lived experience as lab rat, he believes this trial should disappoint shareholders. At the very least, shares may be priced too high.
Can the participant, based on this inference, invest $$$ shorting the pharma firm? This drug is considered the firm’s last best hope.
Their answer was yes, basically. He can trade on this non-public info.
Misappropriation theory is the following: > The misappropriation theory of insider trading is a form of insider trading where an individual trades stock in a corporation, with whom they are unaffiliated, on the basis of material non-public information they obtained through a breach of a fiduciary duty owed to the source of the information
The important part, which you're right was unclear in my comment is that the recipient of the information must have a fiduciary relationship with the source of the information, even if they do not have one with the company in question at all. That's the distinction.
And turns out I didn’t just stumble upon an unconsidered edge case because I got accepted into a drug trial and activated my galaxy brain:
Allan Norwich, The Clinical Trial Research Participant As An Inside Trader (J. Health Law, 2006).
You're ignoring the critical issue of timing. It's one thing to crowd-source knowledge in a steady, homogenous way. It's quite another for an actor with material knowledge of the situation to exploit this dramatic information asymmetry to turn a profit, revealing the new information at the last possible timepoint it could be used to lay a wager. Insider trading is quite different from a Hayek-style price signalling, and it's the same here. In principle (and on long time-scales) these markets can incentivize important information to come to light sure, but in infinite time we're all dead anyways. The short-time dynamics matter a lot more, from a social welfare perspective.
The assassin might place the bet at roughly the same time as they place the bullet in the chamber. Making the prediction into a bounty. Not giving you any meaningful time to ponder the new information. The notification from your phone would be the distraction they'd use when taking aim.
> If I knew someone wanted me dead, of course I would want a prediction market on it, and if the odds suddenly shifted dramatically in favor of my death
No, you definitely would not want that. You don't want to live in the world like this. That's the point.
It's fucking horrible and dystopian, people betting on extra-legal invasions of countries, murders, things that could hurt or harm people where they have incentives to do something else that you've just distorted.
Gambling has been illegal, immoral, and proscribed by religions for literally thousands of years, in all sorts of different forms and iterations, for a reason. Because it's incredibly toxic to society.
You can make some arguments that pure games of chance, like casino games, and even maybe sports betting (since sports is a spectacle) aren't that bad. Based on what we've seen recently, I tend to disagree, but at least it's an argument.
But now we're talking about betting on all sorts of political issues, things that are illegal, things where people are acting in an official capacity and shouldn't be given incentives to subvert that. And all these other examples are just bad. There's not really any upside to this at all. It's just bad for society and it shouldn't happen. It's horrible.
If you feel like you're missing a big piece of the puzzle you should take a couple of steps back and think about the consequences of a world where this is common.
But I don't think we should do anything because religion doesn't like it - that's a foolish thing to use to make your crucial choices or world view. A key reason is pretty much every terrible thing ever was excused as requirement of some religion or forever. Separate from the hurtful things in religious books at times, it's too easy for leaders or authorities to somehow justify actions.
Let's instead use a goal of treating each other respectfully, stop hating and killing each other. Yeah, that's all naive stuff, we aren't there, maybe we'll never be there. Still a good goal, treat each other with kindness. And yeah, I'm an optimistic sort.
It's not toxic because religion doesn't like it. Religion doesn't like it because it's toxic.
Religion has been the primary means throughout history by which humans have tried to figure out right and wrong. You can feel however you want about it, but that's just how it's worked. It's basically the ultimate example of Chesterton's fence.
To carry my analogy further, there are many, many, many times where the fence doesn't need to be there or where the fence has outlived its useful purpose. But it's still a good metaphor.
I already live in a world where people make odds about whether I'm going to die. They're called "actuaries," and they work at life insurance companies. There are also oddsmakers of the same kind at car insurance companies, etc.
Right now, I hate that people who can actually analyze enough data to make odds about these things can only earn a living working for companies that are incentivized to find ways not to pay out when the odds do break against them. I'd much rather these people be able to make their livings just calculating odds, placing bets, and being right. I would like to have access to their calculations, and not be in a position of "just take it or leave it" when I'm evaluating a prospective plan from a life insurance company, for example.
Yes, by all means, there will be gamblers in these markets. There will always be some amount of noise, just like there is in the stock market. But why would that end up being the bulk of the industry? Just like with Wall Street, I would expect companies to grow up around these markets that specialize in getting the odds of things right, and making money off of their predictions. If the market ever became truly efficient, I think we would have a MUCH better idea than we do now about the likelihood of all kinds of things.
Heck, even if I think of something as apparently mundane as weather forecasting, if somebody came up with a breakout model that was right substantially more often, I would expect they would be able to raise all sorts of capital around it and start winning in all the weather forecasting markets, which would then make their predictions a reliable signal, and we'd finally have better information about what the weather is going to do.
I think one part I must be missing is why so many people are assuming that the primary user of prediction markets would be gamblers instead of specialists, especially once they operated at scale. I just don't see why that would happen. Anywhere there's an opportunity to make money reliably by coming up with better analysis or prediction tools, capital will flock there and incentivize coming up with better analysis or prediction tools.
I think I really would like to live in a world where that was highly incentivized, and I'm confused why people would not want that.
ETA: I don't think the gamblers would ruin this any more than they ruin Wall Street. I don't think they have enough capital to matter. (They are, after all, prone to losing money.)
e.g. two sports teams participating in a fair match tomorrow, someone runs a book and after 200,000 punters bet, the odds are 90/10 in favour of Team A indicates that 90% of the time Team A is going to win that game.
This assumes perfect and fully available information with punters availing themselves of this info (or at least an equal split of passionate/casual/informed/wreckless or even slightly "inside" punters on each side).
All I can really do in this case is ask for explanation. If you're enough higher and mightier than I am that you don't care to give me one, that's fine. You don't have to. It's just kind of...unnecessarily condescending to rub my face in it without even trying?
You enable different enemies to crowdsource for your bounty, and as soon as it is deemed worthy by a hitman, they might take up on the job by placing the opposite bet.
It's a very specific example but the mechanics work for most events in a similar fashion.
It is for this reason that event creation is not open to the public, but rather handled by the regulated markets themselves
Reminiscent of PG's essay about the submarine[0]: it's another way of attaching credibility to a 'news' item you're pushing.
I think it's safe to say they figured it out.
Given the immense sums of money, little to no accountability on how it's spent, and a finite list of traditional spending targets I expect campaigns have dabbled in all sorts of unusual approaches.
Compared to typical total advertising expenditures during a presidential election, my guess is that $4M is close to a rounding error.
Having fire insurance and burning your car is in most jurisdictions illegal. Yes, you should be paid if your car is burned, but if you do it intentionally, you are obviously increasing the chances of getting paid, unless of course the insurance company finds out you did it. And so on.
I don't see why these situations would be illegal and, say, betting against the survival of a regime when you're actually working against it, would be legal.
Things are even harder if you coordinate multiple people. For example, let's say 100 people bet that there will be a riot in town X by the end of the year. X is normally a quiet town so most people bet against. These 100 people bet this will happen 10 minutes before actually starting a riot themselves. Yes, someone could observe last minute trends and might predict reality, but last minute or huge bets are not necessarily true - someone could bet on random things for a variety of reasons. So it's not even useful as a way to get insights into the reality.
Sports might be fixed? People might gamble with sports? I don't give a shit man, these markets bet on democratic elections and war, the concerns are whether military action is effected for money or leaked for money, everything else is an infitesimal rounding error.
In chess, it's part of the rules that you cannot use a chess engine, a tournament may have a prize money, to enter into a tournament you agree to some clauses like following the rules of chess and not using an engine. It's a contract.
If someone were to use an engine, they would be cheating, and in this context it would be breach of contract, and possibly fraud.
It would be wrong to assume that because using computer programs in this competitive sport, it is therefore wrong to use it in more critical applications, like war, or health or construction. The core reason being because they are by nature very different events with different contracts that are entered into willingly and are controlled by very different laws, but also independent of laws, they are very different phenomenons and will of course have different moral and practical impacts. (Duh)
I think you are right in that often (but not always), it's fraud (which isn't the same as being ilegal, it could be a breach of contract or fiduciary duty) for someone who is working for a purpose, to sabotage it for another purpose for some additional gain. But the rule being broken is contract law, not criminal law, in this case.
Sometimes other laws would have to be broken to manipulate the events, like in the case of democratic elections, or wars. It's just that these are higher order laws and not contracts between parties.
It's entirely possible for an event to be manipulated where a party doesn't really break a rule or law or contract to win at it, like elon musk tweeting more than 500 times.
Furthermore it's worth noting that this doesn't have much bearing on the legality of the market itself, one thing is for manipulation to be illegal or fraud or somehow penalized, the other is the market itself being illegal.
I hope I have helped a little bit, I'm not sure what your legal training is, I'm not a lawyer, but since you are talking about 'allowing people' I analyzed this from a legal perspective based on the knowledge I have.
For one, it creates insanely imbalanced systems where two sides of a 50/50 market have completely opposite world views that when the market resolves may have access to sources, whether completely fake or misinfo'd, that lead them to believe the market should be settled in their favor. This then puts the prediction market in a place where it is the "arbiter" of reality - in a world where media has become so corrupt and full of noise, finding out what actually happened can be really hard.
So then, a market such as this seems inevitable to me because you can then point to markets and say "see, it resolved this way." It does not perfectly align with truth but with market forces would probably lead to more truth than a reality where you just cherrypick whatever biased source that makes you feel good does. And of course, the market itself can become corrupt.
Stock markets aren't too different in that they help predict which companies will be valuable in the future.
We _currently_ live in. Truth and trust are older than computers. They will outlive computers, too. Computers and the system we have built will eventually yield to truth, not the other way around.
One can get a credit card and say they are living in a post-scarcity world until they hit the limit, but that doesn't make it true.
The only one I know of is the bet on whether Venezuela would be invaded, which PolyMarket didn't resolve as yes arguing that it technically wasn't an invasion. So it isn't that there's two realities really, it's just a very inconsequential word play on how we describe reality, and the only ones concerned with it are those who made the bet.
My best strategy for dealing with people who have been radicalized is to make wagers. Even making the wagers is hard because they are often about individuals who's job it is to gaslight their constituents... but its still been working pretty well. I'm up probably $1000 off of these little bets and they have helped me win later arguments.
Contrary to what you insinuate, we don't have 2 parallel markets for each issue, where each groups bets in their own echo chamber market to feel good about their beliefs. The law of one price holds and we have a single market per event, and it almost always resolves such that >> 50% of people agree with the result retrospectively. The resolution mechanism affects the price. If the market is expected to be biased towards a certain outcome, then that outcome will trade at a higher price.
You could easily prove your theory by giving an example of two markets about the same issue, with different arbiters, where the price significantly diverges. Or where the arbiters disagreed after the fact. There will be examples, but how much Volume traded in those markets, compared to the markets where it didn't happen?
Even though the market basically settled in 2019 as she missed filing deadlines, a whole group of conspiracy theorists in the "Yes" market descended in the comments, and there was 10-15% on "YES" even til the very last hours they closed the market, which was like a ~week or two before the actual election.
Every news event was interpreted by this group as a "sign" she was secretly running, and they provided their own sources. I was arbitraging this market for the whole year on any "new" hillary news, so paid very close attention to the discussion circles happening around it - I checked in after the market closed and many of the genuine "YES" people putting up as much money as they were able to concluded PredictIt was incorrect and that Hillary was still the "phantom" nominee. It would not at all surprise me if a few of them still believe she actually ran for president. They probably should have closed the market several months before, but they kept it open. If they had closed it at any reasonable point beforehand a huge chunk of the "YES" market would have lost their minds.
People are goofy and prone to conspiratorial thinking. If you want an example of something that there isn't a market for, but just an example of how much 2 groups of people's thinking can diverge - Ask 100 random people what happened to an ICE officer in minnesota that was involved in a shooting very recently.
But, one silver lining, maybe, is gamblers are a little less likely to fall for fake news. Maybe?
It seems hard to be a climate change denier when you're about to gamble on it.
Or maybe people will find a way to gamble while still living in completely different reality bubbles. Probably.
If you thought your neighbor was politically extreme last election, just wait until next election when he also has $100,000 on the line...
Long time ago I was working for a betting company and we had a product where virtual (horses, dogs, bikes, cars) were racing in a virtual environment. This was displayed on a TV in physical branches and on the website, along with completely transparent information that it is all random, source of randomness was even some government audited hardware. The customers could place bets on these virtual racers, identified by numbers. Essentially if there were 8 'dogs' in a race, there was a 1/8 chance your pick would win. And then a new set of random numbers would be generated and based on that a new 'race' video would play. The 'races' would go on every day, 4 in hour or something like that.
And the customers (in the live chat or sitting in the physical locations) were often debating the form of the individual 'dogs', how they would perform in the next race and so on. Yes, really.
Unrelated - that site is great. I looked into membership, but $6/month seems steep.
It’s more like the stock market brokerages. They just take a fee on each trade and don’t need to give you a spread over the stock price
You have to watch out for resolutions are don’t depend on the truth or could be abused.
Examples of markets to avoid are those that a single individual can manipulate. They could take the most profitable side and corrupt the result.
5 minutes browsing polymarket comments will dispel that notion really fast.
Only in a truth-agnostic sense. Good gamblers in player-banked games (poker; rock, scissors, paper) vs house-banked games (slots) are good at figuring out what the other guy is representing. The actual truth is much less significant.
I've seen the comment that prediction markets can be viewed as a tool for making conflicts more intractable.
Crypto bros. Remember when all of them were saying that NFTs were the future?
Am I missing something? Maybe it's already being used in that way... in that case, it would be quite scary.
Reference: Andrew Dickson White (first president of Cornell) "Fiat Money Inflation In France", published 1896:
"The government now began, and continued by spasms to grind out still more paper; commerce was at first stimulated by the difference in exchange; but this cause soon ceased to operate, and commerce, having been stimulated unhealthfully, wasted away.
Manufactures at first received a great impulse; but, ere long, this overproduction and overstimulus proved as fatal to them as to commerce. From time to time there was a revival of hope caused by an apparent revival of business; but this revival of business was at last seen to be caused more and more by the desire of far-seeing and cunning men of affairs to exchange paper money for objects of permanent value. As to the people at large, the classes living on fixed incomes and small salaries felt the pressure first, as soon as the purchasing power of their fixed incomes was reduced. Soon the great class living on wages felt it even more sadly.
Prices of the necessities of life increased: merchants were obliged to increase them, not only to cover depreciation of their merchandise, but also to cover their risk of loss from fluctuation; and, while the prices of products thus rose, wages, which had at first gone up under the general stimulus, lagged behind. Under the universal doubt and discouragement, commerce and manufactures were checked or destroyed. As a consequence the demand for labor was diminished; laboring men were thrown out of employment, and, under the operation of the simplest law of supply and demand, the price of labor--the daily wages of the laboring class--went down until, at a time when prices of food, clothing and various articles of consumption were enormous, wages were nearly as low as at the time preceding the first issue of irredeemable currency."
New issues of paper were then clamored for as more drams are demanded by a drunkard. New issues only increased the evil; capitalists were all the more reluctant to embark their money on such a sea of doubt. Workmen of all sorts were more and more thrown out of employment. Issue after issue of currency came; but no relief resulted save a momentary stimulus, which aggravated the disease. The most ingenious evasions of natural laws in finance which the most subtle theorists could contrive were tried--all in vain; the most brilliant substitutes for those laws were tried; "self-regulating" schemes, "interconverting" schemes--all equally vain. All thoughtful men had lost confidence. All men were waiting; stagnation became worse and worse. At last came the collapse and then a return, by a fearful shock, to a state of things which presented something like certainty of remuneration to capital and labor. Then, and not till then, came the beginning of a new era of prosperity.
Just as dependent on the law of cause and effect was the moral development. Out of the inflation of prices grew a speculating class; and, in the complete uncertainty as to the future, all business became a game of chance, and all business men, gamblers. In city centers came a quick growth of stock-jobbers and speculators; and these set a debasing fashion in business which spread to the remotest parts of the country. Instead of satisfaction with legitimate profits, came a passion for inordinate gains. Then, too, as values became more and more uncertain, there was no longer any motive for care or economy, but every motive for immediate expenditure and present enjoyment. So came upon the nation the obliteration of thrift."
(* I don't know why I said "dinner party", since I don't go to those, the conversation usually isn't good, and they aren't my idea of fun, but oh well, it makes the point)
What happened is that, independently of my reply, HN's software started killing your posts because your account had crossed some thresholds at which the software starts doing that.
Like I said, it may be a distinction without a difference to you, but that's what happened.
Thus was the history of France logically developed in obedience to natural laws; such has, to a greater or less degree, always been the result of irredeemable paper, created according to the whim or interest of legislative assemblies rather than based upon standards of value permanent in their nature and agreed upon throughout the entire world. Such, we may fairly expect, will always be the result of them until the ñat of the Almighty shall evolve laws in the universe radically different from those which at present obtain.
And, finally, as to the general development of the theory and practice which all this history records: my subject has been Fiat Money in France; How it came; What it brought; and How it ended.
It came by seeking a remedy for a comparatively small evil in an evil infinitely more dangerous. To cure a disease temporary in its character, a corrosive poison was administered, which ate out the vitals of French prosperity.
It progressed according to a law in social physics which we may call the "law of accelerating issue and depreciation." It was comparatively easy to refrain from the first issue; it was exceedingly difficult to refrain from the second; to refrain from the third and those following was practically impossible.
It brought, as we have seen, commerce and manufactures, the mercantile interest, the agricultural interest, to ruin. It brought on these the same destruction which would come to a Hollander opening the dykes of the sea to irrigate his garden in a dry summer. It ended in the complete financial, moral and political prostration of France--a prostration from which only a Napoleon could raise it."
It's like a dozen paragraphs, forming one complete argument. Is this too much material to take in all at once, in this brave new TLDR tomorrow?
Do as you wish, however I doubt this will have the effect you want here.
The issue is not that you cited a dozen-paragraph argument, it's that you inlined all the text directly into a series of comments instead of a link to the text on a separate page. It visually overwhelms the discussion thread and is disruptive to the broader discussion, which is not strictly against guidelines but generally seen as non-normative behavior.
Betting (risking something known for a payout which is uncertain), is ubiquitous in life, and really any game where the participants don't have perfect information. You are betting even if you don't realize it. You can't opt out, it's part of the human condition.
Gambling refers to taking on risk for the feeling it brings. The fact that humans can gamble reveals a quirk of human neurology. If we evolved to be more rational, then the phenomenon probably wouldn't exist. We know the feeling is valuable (to gamblers) because they are willing to place negative EV bets to bring about the feeling.
Anytime people criticize betting, it looks to me like some kind of utopian scheme, where everyone can have everything without risk.
It's not possible for a 3rd party to, at a distance, determine why someone placed a bet in a prediction market. At a casino, it is possible. Most of the games are negative EV. So if someone plays any of the games, then it can't be because they are trying to maximize EV, it must be for some other reason (like a feeling).
That's not what risk means. Risk is the amount you stand to lose, and expected value is the mean outcome (calculated by integrating across all possible outcomes). The EV can be positive or negative, and that corresponds to a mispriced asset. Risk can only go to zero, but it can also be arbitrarily high.
Managing risk is its own thing, but to give an intuition: How much should you bet on repeated fair coin tosses that pay out 3:1, if you have $100? More than 0, because it is positive EV, but definitely not the whole 100. Risk management is about playing vs. not playing and bet sizing.
Gambling is taking on risk without positive EV. A 1:1 cointoss is the quintessential example. EV is 0, you won't make or lose anything in the long run playing this game. But it adds uncertainty, you could have twice as much or nothing. Gambling is risk-seeking, the variance of outcomes has value (to a gambler) on its own.
I strongly disagree here, I think the phenomenon is in fact part and parcel with the evolution of our rationality. Betting (as you accurately describe) is an intrinsic part of life, and rationality (as I understand) is our evolved response to wrangling that uncertainty. It shouldn't be surprising that the evolutionary reward mechanism for acting rational (big oxytocin hit when you predict something correctly) could get miscalibrated for a subset of the population; that's just biology.
I also think you're making a massive error by conflating criticism of betting with criticism of betting markets, though. Nobody is upset about people dealing with the natural risk of day-to-day life; the problem is that people are now being incentivized to take on additional risk (beyond the day-to-day) which they are poorly equipped to reason about. The systems governing the dynamics of geopolitical events (or other things you can estimate in a betting market) are staggeringly complex, and assigning credences to them is an epistemological nightmare that even the most seasoned experts struggled to do reliably. These market brokers are using a framework of rationalism/"wisdom of the crowds" as a cover to sucker non-expert consumers into what truly is gambling in the sense that you describe it. In principle a person could probably lay accurate odds on a horse race too, but the average punter is never doing that and the same is true of the majority of polymarket users.
Is there much of a difference when it comes to placing bets on the news?
To play off the article's opening example: investing in mineral exploration in Greenland, with an American invasion opening up opportunities for resource extraction, would be taking a risk with an unknown payout due to imperfect information. That is to say, it is taking a risk to build a business. A business where the payout may exceed what is going in. Betting on the news is just an exchange of money, with the intermediary taking a cut. Risks are being taken, but no value is being created. It is all about emotional involvement.
If your informational edge is just America invading Greenland, let's say you know that for sure. Then you could invest in the business, but you might actually be diluting your edge if you don't know more than the market does about the fundamentals of the business. The business could already have a lot of debt, and unable to get more to finance an expansion into Greenland. It would be less risky in that instance to just bet on the invasion, since that is where your edge is.
This is how I feel, too. Life is all about risk management and a life where you take no risk is one where you have nothing. People make bets all the time: areas they move to, people they ask out, jobs they take, what foods they eat, etc. which is clearly different than going to the casino and putting it all on red.
Is the reliability of Polymarket predictions overhyped? Sure. Is there manipulation of Polymarket odds by some people? Most likely there is. But to say that this is a disaster that America is walking into is nothing else but clickbait.
I dont think this is a new threat.
For example, you can expect the data to closely correlate to poll results for elections, because when it doesn't... people will notice and correct it.
There is a large disconnect between the amount of combined effort and thinking that goes into prediction markets versus the glibness of which so many people write about them. It is almost as if people lose the plot — in capitalist countries, many financial flows are heavily informed by futures markets which share many of the same characteristics as prediction markets.
[1]: also: fraud investigations or other areas where rigor is expected
[2]: Even the better sources such as The Atlantic are somewhat advertising fueled, driven towards “engaging” content, prioritizing interesting ideas rather than practical relevance, dumbed down to maybe a high school reading level, hardly a trace of showing one’s methods. I don’t think I’ve ever seen any backing analysis in the form of a spreadsheet or (heaven forbid!) source code of a simulation. This is not meant to point fingers at writers or journalists; we just have to recognize the context they live in. If we want detailed and careful analysis, we need to find ways to build system systems that provide it. What we have now is a joke compared to what is possible.
Part of me is careful what I wish for, starting with passengers bothering staff even more.
But maybe the passengers or crew on that plane had a better idea of why they were delayed, which I'm not sure any site would show. I've been on the other end too, knowing my plane isn't taking off due to a jammed door and texting updates to someone who was supposed to pick me up on the other end.
Some people do it for for entertainment, some people are gambling addicts, some people think they have a strong grasp or inside knowledge when they don't.
It is, at root, a casino. Apply your lens to any casino game, and it shouldn't exist (some very narrow exceptions apply in the casino).
If you don't have inside information and you participate in prediction markets, you're there mostly to provide liquidity.
Unlike stock markets, prediction markets also provide valuable data on important world events, such as elections. It's wisdom of the crowd with financial incentive.
So can a skilled coach make consistent returns in his sport. But sportsbetting is considered gambling.
Surely, in the prediction market, it is possible to set up prediction bets which are practically impossible to predict. And with binary outcome, your odds will be 50/50.
With stock markets, at least in theory that money can be used to make a product to sell. They're not sum-zero games. Even if the company were to liquidate, you would be entitled to a share of actual assets after creditors were paid. This might seem foreign to some modern social media investors who YOLO with leverage all their money on meme stocks, but I would not be against that being reined in too.
Also, I really struggle to see anything coming out of prediction markets as valuable, especially not on a scale that would counteract their destructiveness. Like, polls are basically equally accurate, and there is zero benefit to anyone to know that there's a 76% chance that Trump will say the word "historic" during his speech Thursday.
This is how most people are these days! Or probably thats how human nature is!
Unfortunately, that also means we’re likely due another one any time now.
Right now Polymarket is subject to a federal agreement that they don't let US people participate. Apparently this is just a checkbox for the user to attest to. They don't even do IP geolocation, never mind payment checks.
So it's currently illegal for them to run this in the US. But is it illegal for users to participate?
Your comment said the next administration will enforce it. It seems that administrations from either party have not.
I don't think this convoluted setup is enough to avoid US gambling laws, but it is important to keep in mind how it actually works.
This changed last month.
There is little incentive for someone with significant information, reason, or intuition to reveal it early leaving the market dumb for most of its existence or also open for someone influencing the outcome late.
They also aren't currently that reliable for gauging the wisdom of the crowds for situations where trust in the market effects its outcome. It's easy due to the scale of them for someone to just burn money to skew the perception of it for rhetorical and influential benefits.
I feel like there is no getting off this train though because news media companies are still desperate for revenue. Gambling around news will either increase advertising revenue for them, or if they do real information uncovering journalism, drive subscriptions because there's now incentive for getting news early on more than just financial news.
Yes but only if they know no one else has the same information and enough money to move the market
Fool and his money are quickly separated…
Sorry, that was what I meant to imply with the second half of my comment. Still, in my country there have been debates about whether publishing polls shouldn't be forbidden n weeks or days before the election (currently publishing polls and campaigning is only forbidden on election day).
You got to give even a 1000$ or something in this bet, you are gonna be so vocal about support, manipulation of data to convince unconvinced voters to join you or other details
The unconvinced voters are simply gonna bet on the voting side after sometime. For context, a third of the population in US iirc doesn't vote so what's gonna happen is that a difference of few %'s Lead could turn into something massive
And that few % can easily be rigged by an irrational actor. You are thinking 1 person = 1 vote (yes/no) but I may be wrong but how these work is in the aggregate and so a rich person can cause much more disruption within the voting system "legally" as well.
The point here is the legal part where what can end/what would end up happening is that elites around the world with irrational money can basically get political bases & favours established around the world for their purposes
Suppose an election is at 49 A / 51 B but now a rich guy contacted A and said to invest x$ to now make the odds 51 A / 49 B and then this news gets to twitter or any platform and now people get false news and some undecided voters might go bet on 51 itself too so now it might be 53/47 and in real voting election 51 A/49B
Some Elections are really close so I am pretty sure something like this is bound to happen sooner than later
Coinbase
Robinhood
DraftKings
FanDuel
Polymarket here is one example among the companies causing the problem. Legislation that addresses the problem should affect all the listed companies and more, not just Polymarket.
NFTs have zero value but people seem to derive non-monetary value from them. Naked option trading is a form of gambling (as well as risk management) and, as a result, it is regulated.
Polymarket is a "financial investment" for regulatory purposes but is gambling, there is no legitimate risk management reason. As a result, there is massive scope for harm because it is gambling without any of the gambling regulations that exist in the US.
People on this site appear to be unaware that gambling is regulated where legal. I will give you an example: Polymarket do not comply with state regulator's exclusion/no market lists. This is immoral. Gambling companies should not take bets from users who have gambling problems, they should not market to them.
Offshore unregulated books will often market themselves to addicts saying that they do not comply with regulator's exclusion lists...this is an onshore book operating in Lexington Avenue New York, not out of a shed with a pig sty in Curaco. It is unbelievable at many levels.
I'm not familiar, but this sounds like lists of people who are not allowed to gamble? Do stockbrokers abide by these?
And to be fair options trading used to be pretty limited in users too, until apps like robinhood tried to democratize it.
It's not democratic if you can't destroy it, and believe me a majority of people want to destroy it.
Personally I find it sickening to see ads that say you can get rich betting on the weather. I haven't seen ads for polymarket but Kalshi's ads are absolutely predatory.
Although polymarket would do the best at "attraction" towards the average uninformed consumer because the bets and how to place them are far more understandable than the various option trading strategies.
I used to think it's just yet another way to people with more money than sense to get their kicks.
But then I saw the true reason why the platform is terrifying - it gives people who have nontrivial amounts riding on the line a very powerful incentive to influence said events.
I have seen expertly crafted and highly convincing narratives - that I know to be false from firsthand experience - spring up inside (and presumably outside) the platform spring up on an issue. There was the thing where the ISW (a reputable military think tank) reported an Ukrainian city was captured (when in fact it wasn't) in order to win a bet.
Imagine if next time someone leaks some military intel in order to hedge a bet. Money, especially lots of it, is a very powerful motivator.
There's also no way to check and control who has insider info or has influence on the outcome (as betting against them is essentially suicide)
But if you write uncovered options, your losses are theoretically unlimited.
Agreed, though. It's bizarre that this isn't regulated exactly like gambling. Because... that's what it is.
Ive seen people point out White House press conferences do weird shit, like cut the conference 10 seconds before some polymarket prop bet of "how long will this press conference be".
Much more heinously, a few months ago right before one of Trumps asinine tariff announcements, someone took out a $300M BTC short position that was almost certainly from a WH insider.
I honestly don't care if someone loses all their money gambling, but the problem I have is how so many institutions are able to be undermined at a fundamental level do the existence of polymarket.
there is the stock market for those things, where insider trading is nigh invisible to public.
Polymarket all of a sudden makes it much easier to make money betting on an outcome people control. Looking at polymarket, I see bets paying 100-1 based on the number of tweets Elon makes on a given day. I see another at 100-1 on wether the US airstrikes Iran today with $66m riding on it. All of a sudden theres an incentive of a life changing amount of money for goons in the whitehouse to strike Iran for shits and giggles.
Did you know that in 2007 some NBA Refs were caught rigging games for just $2000 a game? Now Refs don't even need to be payed off when you can make a position anonymously with bitcoin.
but many have the knowledge of which company or industry is about to experience legislation, which they can pass to any of their associates worldwide, who can then buy or short the affected entities and share the profit with the insider. Polymarket is just the idiocracy version of that.
Polymarket is worse as it gives a mechanism for proactively changing the outcome of events to a much more extreme degree, simply because someone can make money on it.
A benign version of this would be NFL employees betting $1million on the color of gatorade in the Superbowl.
An insane version of this would be Trump issuing a single airstrike on Iran after having a friend or family member place a $10M bet on polymarket that pays out $1B. It completely erodes the obligation our government officials have to not act in their self interests.
...and is illegal.
It's not illegal to throw a basketball game.
Example: I had a flutter on the US Election. The odds were well in favour of Trump winning and I figured that was never going to happen, so I thought I was putting 'smart money' on Kamala.
I stand by it being 'smart' money ;)
I underestimated 'dumb' (which, I guess, isn't 'smart').
Huh. That's interesting. Given futures markets on box office receipts are illegal.
https://www.bloomberg.com/opinion/newsletters/2026-01-08/mov...
Good example to show when people tout how great these are at predicting.
You can learn a lot more about whether these markets are accurate at this great resource:
As I understand it, the main argument is that for prediction markets that aim to incentivize the thing they're predicting, better to invest in the thing directly. Otherwise, "prediction markets" are successful precisely when they can't influence the outcome, like sports betting.
I remember finding the election betting interesting last presidential election, but I also remember that it was spiked when Musk invested to change the odds.
[0] https://worksinprogress.co/issue/why-prediction-markets-aren...
There's a level of irrational spending which only institutional investors can counterbalance, and they might not have the risk appetite to get into a single market on a relatively less regulated platform that could rug pull them.
While the reverse is not used as an argument against unchecked wealth.
Which is to say that Elon Musk can inflate any market he wants, but only by losing sums of money that will become increasingly significant as more and more people find out about the free cash giveaway.
There’s no functional difference in how markets work when 99% of wealth is owned by a handful of kings vs 99% of wealth being owned by a handful of oligarchs.
pardon me I wrote king instead of kings and what you wrote in this comment felt like questionable to me first but now comical LMAO.
But my point still stands and aside from this mistake, I am curious in knowing the real answer to my question even now!
I meant that from the perspective of how market forces play out, hyper concentration of wealth into a few actors looks the same whether the title of the those actors is “king” or “oligarch”.
You start losing the wisdom of the crowds effect the market gives if you have a handful of people making the decisions for the entire market
Well, only if they are thinly traded. If they get mentioned a lot more on CNN and CNBC, that is likely to change.
The other is accepting the bribe, sorry, taking the other side of the bet, and making something happen. That only becomes worse with scale. When you're in the position to accept a million dollar payout to cause the press conference to only last 64 minutes, or to invade a foreign country, suddenly you have a million new reasons to do so.
On any prediction market where a reasonably small group of humans decide the outcome, and there's enough money to matter, "betting no" is better understood as offering a fee to make it happen, conditioned on damages should someone accept your offer and fail to do so. "Betting yes" is better understood as agreeing to facilitate the outcome - or assisting in the price discovery mechanism that says facilitators are over charging.
Edited to add: I'd like to rephrase that a bit actually. It doesn't even have to help bring about the particular outcome being bet on. It's enough that it can be used to shift public opinion in some way that's worth the cost to the manipulator.
> It's enough that it can be used to shift public opinion in some way that's worth the cost to the manipulator.
This has been tried in the real world and is just not very effective. It's just too hard to move the price in ways that will shift public opinion when literally anyone else has a huge incentive to bet against you.
Right now, they're all thin traded at their open. As soon as they are created is when you see the volatility that makes them enticing. Once you get volume, there doesn't seem to be as much value to be had.
People who are unfamiliar with how regulated gamblings works assume that the "market" is just lots of informed people rationally trading with each other. This is not how it works. Bookmakers post lines to a small group of syndicates up to a limit, they will often do this non-publicly, and this is how prices are set. They are not set by the "wisdom of crowds", they are set by people who have invested hundreds of millions of dollars in predicting the outcome because bookmakers have an economic need for accurate lines.
When lines open to the public, there is often no significant movement after opening prices set by syndicates. That is because the public has no idea what the actual price should be, they are just uninformed noise traders clicking buttons randomly...that is the product too, the purpose of the product is entertainment not economic efficiency.
It is true that some lines are set incorrectly but the public is not able to benefit from this, because they do not have the information. I would guess that 95% of money made from gambling has been made by under 50 people. And, perhaps counter-intuitively, most of the time these people trading does not have an impact on price because they deliberately trade in a way that does not impact price. Again, the purpose is the same: they trade to make money, not produce economic efficiency.
The people who think prediction markets are useful in any way are people who never traded any markets and couldn't predict if the sun is going to come up tomorrow. If gamblers are noise traders, these people are noise speakers. These markets are completely pointless, gambling is economically pointless outside of the pleasure that people get from entertainment.
Again, it is fairly common assumption that people make that it must be noise traders who are incentivizing syndicates. This is the case at open but not after, and there is a significant distinction between noise traders and noise traders through retail books. Retail books do not set the lines, they do not post lines early to syndicates, their product is completely different. There is literally no incentive for accurate prediction because the economic gain from noise trading does not accrue to anyone who has information. 95% accrues to firms with the greatest marketing advantage, again...this is entertainment, it is not about accurate prediction, you are misunderstanding at a very fundamental level what is going on here. It is like going to see the Minecraft Movie and thinking this is artistic expression on the level of Tokyo Story.
This would all be different if there were real markets underpinned by economic demand for this risk but there isn't. This is why Betfair failed. This is why these "prices" you see aren't actually real prices.
I work in the regulated gambling industry. Prediction markets like Kalshi and Polymarket do not work like the regulated gambling industry. You don't know what you're talking about.
This sounds exactly like the timeline we are in.
This is somewhat similar to dangers of gamblification I guess. Where the expectations of the investors (gamblers) start shaping the decisions of the professional management of the company.
Many, many years ago the libertarians had something they called "assassination politics", in which it was pointed out that the ability to bet on the death of famous figures also created an "untraceable" way to funnel money to someone who could make that event happen.
The Nobel Peace Prize bet was a classic example. Any right-minded bookmaker would have voided that bet given that it was proven that the outcome had leaked ahead of time. Venezuela betting markets were equally corrupted.
The fish rots from the head what with Trump blatantly manipulating markets to enrich himself, his family and anyone who curries favour with him and says he's wonderful.
I personally will not set foot in the US, or buy services from any US company, until this administration is over.
I usually wouldn't bet on war but I was thinking the other day about betting on Valorant. I could hedge my emotions. I could bet against my team and be in a win win situation. If they win, I am happy. If they lose, I earned lunch money.
Prediction markets have gotten attention lately because it's so easy to manipulate them with small amounts of money and get signal amplified in subsequent reporting of the prediction markets "counterintuitive" signals. It is a form of reality shaping.
To that extent, they'll continue to exist, with just sock-puppet level activity until they are ignored.
The essence of prediction markets.
Any moderately intelligent people should realize why insider trading, banning athletes from betting, etc measures have been put in place. One should understand why without those (and even with) those there's perverse incentives to act in destructive ways.
Yet people here would be trying to discuss philosophy, semantics and tell you this is good because an insider betting on an attack on Venezuela 4 hours before it happened increases the accuracy of the prediction and the information being public, ignoring the elephant in the room of having the perverse incentives to influence destructive events. Just think about it: there might be people with incentives of attacking Greenland because they bet on it. This is madness.
This is the worst degeneracy of gambling and dangerous incentives combined, and it's all for nothing else but money. Just look at whose behind these projects: bs crypto adjacent fintechs and gambling companies.
I know we live in numb times where people have thrown in the towel of any hope for a better world, but ffs.
"Chesterton's fence" is the principle that reforms should not be made until the reasoning behind the existing state of affairs is understood.
https://en.wikipedia.org/wiki/G._K._Chesterton#Chesterton's_...
Gambling isn’t a new problem, but apparently we thought it would turn out differently this time, for some vague unclear reason.
I think the simplified version of that reason is: no one really believes in anything anymore, except in the value that acquiring money by any means necessary is a good thing.
Moneyed interests saw a business opportunity, simple as that. Economic investment is becoming highly concentrated towards high-growth, high-risk opportunities and gambling has long thrived in the black market while staying current with technology.
> except in the value that acquiring money by any means necessary is a good thing.
And this will only become more true as the economy continues to worsen. Economic downturns and market collapses favor the elite.
Hit the nail on the head and these are my thoughts exactly. I don't really want to be the guy that thinks his time is extra-ordinary (cue fake quote of Socrates saying "kids these days have no manners"), but... maybe it is?
For me it's like people don't even feel the need to pretend anymore. Selfish geopolitical calculations and greed have dictated all actors' actions in the 20th, that isn't new, but at least then there was a need to appear to abide by laws or to uphold human rights, even to strive for the eradication of war (and often it wasn't a disguise; people actually cared about those things).
States used to care or at least appear to care about progress, betterment, social improvement, moral improvement. Today? All any government speaks of is raw GDP growth %. And so gambling is pushed on TVs, streets, subways, kids' entertainment... The idea that a government of a nation would strive for the moral well-being of its citizens (by heavily curtailing gambling for example) seems positively quaint in 2026.
Anyway I'm tired, excuse the incoherent ramble.
The things I've seen have been either "it's not right to tell me not to" or "non-participants can get useful information by observing the odds". What I haven't seen is claims that it won't be net-harmful to participants.
But once I label myself a conservative, I am stuck, and now have a new set of friends with the same label, because I am labeled myself, and they have all those radical ideas, and then I have to pretend to believe and ending up believing them too.
Of course, the same applies when you label yourself a progressive.
It’s perfectly fine to be for progressive social changes, as long as those criteria are met.
I’d call that a pragmatic approach, not a conservative one.
The other meaning of "conservative", the one that's opposite "reckless".
It should in theory be possible to take a conservative approach to being progressive.
That's likely how most of the middle see themselves (if not in those words) - open to new changes but only if they're fully understood and not drastic.
Conservatives think societies are hard to understand, which makes them hard to engineer, and replacing institutions that work with new inventions needs to be done carefully and slowly.
If you're just someone playing a game of Chess, and someone decides to bet on you via some platform, and then you lose, you now face the fury of random strangers where none existed before.
This applies to all sorts of things. I've seen live streamers get bad treatment because people bet on some outcome on their streams, like innocent Track of the Day races in Trackmania; not even a commercial event.
This sort of thing will suck the fun out of literally everything, and then replace that fun with stress/anxiety/anger/frustration when outcomes aren't met, and when they are met, dangerous monetary/emotional/brain-chemical feedback.
Even disregarding the dangers of gaming the system with insider trading or other fraud, the way that everything is increasingly having a monetary value attached to it is destroying that thing just being itself.
I really, really hate how money corrupts literally everything. In part I think the current financial fuck-ups causing living expenses to be unsustainable leads many to find other ways to make some money, but people have always done this even when times were better. So I guess it's somehow human nature combined with greed and opportunity.
Other things like Pokemon cards are also increasingly about money and not at all about Pokemon itself anymore. People buy packs of cards, look for the high-value ones, then throw the rest out. It's fucked.
I don't really know where this is going but the Cyberpunk 2077 feels like a good predictor. Literal corpo hellscape, and much of it is self-induced by grubbing for the next buck at every innocent opportunity.
Similar to the VC/investment landscape. Take a good product/company, add some VC/investment, and now the incentives are aimed at satisfying shareholders over providing value to customers.
Even for insider trading, it's illegal not because it's unfair, but because the insider is considered to be stealing information from shareholders. For example, it's not illegal for a company to buy back stocks while holding insider information.
Not legal advice of course.
A market is open to all, with the odds influenced by all participants. In established betting markets such as for stocks, pros dedicate their careers and their organizations to improving the public estimates emerging from the market (though not for the sake of that improvement).
General prediction markets might turn out bad, but the above isn't an argument why, it's namecalling.
This is just another racket for those in power to continue making the world worse for just a little bit more gain for themselves.
Edit: Throttled like always, you guys hate me (and reality/law in this instance) https://www.nbcnews.com/sports/sports-gambling/20-charged-ba...
Oh c'mon now. This is completely impossible to police. Players and referees are not under constant supervision. They have families, friends, partners. Some of them got caught but you can be certain most weren't because it's just very difficult to catch.
There are always multiple people who know about key players' injuries, illness, other factors. The game is negative sum and additionally insiders take a a chunk for themselves. It's worse then roulette which at least doesn't pretend to be fair.
As an example, there was a football player in England who had a friend that bet on a transfer market (a market that is extremely prone to inside information). It was detected immediately (despite being a relatively small bet of $10k, I have heard anecdotally that insiders have been detected in this market down to $500 bets), the player was banned, fined $500k, etc.
Btw, the reason these systems exist is because there are certain sports that are too lucrative not to make a market in but the economics/nature of the game mean that matches are easily fixed: 99.99% of this activity is low-ranked professional tennis, and surveillance has been very effective (all of this is funded, not by professional tennis, but by gambling companies). Generally, this isn't as prevalent with US sports because none of those preconditions exist for the major sports.
Like reading some kind of Twilight Zone episode script [1] starring William Shatner…
The reason they're getting big now though, is because we know none of those regulations are going to be enforced. So through regulartory arbitrage, these gambling sites are just going to eat the entire regulated industry until nothing is left.
It used to be Harry Enten's former boss would joke about Scottish teens, when talking about betting markets because frankly, the betting markets didn't seem predictive and were so niche, it seemed like the people on them were generally just betting with no idea what they were betting on.
But today, let's face it, soon we're going to see a contract on whether the S&P goes up or down tomorrow, and when you have that contract, gamblers are going to be betting on it instead of going to Robinhood and buying some Puts.
It's a real test to see if what all those people who talk about the halo effect of trusted well regulated markets are actually correct. The conventional wisdom is that most of the users of these sites are going to get their faces ripped off, and the companies will get very rich doing that.
The stock market at least gives you ownership/partial of a real thing.
The depressing thing is, when you see all these cliches in real: Go to some casino and you will see the guy having a coke nail talking gambling garbage like 'were is the bank teller? My luck is coming back' :(
Maybe not with a specific pollster depending on their scruples, but you can definitely pay to be part of the poll. And that’s the first step to getting any stats whatsoever.
It's a trash platform.
And if it works so poorly, there's a lot of easy money to be made.
The typical notion of the “attention economy” is that you build your audience by getting attention—doesn’t much matter how—and then you get paid to advertise things to them. Could be white label retail like supplements or hats, or could be “content partnerships,” or just straight up ads a la “this episode brought to you by Squarespace.”
Prediction markets only make real money if there is attention. I can predict when my neighbor will take out their trash cans, but without attention, no one will take the counter or put up funds.
Conversely if something does have a lot of attention, then literally anything about it can be predicted, bet, funded, and fulfilled.
I can’t think of a way to stop this, any more easily than I can think of a way to stop people from getting paid to shit-post ragebait slop on YouTube, X, TikTok, etc.
Attention is the complement of free expression. If we let people say whatever they want, then people can also pay attention to whatever they want.
There's potential problems that might come from the benefits of prediction markets, like insiders getting incentivized to change the outcome or leak info.
But gambling is an old problem which emerges in many scenarios, casinos, card games, sports betting, financial markets, crypto.
This take is like a new hooters opening up on the moon and people complaining that there's alcohol addiction, food addiction, sexism, wage exploitation... yeah I know man, but it's on the moon!
guess about the future (no money involved) = "prediction"
guess about the future (money involved) = "gambling"
Insider trading seeks to trade with secret information and minimally obvious trades to avoid moving the markets until their position is locked in, in order to profit when the previously secret information becomes public and the market finally moves to a different price level.
Manipulators seek to move the market to create a false narrative that market-moving info exists when actual market-moving does NOT exist; the expectation is that people will see the price change and ASSUME there is information behind it, when there is actually just a manipulator willing to lose money to create that impression.
In a small market, such manipulation can be more cost-effective (make more of an impression for the same cost) vs buying advertisements.
With this I mean: I can think of several ways in which this would go in the other direction (bad for society). And I am not an economics expert.
For fucks sake...
Regular people just didn’t know it cause the ticket to entry was to expensive.
There are risks connected when prediction markets run wild but Polymarket ain't it. There is also utility. It has high predictive value (it beats polls for elections from a little sample I've looked at) and allows you to make better decisions.
The very low stakes you point out make this even easier to put a thumb on the scales.
Goodhart's law: "When a measure becomes a target, it ceases to be a good measure"
The point of the article is that as soon as the "news" started reporting on prediction markets or corporatized gambling as if it was a measure of sentiment, it ceased to become a good measurement. That point has long passed.
>>out it will be four orders of magnitude cheaper to manipulate that small market and make the news idiots broadcast that opinions have changed than to actually deploy all the adverts needed to change the opinions.
It will then become more expensive. Out of all the manipulation news and journalists do every day I am not sure why "people bet money at 1 to 4 odds that Trump takes Greenland before 2027" is particularly problematic. It's true people bet money on it at those odds. How is that more problematic that news running pro or anti Trump segments or broadcasting some random crystal ball readings to justify stock price fluctuations of the day? You can see how much money is bet on the market as well. It's not like you can spend 5 figures and suddenly shape the narrative.
And yes, if it starts to be seen as one of the levers to manipulate in manipulating public opinion, it will become more expensive. That does not improve it's predictive value, since we never really know how expensive it is on either side relative to the bankrolls and motivations of those who might want to manipulate it.
But for anyone who wants to use it as a crystal ball, go right on ahead — good luck with that!
It's not perfect but it's the best thing we get. Certainly beats analysts, government officials and about anyone else.
Yes, that is True -- IFF (and that is a big If and Only If) we can suss out in real time what is happening.
The other risk is the Polymarket (or other betting market) managers' calls on what gets meet or don't meet the criteria. Like that punter who made big bets on the Venezuela Maduro kidnapping operation, betting tens-of-thousands$$ on the "Invasion" proposition and initially looking like he made almost a half-million dollars, only to have Polymarket decide it was not an "invasion".
So there is both risk of "did I actually detect a ploy?" and counterparty payout risk. But if we can get past those two, we can definitely make bank!
EDIT: Another risk, and probably the key risk, is even after noticing and identifying a large market-moving bet, whether that is from a player who is trying to skew the market (and doesn't care if they win/lose as they are playing a different game) or a player with inside information who knows something we do not.
This person does not realise that most people do not pay attention to the news, that people in power are not glued to the news waiting for journalists to tell them what to say, or that the news is generally not very important...except to people like them who play out these fantasies about wealthy people mind-controlling them through CNN.
The article has two core points, but fails to go deep enough in addressing either. This leads to a _somewhat_ incorrect scapegoating of prediction markets rather than acknowledging head on some more core issues with the state of American journalism. Bullet (1) addresses this core issue while bullet (2) tries to suggest some ways in which these prediction markets can better harnessed to serve the interests of journalists and readers/viewers. IMO the first point is far more important than the second to understand the broader challenges.
1. The centralization and roll-up of American media has led to a dangerous monoculture where truth and accuracy risk being compromised by pressure from big business as well as politicians.
This is by design. It is important for folks to recognize that these are systematic efforts to denigrate and marginalize critical/skeptical voices by individuals with tremendous amounts of wealth and power. A prime non-journalism example of this is the persecution and harassment of short sellers (like Andrew Left) in public markets.
2. Prediction markets are not being described / addressed with sufficient uncertainty. The article touches on this, but fails to go so far as to suggest a fix. Prediction markets should, as the editors/implementers at orgs in the article suggest they do, serve as another data point rather than the whole story.
They should be addressed with the skepticism applied to any source (a lot of "journalists" don't even do this anymore though) with the source, values and market depth questioned.
Editorial standards need to be improved to accommodate this (don't report on very thin markets, acknowledge high amounts of uncertainty, signs of manipulation, and provide a bit of market structure analysis education to readers. All of this is more feasible than ever with good analysis tooling that can be re-appropriated from what professional market analysts (and gamblers) use to assess their odds.
If journalists want to add market information to their reporting then great, just do it responsibly instead of yeeting some number from strangers on the internet.
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Fight back by voting with your dollars and speak up in favor of the truth. Boycott garbage sources and platforms that are trying to one-shot your friends/parents and support strong investigative and local journalism with your money. Talk to your friends and family and encourage them to do the same. Voting with your dollars and presence is one of the most powerful tools you have in our heavily market based society.
gross. This sounds like a press release.
It's gambling dressed-up as forecasting.
There's quite a bit of interesting research done on the accuracy, here's a great resource:
As I see it it seems to be a way to incentivize insiders to leak information, e.g. see the alleged Google insider betting on Google actions: https://www.forbes.com/sites/boazsobrado/2025/12/04/alleged-...
Great for the person who has insider knowledge, probably not so great for Google. I wouldn't be surprized if some companies start cracking down on their employees making bank off unannounced company actions.
https://finance.yahoo.com/news/white-house-briefing-fuels-in...
My description, and appreciation, for these types of tools and their trade-offs comes from reading about their early proposals. I don't trade or engage with any of them in their current form.
Recommend reading early work on them by Phillip Tetlock, as well as the many criticisms and responses that came about at the time and basically covered all of the ground we're retreading today in these discussions.
In theory, insiders give correct signal. But in practice, their volume is often too low to meaningfully move the market in the correct direction, and the timing of their order flow can be too late for that signal to actually be useful as a tool for predicting the future.
Its also critical to note that insider trading laws don't just exist to protect investors. They exist to protect the organizations the insiders belong to. The order flow on both prediction markets and the stock market is public information. Its one thing to short the company you work at because you know they're going to announce bad earnings. Its another thing entirely to take out a million-dollar position on "US Strikes Venezuela before Jan 3: Yes" on January 2nd. Sophisticated geopolitical opponents are monitoring these order flow feeds, and it begins to become a genuine matter of national security.
Overall, I am fine with prediction markets. I think they're an improvement over sports betting in the sense that they better-align incentives between the participants and the market-maker. In typical sports betting, the casinos running them set the odds, and participants take out positions against the casino; which means the casinos are incentivized against allowing anyone to actually make money on their platforms. This has surfaced many times in "professional sports betters" getting blacklisted. In comparison, PMs are a contract between participants, and the market-maker only takes a fee on each transaction (Robinhood's is 2.5%; quite high), which means the market-maker is only incentivized to increase PM order book volume and provide interesting markets. There's more opportunity for actual skill and dedication to shine through.
But, KYC is critical.
https://assets.msn.com/content/view/v2/Detail/en-in/AA1Upfdb
And that's before we get into discussing the social damage to country that already sees more school shootings than weeks in a year (actually, 4x more), with rising political and civil tensions including assassinated politicians, adding potential "lose your house" to random events. As if it'll help calm things down and let us all keep a level head.
Or the implications of news companies reporting on these odds as if they reflect actual statistical likelihood, and how that gives the ultra wealthy yet another lever to control the view of reality the common people have.
Bet appears on Polymarket? You have the ability to direct people and resources to enact the under? Congrats you're rich!
If you have the ability, you are already rich.
The current stock market insane binge has changed that a bit.
Are prediction markets perfect? Of course not. But the difference is in prediction markets someone has something to lose (real money), whereas legacy news values sensationalism over accuracy and sobriety.
again, i don't know enough about prediction markets, but this feels like i can't really trust lower liquidity "predictions" (i guess very similar to penny stocks).
One can argue that main news headline predictions will have so much volume that it's impossible to rig it this way, but what's stopping state actors from manipulation?