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Yeah but the end state here is this also getting brutally regulated. It's how this industry works. It's just a shame that a lot of people are arguing in favor of prediction markets on vague 'I'm a rationalist and like the idea of superforecasters' grounds when they don't get that it's actually a machine for 18 year olds and Texans betting Football
How does the vig compare to Fanduel, etc? I'm guessing Polymarket sports betting takes a much smaller rake than the legal stuff labeled as gambling.
They added fees lately and they can be effectively a lot wider than sportsbooks
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Yes most likely but in the meantime people are expecting tons of money from it.
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Indeed,
For my part I continue to maintain that it is not only morally and logically incoherent, but economically irresponsible to treat prediction markets any differently from how we would treat betting on a horse race or a ball game.
I strongly dislike gambling. Especially sports betting. Im usually a libertarian/"let people enjoy things" kind of person but society is clearly barely able to handle online gambling, and it's fucking with young men especially. I hate it.
However, the prediction markets have found a good straddle, and I would like you to try and draw a line. How do you separate gambling from futures contracts/forwards? Where do we draw the line? It's really hard. Obviously from a "know it when you see it" perspective, "who will win the hockey game" does not provide the same economic benefit as "I would like to lock in the price of wheat 6 months from now".
But, in a world where we banned all sports/online gambling but Robin Hood allowed trading of fractional wheat forwards, and all the men aged 20-30 started being degens in the wheat futures market, what do we do?
I think futures contracts are a fundamentally different thing from "gambling" as at the end of the day you still get the orange juice.
As I have argued previously prediction markets aren't really "markets" in the "market economy" sense of the word so much as Casinos cosplaying as markets. "Investing" in a predication market is functionally the same thing as "investing" in scratchers tickets. You've given the house your money in exchange for nothing beyond the possibility that they might choose to share share a portion the money that they've taken off others with you, and the house is always going to win because otherwise how are they supposed to stay in business.
Most futures are liquidated before delivery and settled in cash.
I'm concerned you don't understand prediction markets because you are not betting against the house, you bet against other users. There is no "house".
It is absolutely nothing like scratch tickets.
Yes, most futures are liquidated before delivery and settled in cash, but if you chose not to go that route they would be contractually obliged to hand over the orange juice. That is what "a future" is. A contract to purchase a product at a set price some time in the future.
Furthermore the statement that "There is no 'house' in prediction markets" is a lie told to you by the same people who want you to "invest" in prediction markets. When you buy "shares" of an "event" in Polymarket or Kalshi who holds the money? Polymarket and Kalshi hold the money. They are "the House", and if you don't think that the people who own Polymarket and Kalshi are trying to get rich then I have a bridge in London to sell you.
Again, I do not believe that prediction markets are true markets in the "market economy" of the term, and I think that people who can't see past labels to the underlying mechanics are the people who get rationalists get compared to Quokkas. It is everything like scratch tickets except without the social opprobrium, but I expect that to come with time.
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Prediction markets are 95% sports contracts and that split will go higher especially in a post Trump universe
This doesn't address my comment or question at all. But I believe you.
I mean my point is that prediction markets aren't even a straddle. There's some marketing spend around novel politics markets but they're barely a blip commercially
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It's worse than that, because it also allows insider trading on literally anything you can stand up a market for, and you can also use them to directly incentivize specific behaviors without individually bribing someone or having a causal link back to the act to the person who funded it. And people complained about stochastic terrorism!
Jim Bell spent years in jail for promoting this idea.
I'm not here to promote it. I think that if we're not very careful, existing prediction markets risk stumbling into incentivizing that by default, and this is a bad thing. Prediction markets might be fine among intelligent and conscientious forecasters, but I think they're another entry on the very long list of "good-sounding ideas that go badly when you roll them out society-wide".
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