Can we please stop calling them "prediction markets". This only legitimizes what they really are, "gambling exchanges".
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In any case, attempting to use a derogatory or denigrating euphemism to refer to something is usually less productive than simply exposing (what you perceive to be) its faults. What specific issues do you have with these markets/exchanges?
Gambling is a destructive addition that the vast majority of participants cannot manage well. It harms not only them, but their children and their spouses. How many a kid's college fund has gone up in smoke? A lot of harm is done to very innocent people in pursuit of a ten second rush. (Much like all other addictions.)
I also very respectfully disagree that inventing a name for something is not productive - it's incredible effective, in fact. That's why political campaigns often favour duelling names over hot button issues: it's easier to win broad based support from soccer moms and football dads for 'marriage equality', whereas 'homosexual marriage' may be a harder sell. See also 'medicare for all' versus 'socialized medicine', 'pro-choice' v 'pro-life' etc.
(And I got the term "gambling exchange" from the UK where Betfair Exhange basically does what Polymarket do since 2000, without the Crypto glamour.)
The rest of what we see are (binary) event contracts (options)
Based on my understanding, which may be incorrect, they seem to be basically a rebranding of binary options which were illegal in the US for the longest time. With a clever renaming trick things now work :)
its more wasteful for some segment of our society to need a distinction between investing or gambling at all, the people they're competing against don't care, don't have any cultural limitation, religious limitation, or peer group that needs this distinction. and your "legitimizes" wording looks based on needing a distinction.
even with the "positive or negative expected value" metrics to distinguish some financial games, I've traded options contracts with a lower expected value than a table game at a casino. so just don't worry about the distinction and use our words for the specific game we're playing. prediction markets are prediction markets.
"Binary options are gambling products dressed up as financial instruments. By confirming our ban today we are ensuring that investors don’t lose money from an inherently flawed product."
https://www.fca.org.uk/news/statements/fca-confirms-permanen....
Sound familiar?
They also highly regulate CFDs and other financial instruments that are marketed to retail.
Because insurance is quite literally a prediction market.
Not trying to be snarky, I know certain religions actually do consider insurance to be gambling.
I think, indeed, a lot of people are effectively using the markets to gamble, but the same can be said for equities/futures.
I see no reason they shouldn't be allowed, since there are proxies that people can trade as well
They describe it as "profit from your knowledge by betting on future events across various topics" on their own website.
Betfair Exchange can be used to make predictions, too. They call it "implied probability" and it's always been a feature of their product.
My concern is the use of terminology to describe a gambling product as something else entirely.
Is it a prediction market than can be used to gamble?
Or is it a gambling exchange that can be used to make predictions?
Thank you to share.
> Rules and limits
> The IEM is neither regulated by the U.S. Commodity Futures Trading Commission (CFTC) nor by any other agency due to its academic focus and the small sums that are involved. Indeed, the IEM has received two no-action letters that extend no‑action relief. A speculator may put at risk in the IEM only between $5 and $500.
> They are banned across Europe, Australia, the U.K., and many other jurisdictions because of their volatility and are often seen as wagers more akin to gambling than sound investing.
Congrats on using the worst argument in the world: https://www.lesswrong.com/posts/yCWPkLi8wJvewPbEp/the-noncen...
A traditional sportsbook maintains a house vig anywhere from 5 to 15%, which is, indeed, a pretty fast path to ruin. They typically don't allow you to exit your position once you're committed.
Polymarket's sports markets, in contrast, have comparable bid/ask spreads to financial markets (maybe slightly wider), and the market is liquid such that you can sell your contract to someone else whenever you want.
An insurance company sells options contracts. We call it healthcare. It is , aside from a few small differences, the same as a put or a call.
An insurance company's day-to-day operation is indistinguishable from a derivatives hedge desk. Insurance companies absolutely take massive bets. These are managed by re-insurers.
Whoever said other markets aren't gambling?
> Polymarket's sports markets, in contrast, have comparable bid/ask spreads to financial markets (maybe slightly wider), and the market is liquid such that you can sell your contract to someone else whenever you want.
'Financial markets' is a slippery term - you could be using it to refer to traditional investing (holding a diversified share portfolio for years because you believe in the fundamentals of the companies in question), or you could be using it to refer to things like frenetic speculating in short-dated out-of-the-money 'binary option' contracts.
The former is not gambling (no 'rush', not generally addictive, very hard to go broke, mathematically sound), and the latter is absolutely 100% gambling (all rush, totally addictive, incredibly easy to lose your shirt, mathematically stupid). There have been many attempts at 'finance-washing' straight up gambling schemes in recent years, and I wouldn't be surprised if we see more crackdowns soon.
Pretending that betting on election results is some complex financial derivative that is totally magically immune to laws about gambling isn't going to fool any judge.
> A binary call can similarly be replicated with other options