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FBI Raids Home of Polymarket CEO Shayne Coplan

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249 points jaboutboul | 4 comments | 13 Nov 24 21:29 UTC | HN request time: 0.843s | source
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beejiu ◴[13 Nov 24 22:09 UTC] No.42130650[source]▶
Can we please stop calling them "prediction markets". This only legitimizes what they really are, "gambling exchanges".
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nickff ◴[13 Nov 24 22:17 UTC] No.42130759[source]▶
I am not familiar with the term 'gambling exchange', where'd you get it? Many 'sportsbooks' are referred to as 'betting exchanges', but that has become something of a term of art, much like the term 'prediction market'.

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?

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1. mrcode007 ◴[13 Nov 24 22:36 UTC] No.42130963[source]▶
IIRC There is only one prediction market with a single regulatory exemption granted for the University of Iowa and the bets are limited to $500.

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 :)

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2. throwaway2037 ◴[14 Nov 24 01:24 UTC] No.42132182[source]▶
Wow, I never knew about this exchange: https://en.wikipedia.org/wiki/Iowa_Electronic_Markets

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.
You raise an interesting point in your final paragraph: Binary options look very similar to sports betting. I was unaware that they are so strictly regulated. I found this info: https://www.investopedia.com/articles/active-trading/061114/...

    > 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.
The weird part: In all of these jurisdictions, there is a large "structured products" market, where large investment banks structure complex derivs with (often multiple) embedded binary options (called knock-out or knock-in), and sell them to high-net-worth people via private banks. I guess the "embedded" part makes them legal? To be clear, this market is over 20 years old at this point, so if regulators did not allow, they would have stopped it by now.
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3. mrcode007 ◴[14 Nov 24 07:34 UTC] No.42133875[source]▶
The structured part is because these options are most likely replicated with existing option products. A binary call can similarly be replicated with other options and packaged
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4. throwaway2037 ◴[17 Nov 24 05:18 UTC] No.42162161{3}[source]▶

    > A binary call can similarly be replicated with other options
I don't think that this statement is true. Using vanilla call and put options, it is not possible to exactly replicate a binary option. Please correct me if wrong.