I still don't understand the Polymarket business model. Why take the legal risk of $3 billion in volume as an unlicensed commodities exchange if you're not even going to get paid for it? 1% would be $30,000,000!
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See Alex Tabarrok's triumphant take from before the raid: https://marginalrevolution.com/marginalrevolution/2024/11/pr...
Here's an interesting question. We know that if a bettor in a prediction market wants to manipulate the market's prediction, it's likely to be extremely costly for them (though Théo's big bet on Polymarket seems to have shifted it a lot, so maybe we should doubt this theory). Does the operator of a prediction market have less-costly ways to manipulate the prediction?
Other than just shutting down the market permanently on Election Day, Mt. Gox style, which is an extremely profitable scam whether you manipulated the predictions or not.
About a decade ago I was told by someone on GOOG's anti-spam team that they had thought they'd finally made it too costly to spam, only to discover that political spammers just didn't care how much it cost.
Observably, so far, political spammers do not obtain ten trillion dollars per US election to spend on influencing it. Arguably this is only because they haven't found an effective way to spend that much money, and we should be very concerned that a mere 50 million dollars seems to have been enough to influence the prediction market results quite seriously in this case.
But that's not necessarily inherent to markets, even prediction markets. Foreign exchange rates were a major issue in our last election, because our rate of inflation was top in the world last year, but it isn't plausible for political parties to bet enough in forex futures markets to influence their predictions of those exchange rates—because banks bet almost 8 trillion dollars per day in the forex markets, so to intentionally maintain an irrational prediction in the market over the several months of the campaign, you'd need to be rich enough to expend roughly the entire world yearly GDP, and willing to lose it.
If sending spam required posting a bond set by the receiver, to be paid to the receiver if they decided the email was unwanted, I think you'd find that even political spammers did start to care a great deal about the cost. Until they cared, I'd set up domains with billions of potential receivers, each setting a ten-dollar bond. After the political spammers transferred their first few billion dollars to me, they'd run out of money.
Come to think of it, that sounds a lot like diplomatic exchanges during the Bronze Age: sending your ambassador along with a bunch of gifts like exotic animals and spices and slaves was an implicit way of saying "I'm confident you'll want to hear my guy out; confident enough that if you don't think his proposal is worthwhile, just keep these gifts and don't reciprocate them".
for good measure, Mark Twain on lagniappe:
> The shopman always responds; gives the child a bit of licorice-root, gives the servant a cheap cigar or a spool of thread, gives the governor—I don't know what he gives the governor; support, likely.