alt Hacker NewsIf you're going to gamble, it's probably for the best that your counterparty doesn't also control the platform. I'm not saying that justifies being able to gamble frictionlessly, but it is marginally less exploitative. Eg, back in the day bucket shops (which sold binary options, like prediction markets do) would increase the spread in proportion to their assessment of your skill such that you would lose even if you were more skilled. In a proper market the platform makes the same amount of money whoever wins.
So, not all that different, but marginally less exploitative. I've never looked at Polymarket but Kalshi and PredictIt slid steadily from things of at least plausible real economic value (a market where it was conceivable [if unlikely] someone would be hedging their insurance contract or something) into total nonsense with no non-gambling function like whether someone would tweet a certain word.
I think prediction markets could serve a similar to a futures markets and have a functional purpose in the economy. It could be useful to generate real time estimates of the probability of some events that no one can control and have real economic consequences, like a hurricane. But evidently that's not where the money is.
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> it's probably for the best that your counterparty doesn't also control the platform
But doesn't Polymarket et al own their own platforms, just like Betfair owns their platform? There is no P2P going on, even if some markets seem to advertise themselves as such so again, seems like the same just minus gambling regulations?
Futures role is not "generate real time estimates of the probability" and never was. They have two roles: actual contracts to deliver later at set price and high risk trading (yes, some peoples use of it is gambling). Futures markets at do in fact have the actual market component. Prediction markets don't.
If you want meteorological prediction, you are way better off buying meteorological prediction from a company that sells meteorological predictions.
Why would prediction markets do a better job of predicting hurricanes than, say, meteorologists, weather stations, and satellite information?
All evidence I’ve seen shows mainstream prediction markets devolve quickly into gambling and related corruption while predicting nothing other than conventional wisdom. especially about real-time facts. The prediction markets on the NBA Finals game four this year were completely useless.
> I think prediction markets could serve a similar to a futures markets and have a functional purpose in the economy. It could be useful to generate real time estimates of the probability of some events that no one can control and have real economic consequences, like a hurricane.
Even though nobody can control them, some people can predict them better than others. (Meteorologists with good models and supercomputers, etc.) In general it's impossible to prevent the appearance of insider trading in prediction markets, and it's also impossible -- unless you massively restrict what people can bet on -- to prevent people from doing things for bets to resolve in their favor, which turns those "markets" into "bounties." (The same guys who theorized prediction markets were the ones who theorized assassination markets.)
They're fundamentally broken and the fact that they're allowed is a sign and symptom of a dysfunctional society.