alt Hacker NewsTotally agree with this. I don't understand how those organizations aren't "bucket shops" which have basically been illegal in the states since the 1920s. As bad as they are, at least it's really hard to move the stock market, and very illegal to do it in most of the dishonest ways you can think of. With prediction markets we have people betting on the words they will themselves say...
As I understand it, the main problem with bucket shops was that they were the counterparty to each bet, so they had a very high interest in customers actually losing. More legitimate exchanges earn their money via trading fees, so at least they only have an interest in customers trading a lot.
Unfortunately, when trading a lot at negative expected value, the outcomes converge...