And in the US prediction markets are regulated like commodities which have much more lax insider rules, because again, insider trading is the point.
That is how theoretical mathematical construction works. Which has nothing to do with how real world people behave in iterated gambling games. And the less you regulate what the gambling company can or can not do, the less the real world version resembles the theoretical construction.
Says who?
Though I think where things start to get a bit more insidious is when the "insiders" have access not merely to inside information, but the ability to change the outcome. That type of insider trading should be banned IMO because it works against the purpose of prediction markets as a tool. (Though the extent to which banning that is possible though is debatable.)
Accurately predicting the outcome of a war, election, or other nationally important event though can potentially have immense value.
I don't contest that, but again, you haven't explained why "predictions" is the point of prediction markets. People place bets on things they want to be true as much as things they believe to be true. They can market themselves as whatever they like but no one has made a case that this is any different from sports betting.
Polymarket, for example, makes money on the data. So it must be worth something because people are paying for that predication data. They don’t take a slice of the winnings.
They don’t make money by taking a spread, they make it by providing information.
And people bet on emotion for sure, but “wisdom of crowds” suggests that generally that will balance out to somewhat accurate odds.
For that very reason, insider knowledge, and especially the ability to influence future outcomes, become the subject of heavy regulation. And, the lack of such regulation for congressional members is also why their net worth tends to skyrocket once entering office.
But I think the way our current system solves this is by forcing companies to disclose important insider information to shareholders all at once, rather than by letting insiders profit by leaking the information through their market transactions. (The one possibly being related to the other, because insiders who could legally profit by keeping information secret rather than disclose it would be incentivised to do so.) I don't think a similar restriction is feasible for prediction markets, because often the thing you're trying to predict is not something that can be legally cajoled into giving up its secrets.
Before Salman vs US (2016) it basically was, how do you think the oracle made bank?
With prediction markets, the "purpose" is information discovery, and "insider trading" actually helps (=> via information from insiders).
Disclaimer: I'm somewhat playing devils advocate here, I personally think that prediction markets are for now mostly an ineffective zero-sum game (and legalized gambling with all the drawbacks that brings).
But you don't usually buy the stocks from the company itself, do you? Unless there is some shenanigans with buyouts going on...
If I work at the company and count the inputs and outputs, and trade on it, I am a morally bankrupt scumbag and I have hurt society and all of the traders in the market.
Hmmmmmmm
If you hold a position of fiduciary responsibility within the company (or gain information from someone who does) that's a different matter. But the analogy there would be hacking into the company to read internal records, not just looking over a fence. in both cases, it's a crime.
The reason insider trading is illegal is because it undermines confidence in the markets by establishing a pattern by which insiders with privileged, secret information leverage it to profit off people who cannot access this information.
It also incentivizes insiders to leverage their position within a company to manipulate the business in order to profit. This also undermines integrity of markets.
Your second example, setting aside all your troll bait inflammatory verbiage about moral bankruptcy, is an illustration of this risk. I don't care if it rises to the level of moral bankruptcy, it is harmful to a capitalist society in a serious way.
Your first example is a depiction of someone leveraging information that anyone can gather. It does not undermine the integrity of markets because it is just an investor acting on publicly-accessible information.
Consider the case where a company knows that the drug they are selling is dangerous but keeps it a secret. Insiders know of the dangers and so bet against the company in the market (obviously this is illegal right now). The insiders make a profit in the short term, and investors also in the short term lose out (which they were going to do anyway, the losses come sooner), but in the long term the secret information is revealed to the benefit of everybody.
But I never said insider trading was bad because it caused people to keep information a secret. You're responding to an argument I didn't make.
> “The point of these markets is to get information, so the only reason you should ever be trading on them is if you think you have some information,” said Hanson, a professor of economics at George Mason University whose academic work inspired the founders of prediction markets Polymarket and Kalshi. “People with more information should trade more and get more money because that's how they get paid for the information they contribute.”
https://www.forbes.com/sites/aliciapark/2026/01/09/why-predi...
Seems like you should read more about these markets.
What you are describing is governmental corruption and that should be handled via corruption laws not insider trading laws.
Simultaneously: Insiders have power to coerce an outcome, the market creates a corrupt payoff for them to abuse that power.
And like any other gambling (see 1919 Black Sox), they can also incentivize behavior for actors who can influence the outcome of what’s being gambled upon.
Personally, that’s a significant enough negative externality for me to not want to live in a society where “prediction markets” are popular.
2. If it’s only banned in the US, yes it pays out, you just need to get a VPN or go to another country.
Also even it’s banned everywhere, the markets are blockchain contracts so you should be able to access it without the website, which is just the frontend. (this is where my technical expertise breaks down, someone who knows blockchain is a better expert)
But if you are going to allow them at all, you want as much expertise as possible in them. Sharks eating minnows is what that looks like.
So if a war with Iran is going to happen, and so a general bets that it will, the odds will jump and go very high.
Now at least theoretically, people in the Middle East can see the high odds, and travel elsewhere.
After seeing how many people got trapped in the UAE, I might check these prediction markets in the future for similar things.
Surely you aren’t saying that because prediction markets can’t save every single life, that it’s somehow useless to save a few.
Another example, if odds jump on a missile strike on a particular city, you might have the chance to move out of the way.
so why would a newspaper pay money for information they cannot recover or monetize? Where would this money come from in the first place, because even if they wanted to do this out of altruism, they will simply run out of money after a while.
I have a bridge to sell you in Brooklyn if you believe that when you bet on the stock market or on the sports market for each and every particular bet involving millions of people the maximum profit is not reaped by a half a dozen of insiders who trade on inside informations and their only problem is not being too obvious about it.
Also even if they get caught the millions of people wagering are still getting fucked because there is not a redo or making people whole when the insider traders get caught (which is a tiny percentage of the time)
Wouldn’t the good old-fashioned fraud laws present in basically every jurisdiction apply?
I cannot fathom what could be fun about that.
Does the lamentations of women count as a musical number?
>But we're in an era of less and less responsible government oversight
The era doesn't matter. The incentives are so bad, eventually you'd get a horrible result even with oversight. These markets are prone to this and shouldn't exist.
Like, you pay him a little (<= $20 ?) and he'll announce your game of NBA-2K26 on twitch. He does have a good radio voice. A good way to make a little in the off hours.
So, he got a gig to announce the opening of loot boxes at some show. I think it was Fortnite loot boxes. I guess it gives you the total value of the loot box spree you opened. So, 2 people buy a bunch of loot boxes, then open them up, then whoever has the higher value wins and takes both of the people's total haul.
Sounds like a strange thing to have to announce, but sure the guy says you pay and I'll say.
No, it was gambling for the watchers on polymarket [0]. People were betting on who would have the higher value. 'Like a lot of people' he said.
That's High Card. "A lot of" people were betting on games of High Card, essentially.
You know, shuffle a deck, draw 2 cards, whoever has the higher value one wins. Repeat.
It is the most Degenerate form of gambling out there. There is no skill, no human factor, no nothing. Just pure random numbers.
My lord, what a plague we have unleashed. We'll be dealing with this for decades.
[0] no idea if polymarket and the like do things this quickly, but he said they were gambling somehow with another site off of Twitch and then waved his phone, implying you can access it that easily.
Never go to Nevada.
You don't have Nevada 24/7 in your pocket. Or you shouldn't.
I don't think so. At least you have a 50% chance of winning. Unlike say a lottery or a slot machine.
If you have a 50% chance of losing $2 or gaining $1, you have a negative expected value and that's bad.
If you have a 10% chance of gaining 100$ and 90% chance of losing $1, that's an expected value of $9 and it's a great deal.
If your buddy is somewhat famous, then get on the socials and network with the players in the files already, they all seem really open as it's still a big and unaddressed market. Payouts are gonna be small at first, think beer leagues and largeish friends groups. And from what I can tell the competition for big gigs is tougher as you go up in the field.
Honestly give it a try, seems like a great side hustle.
Edit: be a great idea for AI in the low end, but it's the human touch that really makes it. The guy I know is pretty funny and I assume his wisecracks help him
Have business cards ready to go and have them laying out.
The Eudaemonic Pie is a non-fiction book about gambling by American author Thomas A. Bass. The book was initially published in April 1985 by Houghton Mifflin.
https://en.wikipedia.org/wiki/The_Eudaemonic_Pie
The book focuses on a group of University of California, Santa Cruz, physics graduate students (known as the Eudaemons) who in the late 1970s and early 1980s designed and employed miniaturized computers, hidden in specially modified platform soled shoes, to help predict the outcome of casino roulette games. The players knew, presumably from the earlier work of Shannon and Thorp, that by capturing the state of the ball and wheel and taking into account peculiarities of the particular wheels being played they could increase their odds of selecting a winning number to gain a 44 percent advantage over the casinos.
While I wouldn't use the word "degenerate", in terms of gambling, this isn't anywhere close to as bad as it gets.
At least this form is (psuedo)random, and the odds are statistically fair and published (by law).
Contrast to slot machines, which are not random, but are in fact preprogrammed to provide payouts in ways which maximize the earnings for the house and the addictive value for the player.
The house always wins, but there is no form of gambling where that is more guaranteed and manipulated than slot machine games (which includes the video arcade-style slot games).
this isn't correct. slot machines are random. my first job out of school was, in part, making sure slot machines were random.
people think the machines are rigged because they don't understand the rules. the machines are fair, it's the pay tables that are rigged.
My game of choice is the big state lottery and it’s simply for the fun mental space of the possibility of winning, actually checking your ticket is kind of depressing because the odds are so low. But look at it as paying for the experience of the possibility of a jackpot and realize when you buy one ticket or multiple so just buy one and it becomes a cheap thrill.
If you spend $50 at the arcade you usually develop a little more skill at the game. Depending on the game and player.
$50 at a slot machine develops no skill. At best you’ve broke even or made a little money. At worst, it just feeds an addiction. But there’s no skill here; the odds of any outcome are fixed regardless of what the player does.
But, an alternative goal is to maximize your probability of qualitative changes up, and minimize the probability of qualitative changes down, for your living conditions. If somebody is in a situation where they can spend a qualitatively inconsequential amount of money on lotteries, then playing the lottery is a rational way of maximizing this metric, right?
Of course, it does add the hard-to-quantify risk that they’ll become addicted to gambling and start spending a qualitatively meaningful amount of money gambling!
OTOH if we as a society all started putting a small percentage of our wealth toward the lottery we’re essentially misallocating whatever that percentage was. So it produces a somehow less efficient economy I guess. So maybe there’s a social bias against it.
And I didn't have a response.
Take the lottery: The classic "math objection" is to explain to the person that the expectation[1] of buying tickets in a lottery is negative so over time they will (on average) lose money.
Most people who gamble know this. The thing is they are not trying to maximise expectation. They are trying to maximise "expected marginal utility"[2]. They know that the dollar they spend on the ticket affects their life far less than the payoff would in the unlikely event they get it. Because the marginal utility of -$1 is basically nothing (it wouldn't change their life much at all to lose a dollar) versus winning say $10mil would completely change the life of most people and therefore the marginal utility of +10mil is much more than 10mil times greater than the marginal utility lost by spending a dollar on the ticket.
It is fundamentally this difference that the gambling companies are arbitraging. And for people who become addicted to gambling it is like any other addiction. The companies are just exploiting people who have a disease and are ruining their lives for profit. There are studies which show that addicted gamblers don't actually get the dopamine hit from winning, they get it from anticipating the win (ie the spin). So actually winning or losing just keeps them wanting to come back for another hit.
[1] Ie the average payoff weighted by probability
[2] Ie the average difference in utility weighted by probability. This could be seen as how much of a difference the payoff would make to their life.
They have some disposable income, and spend it at the casino for a bit of fun. Sometimes, they come out richer, and they are happy, sometimes, they lose, they come out a bit disappointed, but that's the cost of of entertainment.
You know you’re going to lose.
You know the money is wasted.
You do it anyway — and knowingly just pretend those first two facts aren’t true.
Then you lose your money. Which you knew was going to happen.
If you happen to be at a casino, make exactly one bet in your lifetime and there’s a significant chance you’ll end up ahead. On average you’ll be out money but we don’t live out every possibility and average them. It’s just one event and you could easily end up ahead, it’s only as you repeat it with minimal gains and negative returns that things quickly become a near certainty.
With Powerball the odds are low but not astronomical that you buy 1 or 1000 tickets and end up ahead. It’s the most likely outcome by a massive margin but due to non jackpot prizes a long way from zero.
However again the odds of breakeven just reduce the cost of play they aren’t the only thing people get for their money.
Only fair until the manufacturer of said lootboxes gets in on the action. This is why gambling is so highly regulated in all jurisdictions.
How is this any more degenerate than slot machines? At least it is truly random, rather than rigged.
For sporting events, for example, the alternative to prediction markets 5-10 years ago was to use a website where you bet against the house directly, and they'd usually take around a 15-20% spread, and they'd ban you and keep your account funds if they decided you're winning too much. Now you can bet on the same events on prediction market sites, with around a 1-5% spread, and the house doesn't care how much you win (so there's actually an argument that you're playing a game of skill, compared to the old format where you definitely weren't, since you'd be banned for being too skilled).
We're already seeing athletes try to fulfill specific bets since it's way easier to rig a play than to rig a whole game. The problem with prediction markets is that people who bet on something small and influenceable have an actual chance to change the outcome of that thing in their favor.
If you just want fun, you don't need to be gambling real money.
What about calling it "gambling" rather then "prediction market"? And then applying the gambling regulation on what is gambling.
People betting on stuff is not exactly a novel idea, the novel thing is how they are avoiding the regulations.
A small market is not at all efficient - it's unlikely to incorporate available information to attain accuracy.
A large market invites manipulation of the event itself - it's auto-corrupting. If ball players make $1M/year and there are easy opportunities to throw a game and make $30M anonymously, then you can expect that the game you're seeing isn't legit.
Arguably (go watch the show 'Billions') this is a big part of how the stock market works as well - insider information is rampant and overwhelming in profitability, and if you believe POSIWID ( https://en.wikipedia.org/wiki/The_purpose_of_a_system_is_wha... ) ... you're probably not doing a whole lot of trading as a personal investor based on publicly available information.
The more anonymous the winner is relative to the action taken, the more that bad behavior is incentivized. Back when this was dreamed up, the idea was crypto. But now we have prediction markets that encourage insiders to bet. And an administration that chooses to not prosecute corruption: https://www.wsgr.com/print/v2/content/49042620/Executive-Ord...
The result is a market that incentivizes manipulating wars for private gambling profit. With no need for anonymity, because the investigators have been fired. :-(
See also the list of prominent people and companies that benefitted from executive action after investing in the Trump Presidential Library. You know like Amazon, Coinbase, Lockheed Martin, and Comcast. One wonders what exactly Qatar has gotten for deciding that the library needs a jumbo jet.
As I said, when the investigators have been fired, this kind of stuff can just happen in the open...
(To be fair, this happens on both sides. Granted, Trump has moved the Overton Window on corruption. But there is no guarantee that his successor, even if a Democrat, will want to move it back.)
You went from a situation where the intent was for coaches to develop young men, teach them about hard work, overcoming obstacles, getting an education and become a part of an alumni base for the rest of your life.
And now it's leaving at the slightest difficulty, constant money dangling to encourage transfers because even if the guy doesn't play for you at least he's not playing for your opponent, followed by a million voices online just telling kids to follow the money. There's no telling how much gambling is playing a part.
It's taken one of the best institutions in our country for developing youth and corrupted it while people go out of their way to not report on the stories of people being hurt by the process.
we would actually have had to have been delivering on the whole "..develop young men, teach them about hard work, overcoming obstacles, getting an education and become a part of an alumni base for the rest of your life.." story.
Unfortunately, for the vast majority of student athletes in money sports, we never really delivered on all of those promises in the past.
These younger generations (GenZ) of student athletes are just wayyy smarter than the older generations of student athletes. Consequently, we can't take advantage the way we did in the past. Even women's volleyball and basketball athletes are choosing to take their money up front, and then transfer because they're pretty sure they won't need the "value" of the "alumni base".
https://clemsontigers.com/pj-what-is-paw-journey
He's obviously not the only coach who wants to carry his program that way, just the most high profile to recently do it while competing at the highest level.
Another notable legend was John Wooden from UCLA who famously won 10 championships while teaching his players his Pyramid of Success that's been written about in books and even hung on Ted Lasso's office wall in the TV show.
We hear about the negative examples. What you're not hearing about as much today is the number of players entering the transfer portal seeking better deals who don't get one and end up as college dropouts. It's a huge percentage.
I am curious - how do you even begin to police such a thing like polymarket? Wouldn't it take enormous resources to do it? Is it even worth it at that scale? They let you bet on anything and everything, right?
I had fun betting $5 here and there
Maybe this is the solution - don't let people bet more than $5. That is small enough for everyone to have some fun and not worth it for insider trading, threatening journalists etc?
Actually, there's another perverse incentive operating on a higher level, when it comes for the people running things: "How is my prediction-market startup supposed to IPO for a bajillion dollars if we're not first-in-line for having sometimes-corrupt insider data? Nobody's going to pay me that much for a company that's just a spicier form of polling."
But we're in an era of less and less responsible government oversight, so the whole thing naturally gets ruined if there's no guardrails to prevent peoeple without souls or the accompanying morals from participating in ugly, greedy ways.
Though I'm also likely to adopt the idea that the absenece of competent government is an effect, not a cause, of some societies having had to mortgage their souls.
Edit: I mean, yeah, if you're stuck being fixated on pessimism and greed, of course there's a lot of ways this can be exploited. I just think that in its more pure, good faith form, the idea of letting the market tell you odds of things happening is pretty fascinating. I'm sure there's a whole body of economics on this idea, that it might be a better predictor of events than other models. I had fun betting $5 here and there on video game announcements/awards. (though for me betting is a game, not a financial strategy)