It seems strange to me to call these "prediction markets" when we call them "betting exchanges" in the UK. It positions the goal of the market to make a prediction or a forecast, rather than simply being a bet. It's interesting framing.
if you believe in the wisdom of crowds, they are prediction markets. If you discount the wisdom of crowds, they are pure gambling.
I think they started being called prediction markets around the idea a few years back that we should allow "gambling" on events to predict events: if you allow betting on the date of the next terror attack, the terrorists will not be able to restrain themselves from insider trading, and bingo, you know when there will be a terror attack. The idea was that it was such a good idea, the FBI/CIA would run these things. But the public hated the idea so it got squelched.
This is all from my memory, which I wouldn't bet on.
There's the problem that betting on assassinations or terror attacks is a deniable way of funding them. Because the perpetrator is the one who knows to bet on the correct date. One guy was prosecuted for proposing this, if I recall correctly
Terrorists betting on their own attacks is not at all like voters betting on their own election. Wisdom of crowds is something I take with a grain of salt. But if there was ever a thing that crowds could predict, it is election results.
Gambling is a regulated industry. Kalshi is licensed in the US, Polymarket isn't (but US consumers routinely use VPNs to evade their block). So the fact that they're clearly marketing to US consumers seems to be fraudulent evasion of oversight.
Are they advertising to US consumers, or simply to the world? I think it's just a global ad campaign. I haven't tried it but I assume that they can just reject any US payment method and be fine. How else would you pay, Bitcoin?
As long as it's good clean betting, I don't think anyone should be restricted from this gambling in the land of the "free" anyway. It's also weird that Kalshi is approved and Polymarket isn't. I wonder why that is the case.
I’m paywalled on the article but I think the issue is specifically with Polymarket hiring US influencers when they aren’t allowed to let Americans trade on the platform. Kalshi is allowed to let Americans trade so it’s not an issue (assuming they follow disclosure requirements etc.)
Considering that US influencers can reach the world, it's not a problem. I mean, if US persons are blocked from the platform anyway, why does it matter that the platform is advertised online?
It will be interesting to see how we feel about the prediction markets after today. They are making a clear bet on the winner, and if they are wrong, it will be a pretty big hit on their value.
If you have a coin and know for a fact that it is either a fair coin or a 60 40 coin, it would take ~100 flips to be 80% sure which kind of coin it is. We will never know whether polymarket’s odds were more accurate than e. g. Nate Silver’s on predicting a single event
This is true, but go ask Nate Silver how that went for him in 2016. The general public has only superficial familiarity with even basic statistics. 60/40 is perceived by many as a near guarantee. More than enough to make them cry 'stolen election!' if the election does not go the way they want.
Market dynamics are subtly different than statistics of traditional polls, since you need to account for fees and slippage and irrationality. You’d also need to compare this to a poll asking “who do you think will win the election?” which is a different question from “who are you voting for?”
There is already plenty of historical data that would have demonstrated the quality of the predictions. This specific bet, however, could be the worst way to judge the prediction markets given that the key demographics of the gamblers, young risk taking males, are the same that strongly favor the GOP candidate. In that regard, your bet alone demonstrates loyalty which feels like a soft win. Also, when you win if you win, and if you lose, you were still right because you can cite the heavily skewed prediction market as proof the election was stolen.
That's interesting, I have only looked recently at polymarket, and it's at 62/38 right now. Robinhood is at 59/43. I wonder why PredictIt is so much closer.
Does it work like that? Wont the house set the odds such that it always win? I.e. the betters set the odds but the initial seed. The house know their book, we don't.
EDIT:
Oh. Visiting the site, it seems like it is not gambling? Or have I misunderstood it.
It's definitely gambling (though maybe not legally, in some cases; RH is selling event contracts, and maybe derivatives are not legally gambling, but effectively they sure seem like it...). The payout is $1 if it turns out correct, $0 if not.
I agree, although I read somewhere prediction markets in 2016 had Clinton by a wide margin. I don’t have a reference for that and obviously they would have been tiny markets by comparison to today.
I absolutely hate the election betting markets. They seem so un-American. It was only made legal in the USA last month, so all of the results so far have been foreign entities.
I've been using it from the UK where it's also technically not available and it's trivial to get around. You just have to turn on a vpn to click the bet button.
It's 100% American and has been a thing forever. It's also a free speech argument, I should be able to bet on outcomes of events. It was common all throughout US history
Fascinating, thanks for sharing! It should probably be highlighted tho that there were absolutely waves of relative interest (~1790-1840 and ~1890-1910, at least), and it was outlawed almost everywhere by the mid 1800s, which obviously means it primarily fell to the rich and well-connected. Ditto in Britain — they had bets, but;
Bets about the outcome of events in war, over the death of political leaders, over court cases, or between voters over election results were illegal on these grounds. In the Victorian and Edwardian periods, the British government increasingly attempted to limit gambling, especially among the working classes.
So I’d argue it’s more like “a persistent scourge threatening democracy” than “a treasured ideal of free speech”. But I’m biased against all forms of gambling, so might have skimmed it unfairly. Worth a read, for sure!
Sports gambling itself was illegal in most of America until the Supreme Court decided Murphy v. NCAA in 2018.
The entirety of the legalized sports betting industry has emerged from essentially nothing and embedded itself thoroughly in the national sports psyche in the span of six years.
I actually think we should ban polling, too. Make the election about getting the message out and convincing people, not about a horse race between two numbers.
In a one-turn voting system, polls are very useful as a kind of "turn zero". The important point is that one should always tell the poller who they actually want to vote for (a possible third candidate) so that if this candidate actually stands a chance it can be seen in the poll and be voted for. In the actual election, if you see your third candidate has no chance you can vote for someone that can actually win.
Changing the voting system seems much more important than trying to mess with the polls. However, regulating polls to enforce their trustworthiness is probably a good idea since they may have so much power.
In France the presidential election is two-turns and even then I think we need polls since there are so many candidates in the first turn diluting votes.
Could be a good idea, but I suspect asking people what they think about political candidates enjoys such core first amendment protection that banning it would require amending the Constitution. And practically, nobody in power will want to ban them because they're a tool for staying in power. Same reason that we'll probably always have a two party system.
If we only get to pick one thing, I'd much rather see us harmonize voting times between states so we don't have the election results rolling in before some people have voted.
> Make the election about getting the message out and convincing people, not about a horse race between two numbers
Polling helps elites and voters alike allocate resources. Biden was replaced in part due to polls. Similarly, if a race in my state becomes unexpectedly competitive, I’ll at attention more than I would have absent that signal.
Polymarket is a new thing and it's throwing a lot of political pundits off their tracks because they treat it as political sentiment indicator, but it's all just gambling and manipulation.
Except the people who know best are in the US and can't file 1099 on their winnings without implicitly admitting to a crime. Any American dumb enough to invest in Polymarket deserves to lose their money.
Even if I know that is bullshit if someone claims to know the next number of a roulette and backs it up going all-in on black, it is not rational for me to bet on red.
For me personally, I placed a bet for my non-favored candidate so that either my person wins, or I win some amount of money. I'm using it kind of like insurance or hedging. Unfortunately if enough people use it this way, it probably no longer works as a predictor
I thought about doing this as well but ended up viewing it personally as a "lose-lose" for myself rather than a "win-win". I wonder if that says anything about my risk-aversion.
So, that's true. But the point of the linked article is that Polymarket is clearly marketing to US consumers, a market it isn't licensed to serve and that it claims it tries to prevent (via an IP block, anyway).
It's not illegal to be running a gambling and manipulation site per se. PredictIt and Kalshi do it above board. Polymarket appears to be engaging in at least a little bit of fraud here.
It does seem to be working a bit as a sentiment indicator at the moment on the Trump Kamala election but seems biased because most people speculating on crypto are male and pro Trump. In basic economic theory you'd expect it to reflect a realistic estimate of the candidates chances but seems off a little just now. I'm long Kamala for what it's worth.
Betting markets can be good predictors but I think what poly market is reflective of is not people who are looking for the optimal bet; but wish casting of crypto bros.
Readit News
I think they started being called prediction markets around the idea a few years back that we should allow "gambling" on events to predict events: if you allow betting on the date of the next terror attack, the terrorists will not be able to restrain themselves from insider trading, and bingo, you know when there will be a terror attack. The idea was that it was such a good idea, the FBI/CIA would run these things. But the public hated the idea so it got squelched.
This is all from my memory, which I wouldn't bet on.
Oh yes, it was Jim Bell: https://en.m.wikipedia.org/wiki/Jim_Bell
With capped bets and broad participation, you have a wisdom of crowds game. That’s not how Polymarket is designed.
Invest as if A will happen. If the odds seem right, bet ~A will happen too.
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I don’t see the issue?
As long as it's good clean betting, I don't think anyone should be restricted from this gambling in the land of the "free" anyway. It's also weird that Kalshi is approved and Polymarket isn't. I wonder why that is the case.
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EDIT: Oh. Visiting the site, it seems like it is not gambling? Or have I misunderstood it.
Hate it.
https://users.wfu.edu/strumpks/papers/Int_Election_Betting_F...
Stuff they talk about include:
- 90% male bias on Kalshi.
- Polymarket is all crypto so that probably introduces bias.
- He says 60/40 is still a coin flip.
- Prediction markets are just another sentiment tracker, that the 60/40 is still a coin flip race.
> un-American
The entirety of the legalized sports betting industry has emerged from essentially nothing and embedded itself thoroughly in the national sports psyche in the span of six years.
Changing the voting system seems much more important than trying to mess with the polls. However, regulating polls to enforce their trustworthiness is probably a good idea since they may have so much power.
In France the presidential election is two-turns and even then I think we need polls since there are so many candidates in the first turn diluting votes.
Polling helps elites and voters alike allocate resources. Biden was replaced in part due to polls. Similarly, if a race in my state becomes unexpectedly competitive, I’ll at attention more than I would have absent that signal.
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Are you sure you don’t like them just because they are currently predicting the person that you don’t like is going to win the US election?
https://repository.arizona.edu/bitstream/handle/10150/666656...
https://www.sciencedirect.com/science/article/abs/pii/S02613...
Not if you’re American and want to respect the law!
It's not illegal to be running a gambling and manipulation site per se. PredictIt and Kalshi do it above board. Polymarket appears to be engaging in at least a little bit of fraud here.
https://www.reuters.com/world/polymarket-says-mystery-trump-...
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