Reminds me of our President (SA) asking his colleagues to sign a pledge not to do corruption; when there's already a swearing in that does the same thing.
For those who live in the red-pilled real world, just don't trade on something where controlling insiders (also with a potential conflict-of-interest) can beat you at the game. This is different from bets with non-controlling insiders with no conflict-of-interest.
The key is avoiding the bets with controlling insiders, i.e. those that could have a potential conflict of interest. Even something as banal as weather data has some insider knowledge, but an insider has no practical control over it, i.e. the insider is non-controlling, with no conflict-of-interest.
Weather data in prediction markets can definitely be gamed. One example that exists in real prediction markets is that the contract specifies a single source as the source of truth. But that source rounds data during unit conversion twice (F -> C -> F), meaning there’s an unequal probability distribution, and some numbers have a 0% chance of winning.
I don't understand why anybody without access to serious inside information is currently betting on prediction markets. It's clear that insiders are absolutely going to eat your lunch. So who are the suckers who are losing all this money?
I guess this isn't true for all things you might bet on, but it seems to be true for a lot of them.
I did a bit for fun and felt there were areas where I did do well. However, the problems with these markets is the contracts are often such where you can win or lose on obscure technicalities. I bet on 5 things, and 4 were resolved in ways I felt were non obvious.
For example, will the Ayatollah be out by April. Lost because death apparently did not count. Bet Anthropic would advertise at the superbowl. Lost because while they did so they advertised Claude not for the company.
Once it became clear that it was an exercise in legalese, I was done.
I remember reading something awhile ago in regards to why people were investing in NFTs when it seemed so clear they were a scam. The gist of it was that it's easy to get into cryptocurrency, but it's hard to get out. KYC, taxes, age requirements, currency fees, etc are enough of a barrier that many people would rather just keep those assets in virtual space. Polymarket is the answer to the question "Well what else am I gonna do with this crypto I own"
There's no shortage of people willing to make extremely poor financial decisions on games of chance, it's why gambling was heavily regulated. Visit a casino and witness addiction in-person, it's a sad sight.
It is either not being offered in depth by anyone market-maker (part of the answer given the relatively small revenue opportunity) or it is being offered by people who aren't sophisticated enough.
Bookmakers offer markets on events where someone can know the outcome. The difference is that they have tools to prevent adverse selection.
Prediction markets offer none of those protections so the market structure is going to end up being very different (which is already happening, revenue opportunity from politics isn't huge). There are other examples of this around latency arb, market is going to be very different.
Also, I will point out that most insiders are probably going to be losing money too. All that you ever read is the final outcome, you don't read the stuff that happens before. Politics is, generally, not a good market because the actual event is driven by decisions made by people. Election markets are fine but political event markets are not good, even if you have inside information.
The ads for prediction markets on TikTok are aggressive - like (paraphrasing) "this is your new source of passive income and you'd be crazy to miss it" aggressive.
I guess I'm one of those suckers, except that so far I've made a 3x return on the small sum I bet, I would say it's a hedge. I’ve been betting on the Iran war since mid February, the reasoning was that if the conflict happened, my payout would offset some of the jump in my cost of living. I could have used traditional financial instruments to buy options or oil futures or gold, but there's more friction there and I already had some crypto.
Kind of what I was thinking. If it is essentially InsidrBetz.com why bet at all? This is the kind of thing that could (should, anyway) kill the industry.
Kalshi: Sequoia Capital, Paradigm, Andreessen Horowitz (a16z), Y Combinator, Charles Schwab, Henry Kravis (KKR), and CapitalG (Alphabet).
Polymarket: Intercontinental Exchange (ICE - parent of the NYSE), Founders Fund (Peter Thiel), Vitalik Buterin, and 1789 Capital (Donald Trump Jr.).
PredictIt: Primarily supported by Aristotle International (a political tech firm) and historically Victoria University of Wellington.
Donald Trump Jr.: Prominent investor in Polymarket through his firm, 1789 Capital, and serves as a paid strategic advisor to Kalshi.
The current CFTC Chairman, Michael Selig, created a 35-member panel to draft new regulations for prediction markets. This panel includes the CEOs of the platforms they regulate, such as Shayne Coplan (Polymarket) and Tarek Mansour (Kalshi).
And how about friends & family without official roles, congressional appointment process approvals, etc who just.. happen to be around a lot and involved in a lot of stuff?
its free for all at the moment. its not like any of these rule were ever enforced before, lots of our govt worked on honor system & DJT exploited the heck out of it all.
Aside from the current horrible admnistracion.
If I understand correctly, One of the strengths of prediction markets is to try to get the insiders to come in and provide insider information thus improving the total info available.
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– Las Vegas
I guess this isn't true for all things you might bet on, but it seems to be true for a lot of them.
For example, will the Ayatollah be out by April. Lost because death apparently did not count. Bet Anthropic would advertise at the superbowl. Lost because while they did so they advertised Claude not for the company.
Once it became clear that it was an exercise in legalese, I was done.
Bookmakers offer markets on events where someone can know the outcome. The difference is that they have tools to prevent adverse selection.
Prediction markets offer none of those protections so the market structure is going to end up being very different (which is already happening, revenue opportunity from politics isn't huge). There are other examples of this around latency arb, market is going to be very different.
Also, I will point out that most insiders are probably going to be losing money too. All that you ever read is the final outcome, you don't read the stuff that happens before. Politics is, generally, not a good market because the actual event is driven by decisions made by people. Election markets are fine but political event markets are not good, even if you have inside information.
> So who are the suckers who are losing all this money?
Random people who saw an ad or their favorite influencer shilling it.
Like when my neighbors started asking me about NFTs.
Everyone knows the Casino has the edge, but people still play heavily anyway.
> So who are the suckers who are losing all this money?
Gambling is just a tax on the stupid. Is it surprising it's rampant in certain institutions?
"But we have laws criminalizing insider trading..." the only proper response to this is: hahahaha.
Kalshi: Sequoia Capital, Paradigm, Andreessen Horowitz (a16z), Y Combinator, Charles Schwab, Henry Kravis (KKR), and CapitalG (Alphabet).
Polymarket: Intercontinental Exchange (ICE - parent of the NYSE), Founders Fund (Peter Thiel), Vitalik Buterin, and 1789 Capital (Donald Trump Jr.).
PredictIt: Primarily supported by Aristotle International (a political tech firm) and historically Victoria University of Wellington.
Donald Trump Jr.: Prominent investor in Polymarket through his firm, 1789 Capital, and serves as a paid strategic advisor to Kalshi.
The current CFTC Chairman, Michael Selig, created a 35-member panel to draft new regulations for prediction markets. This panel includes the CEOs of the platforms they regulate, such as Shayne Coplan (Polymarket) and Tarek Mansour (Kalshi).
Hey don’t abuse privileged workplace information for personal gain isn’t exactly a fresh notion.
Imagine if professionals like lawyers and accountants operated like that.