4 ms·

> In prediction markets or sports betting, the gamblers aren't betting against the casino. Are you saying the crowd has an edge over the house? Sports betting

by f430 6y ago

> In prediction markets or sports betting, the gamblers aren't betting against the casino. Are you saying the crowd has an edge over the house? Sports betting platforms, poker sites, they are in the business of profiting off people who think they have an edge (aka ppl believe in the non-zero sum nature of these markets)

rspeele 6y ago
I'm saying the house doesn't even have skin in the game. At least in the prediction markets, the house is just pairing one person who'll bet "Trump wins" against another person who'll bet "Trump loses". Even when the "wisdom of crowds" holds true, the crowd is made up of thousands of individual winners and losers. The house just extracts a cut (fee, commission, vig, juice, take) from the winners' profits. They stay profitable no matter how "wise" the odds settled on by the crowd ended up being. Edit: concrete example. If you want to bet on Andrew Yang winning election for NYC Mayor, right now you'd pay 47c for a share on PredictIt. If he does win the election, you get a dollar. Where does the dollar come from? Well, you didn't really buy your "Yes" share from PredictIt. You bought it from somebody else on PredictIt, who's placed a standing offer to pay 53c for a "No" share. You accepted their offer when you bought your share taking the opposite end of their bet. Your 47c plus their 53c makes the dollar, and whoever wins gets the whole dollar. Except not quite, because PredictIt takes 10% of profits, so if you're right, you actually get your .47 back + (0.9 * .53) = $0.95, PredictIt gets the $0.05, and the loser gets zero. It's good to be the bookie.
dragonwriter 6y ago
> Are you saying the crowd has an edge over the house? No, the crowd is paying the house to bet against each other. > Sports betting platforms, poker sites, they are in the business of profiting off people who think they have an edge In that that's a big part of what motivates people to gamble, yes, but parimutuel gambling—which, in effect, includes prediction markets—the house isn't taking a side against the gambler, it's taking a cut off the top from all the gamblers on all sides, then the winners split the remainder. (Or splitting among winners first and charging a fee to the winners, which amounts to the same thing.)

by f430 6y ago

rspeele 6y ago

I'm saying the house doesn't even have skin in the game. At least in the prediction markets, the house is just pairing one person who'll bet "Trump wins" against another person who'll bet "Trump loses". Even when the "wisdom of crowds" holds true, the crowd is made up of thousands of individual winners and losers. The house just extracts a cut (fee, commission, vig, juice, take) from the winners' profits. They stay profitable no matter how "wise" the odds settled on by the crowd ended up being. Edit: concrete example. If you want to bet on Andrew Yang winning election for NYC Mayor, right now you'd pay 47c for a share on PredictIt. If he does win the election, you get a dollar. Where does the dollar come from? Well, you didn't really buy your "Yes" share from PredictIt. You bought it from somebody else on PredictIt, who's placed a standing offer to pay 53c for a "No" share. You accepted their offer when you bought your share taking the opposite end of their bet. Your 47c plus their 53c makes the dollar, and whoever wins gets the whole dollar. Except not quite, because PredictIt takes 10% of profits, so if you're right, you actually get your .47 back + (0.9 * .53) = $0.95, PredictIt gets the $0.05, and the loser gets zero. It's good to be the bookie.

dragonwriter 6y ago

> Are you saying the crowd has an edge over the house? No, the crowd is paying the house to bet against each other. > Sports betting platforms, poker sites, they are in the business of profiting off people who think they have an edge In that that's a big part of what motivates people to gamble, yes, but parimutuel gambling—which, in effect, includes prediction markets—the house isn't taking a side against the gambler, it's taking a cut off the top from all the gamblers on all sides, then the winners split the remainder. (Or splitting among winners first and charging a fee to the winners, which amounts to the same thing.)