3 ms·

Robinhood admits it's just a gambling app

10 points by bentocorp 2y ago

Terr_ 2y ago
I'm pretty cynical about "prediction markets" supplanting polls. There are a lot more meta-games going on, especially if the "prediction" can somehow influence the odds of itself happening. Plus, y'know, the whole gambling aspect, especially when it's a zero-sum game with other gambler and the house/brokerage. The regular stock market has its warts, but it at least involves some amount of externally productive human activities.
- legitster 2y ago
  The problem with prediction markets is that they are tiny and restricted to individuals. Last election cycle I was able to handily "win" a bit of money on PredictIt by just looking at polling data and betting the line. Markets are heavily distorted, but the max I could bet is $800 so there's no way a handful of informed "investors" (gamblers) could un-distort the market. The only way to actually get the markets efficient and predictive would be to bring in huge money from things like hedge funds. But then you obviously have a much bigger problem where there's suddenly huge financial incentives for interfering and tampering in elections.
  - tim333 2y ago
    Polymarket, as mentioned in the article, isn't either of those. The amount bet on Trump/Kamala is $2.59bn, amazingly enough. It's all done via crypto on the polygon network so anyone with access to that can bet. In theory some countries are blocked but if you just turn on a VPN you are unblocked. There's no KYC - it's decentralized. With that sort of money you could see some sort of rig the election scheme be an issue.
legitster 2y ago
Robinhood did not actually "admit it's just a gambling app" in any way. Robinhood opened up a betting market and this article is mocking both the idea as well as their specific phrasing of the announcement. The headline is intentionally flip and misleading from an author who just really, really hates prediction markets (and Nate Silver).
- bentocorp 2y ago
  How is a "prediction market" different to gambling?
  - legitster 2y ago
    That's actually a pretty deep question considering there are a lot of financial products that are already basically gambling - single stock, triple-leveraged ETFs probably being the most egregious. It's not gambling in the sense that you are walking into a casino and placing a bet on purely random outcome. Average people can have enough information to accurately predict risk in election outcomes. In that sense it may be more akin to something like poker or a sportsbook. But unlike a sportsbook, I don't think you have the same risk of abuse. You are not being pressured to parlay your bets, you are betting on more limited events, you can sell your position at any time. So on a spectrum from degenerate gambling to rational investing, I would say it errs towards the middle.
    - bentocorp 2y ago
      It would be interesting to see some thorough research on this topic. I would say that a large majority of investing, especially newer forms that occur via apps such as Robinhood, in form and outcome would be indistinguishable from gambling. > But unlike a sportsbook, I don't think you have the same risk of abuse. I doubt this is true. You see the exact same behaviours between online day traders as you do online gamblers. Both share tips, have a sense that they are in the know about performance beyond that of the average 'punter' and use apps that are gamified and have dark patterns encouraging continual use and abuse. I would also say they are primarily used by the same demographics – male, skewing younger who are high risk, low real world experience individuals who either get fully addicted and don't learn their lesson or those that get burned early on, 'grow up' and learn not to continue to waste money on such endeavours.
  - tim333 2y ago
    It's basically the same thing but the mechanics are different. Regular betting you place a bet wait till the event. Prediction markets you can buy and sell your position any time more like a futures market.

10 points by bentocorp 2y ago

I'm pretty cynical about "prediction markets" supplanting polls. There are a lot more meta-games going on, especially if the "prediction" can somehow influence the odds of itself happening. Plus, y'know, the whole gambling aspect, especially when it's a zero-sum game with other gambler and the house/brokerage. The regular stock market has its warts, but it at least involves some amount of externally productive human activities.

legitster 2y ago
The problem with prediction markets is that they are tiny and restricted to individuals. Last election cycle I was able to handily "win" a bit of money on PredictIt by just looking at polling data and betting the line. Markets are heavily distorted, but the max I could bet is $800 so there's no way a handful of informed "investors" (gamblers) could un-distort the market. The only way to actually get the markets efficient and predictive would be to bring in huge money from things like hedge funds. But then you obviously have a much bigger problem where there's suddenly huge financial incentives for interfering and tampering in elections.
- tim333 2y ago
  Polymarket, as mentioned in the article, isn't either of those. The amount bet on Trump/Kamala is $2.59bn, amazingly enough. It's all done via crypto on the polygon network so anyone with access to that can bet. In theory some countries are blocked but if you just turn on a VPN you are unblocked. There's no KYC - it's decentralized. With that sort of money you could see some sort of rig the election scheme be an issue.

legitster 2y ago

Robinhood did not actually "admit it's just a gambling app" in any way. Robinhood opened up a betting market and this article is mocking both the idea as well as their specific phrasing of the announcement. The headline is intentionally flip and misleading from an author who just really, really hates prediction markets (and Nate Silver).

bentocorp 2y ago
How is a "prediction market" different to gambling?
- legitster 2y ago
  That's actually a pretty deep question considering there are a lot of financial products that are already basically gambling - single stock, triple-leveraged ETFs probably being the most egregious. It's not gambling in the sense that you are walking into a casino and placing a bet on purely random outcome. Average people can have enough information to accurately predict risk in election outcomes. In that sense it may be more akin to something like poker or a sportsbook. But unlike a sportsbook, I don't think you have the same risk of abuse. You are not being pressured to parlay your bets, you are betting on more limited events, you can sell your position at any time. So on a spectrum from degenerate gambling to rational investing, I would say it errs towards the middle.
  - bentocorp 2y ago
    It would be interesting to see some thorough research on this topic. I would say that a large majority of investing, especially newer forms that occur via apps such as Robinhood, in form and outcome would be indistinguishable from gambling. > But unlike a sportsbook, I don't think you have the same risk of abuse. I doubt this is true. You see the exact same behaviours between online day traders as you do online gamblers. Both share tips, have a sense that they are in the know about performance beyond that of the average 'punter' and use apps that are gamified and have dark patterns encouraging continual use and abuse. I would also say they are primarily used by the same demographics – male, skewing younger who are high risk, low real world experience individuals who either get fully addicted and don't learn their lesson or those that get burned early on, 'grow up' and learn not to continue to waste money on such endeavours.
- tim333 2y ago
  It's basically the same thing but the mechanics are different. Regular betting you place a bet wait till the event. Prediction markets you can buy and sell your position any time more like a futures market.