3 ms·

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.

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.