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Can we please stop calling them "prediction markets". This only legitimizes what they really are, "gambling exchanges".

• nickff 2y ago
  I am not familiar with the term 'gambling exchange', where'd you get it? Many 'sportsbooks' are referred to as 'betting exchanges', but that has become something of a term of art, much like the term 'prediction market'. In any case, attempting to use a derogatory or denigrating euphemism to refer to something is usually less productive than simply exposing (what you perceive to be) its faults. What specific issues do you have with these markets/exchanges?
  • troad 2y ago
    Not GP, but I suspect it's the gambling part? Hence the name? Gambling is a destructive addition that the vast majority of participants cannot manage well. It harms not only them, but their children and their spouses. How many a kid's college fund has gone up in smoke? A lot of harm is done to very innocent people in pursuit of a ten second rush. (Much like all other addictions.) I also very respectfully disagree that inventing a name for something is not productive - it's incredible effective, in fact. That's why political campaigns often favour duelling names over hot button issues: it's easier to win broad based support from soccer moms and football dads for 'marriage equality', whereas 'homosexual marriage' may be a harder sell. See also 'medicare for all' versus 'socialized medicine', 'pro-choice' v 'pro-life' etc.
    • caeril 2y ago
      These markets are no more "gambling" than other markets are. A traditional sportsbook maintains a house vig anywhere from 5 to 15%, which is, indeed, a pretty fast path to ruin. They typically don't allow you to exit your position once you're committed. Polymarket's sports markets, in contrast, have comparable bid/ask spreads to financial markets (maybe slightly wider), and the market is liquid such that you can sell your contract to someone else whenever you want.
      • troad 2y ago
        > These markets are no more "gambling" than other markets are. Whoever said other markets aren't gambling? > Polymarket's sports markets, in contrast, have comparable bid/ask spreads to financial markets (maybe slightly wider), and the market is liquid such that you can sell your contract to someone else whenever you want. 'Financial markets' is a slippery term - you could be using it to refer to traditional investing (holding a diversified share portfolio for years because you believe in the fundamentals of the companies in question), or you could be using it to refer to things like frenetic speculating in short-dated out-of-the-money 'binary option' contracts. The former is not gambling (no 'rush', not generally addictive, very hard to go broke, mathematically sound), and the latter is absolutely 100% gambling (all rush, totally addictive, incredibly easy to lose your shirt, mathematically stupid). There have been many attempts at 'finance-washing' straight up gambling schemes in recent years, and I wouldn't be surprised if we see more crackdowns soon. Pretending that betting on election results is some complex financial derivative that is totally magically immune to laws about gambling isn't going to fool any judge.
  • beejiu 2y ago
    But it is not derogatory or euphemistic, it is descriptive. Polymarket is gambling by any definition. Gambling is known and proven to have great harms and risks to society. (And I got the term "gambling exchange" from the UK where Betfair Exhange basically does what Polymarket do since 2000, without the Crypto glamour.)
    • sitzkrieg 2y ago
      are futures markets gambling in your eyes because speculators can participate?
      • snakeyjake 2y ago
        Yes.
      • beejiu 2y ago
        I can only speak from a UK perspective, but many financial instruments can be used in a gambling sense by retail "investors". In 2019, our regulator banned binary options, saying this: "Binary options are gambling products dressed up as financial instruments. By confirming our ban today we are ensuring that investors don’t lose money from an inherently flawed product." https://www.fca.org.uk/news/statements/fca-confirms-permanent-ban-sale-binary-options-retail-consumers#:~:text=The%20FCA's%20rules%20are%20permanent,claiming%20to%20offer%20these%20products https://www.fca.org.uk/news/statements/fca-confirms-permanen.... Sound familiar? They also highly regulate CFDs and other financial instruments that are marketed to retail.
      • _zgx0 2y ago
        Futures markets serve an important role outside of speculation, i.e. producers managing their future price risk. Betting markets do not.
        • memkit 2y ago
          Everything in finance is isomorphic to some combination of borrow-lend agreements. Betting markets and futures markets are functionally one in the same. The only difference is the oracles and the series of bets required to construct your position.
  • mrcode007 2y ago
    IIRC There is only one prediction market with a single regulatory exemption granted for the University of Iowa and the bets are limited to $500. The rest of what we see are (binary) event contracts (options) Based on my understanding, which may be incorrect, they seem to be basically a rebranding of binary options which were illegal in the US for the longest time. With a clever renaming trick things now work :)
    • throwaway2037 2y ago
      Wow, I never knew about this exchange: https://en.wikipedia.org/wiki/Iowa_Electronic_Markets https://en.wikipedia.org/wiki/Iowa_Electronic_Markets Thank you to share. > Rules and limits > The IEM is neither regulated by the U.S. Commodity Futures Trading Commission (CFTC) nor by any other agency due to its academic focus and the small sums that are involved. Indeed, the IEM has received two no-action letters that extend no‑action relief. A speculator may put at risk in the IEM only between $5 and $500. You raise an interesting point in your final paragraph: Binary options look very similar to sports betting. I was unaware that they are so strictly regulated. I found this info: https://www.investopedia.com/articles/active-trading/061114/guide-trading-binary-options-us.asp https://www.investopedia.com/articles/active-trading/061114/... > They are banned across Europe, Australia, the U.K., and many other jurisdictions because of their volatility and are often seen as wagers more akin to gambling than sound investing. The weird part: In all of these jurisdictions, there is a large "structured products" market, where large investment banks structure complex derivs with (often multiple) embedded binary options (called knock-out or knock-in), and sell them to high-net-worth people via private banks. I guess the "embedded" part makes them legal? To be clear, this market is over 20 years old at this point, so if regulators did not allow, they would have stopped it by now.
      • mrcode007 2y ago
        The structured part is because these options are most likely replicated with existing option products. A binary call can similarly be replicated with other options and packaged
        • 2y ago
• yieldcrv 2y ago
  since I like gambling on stock exchanges and table games I prefer the more nuanced term for the specific game I'm playing. its more wasteful for some segment of our society to need a distinction between investing or gambling at all, the people they're competing against don't care, don't have any cultural limitation, religious limitation, or peer group that needs this distinction. and your "legitimizes" wording looks based on needing a distinction. even with the "positive or negative expected value" metrics to distinguish some financial games, I've traded options contracts with a lower expected value than a table game at a casino. so just don't worry about the distinction and use our words for the specific game we're playing. prediction markets are prediction markets.
• mise_en_place 2y ago
  That's overly reductive. Perhaps you missed this article that was on the front page? https://asteriskmag.com/issues/08/the-death-and-life-of-prediction-markets-at-google https://asteriskmag.com/issues/08/the-death-and-life-of-pred...
• pembrook 2y ago
  I presume you also feel strongly that people should call health/life/car/homeowners insurance "gambling?" Because insurance is quite literally a prediction market. Not trying to be snarky, I know certain religions actually do consider insurance to be gambling.
  • beejiu 2y ago
    No, because even though insurance companies make profit, the primary motivation of insurance is risk pooling amongst the policyholders. This is not the case for those trading binary options or similar instruments (except for "hedging" - a legitimate use case of producers buying futures, for example).
    • jsyang00 2y ago
      you do not think there are legitimate hedges which can be made with events trading on prediction markets? I think, indeed, a lot of people are effectively using the markets to gamble, but the same can be said for equities/futures. I see no reason they shouldn't be allowed, since there are proxies that people can trade as well
      • beejiu 2y ago
        I don't see anything in Polymarket's marketing material that suggests it be used for hedging. They describe it as "profit from your knowledge by betting on future events across various topics" on their own website. Betfair Exchange can be used to make predictions, too. They call it "implied probability" and it's always been a feature of their product. My concern is the use of terminology to describe a gambling product as something else entirely. Is it a prediction market than can be used to gamble? Or is it a gambling exchange that can be used to make predictions?
    • zer8k 2y ago
      This is only true because you've minced words. An insurance company sells options contracts. We call it healthcare. It is , aside from a few small differences, the same as a put or a call. An insurance company's day-to-day operation is indistinguishable from a derivatives hedge desk. Insurance companies absolutely take massive bets. These are managed by re-insurers.
• anigbrowl 2y ago
  These terms are semantically equivalent.