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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
by 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 agoyou 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 agoI 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 agoThis 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.