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Yeah. You aren't allowed to set up a life insurance policy on someone else's life, or a fire insurance policy on someone else's home. For obvious reasons. But b
by hmry 4mo ago
Yeah. You aren't allowed to set up a life insurance policy on someone else's life, or a fire insurance policy on someone else's home. For obvious reasons. But buying an event contract that pays if someone dies or someone's house burns down is fine?
- philipallstar 4mo agoWell, you are privately allowed to bet on whatever you like with another individual. That is indeed legally fine, though potentially distasteful. Polymarket is facilitating bets between people, not bets with the house. Gambling and insurance are both bets with the house.
- CPLX 4mo agoWhat the hell are you talking about? You are absolutely not allowed to bet on whatever you'd like with another individual. Depending on what you're betting on (for example, the price of a stock or the throw of a card), it falls under varying different regimes. This is highly regulated and has been for most of the whole of human history. Yes, there are de minimis exceptions. Your office NCAA pool, for example, is often legal, but it has nothing to do with what we're talking about and is also irrelevant to a business facilitating it via 18 U.S.C. § 1955.
- anthk 4mo agoIn Spain in elderly caring homes there was a tradition to bet on Bingo matches for simbolic prices (barely one or two euros, enough for a coffee and that's it). It was legalized on paper recently, but technically everyone turned a blind eye. https://russpain.com/en/news-3/authorities-consider-legalizing-bingo-for-seniors-in-spain-416497/ https://russpain.com/en/news-3/authorities-consider-legalizi... >Rarely exceed 25 euros. Maybe in Christmas, because the weekly play was just about low prizes.
- FireBeyond 4mo agoIt was, believe it still is, somewhat similar in Australia, where the game Two Up (https://en.wikipedia.org/wiki/Two-up https://en.wikipedia.org/wiki/Two-up), which was a wartime favorite among soldiers, was implicitly or allowed on Anzac Day despite being gambling.
- kube-system 4mo ago> Well, you are privately allowed to bet on whatever you like with another individual. What jurisdiction are we painting with that broad brush? This is far from universally true, even in the US.
- bit-anarchist 4mo agoCould you provide an example?
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- wsng 4mo agoIn German law, any contract, including bets, is void if it is “sittenwidrig”. For example, if your wager in a bet is to become one’ slave in case you lose, this bet is void.
- bit-anarchist 4mo agoI suppose they never specified the wager. But, given the topic is prediction markets and the topics of the bets, I thought it was implied that the wagers would be exclusively in money. With that in mind, is there any example of a law against specific topics being betted on?
- josefritzishere 4mo agoThat "facilitating" argument didn't work out for Silk Road.
- philipallstar 4mo agoBecause what the Silk Road did was illegal whether in person or not.
- kube-system 4mo agoWhat Polymarket and Kalshi are doing is also illegal in many places.
- jubilanti 4mo agoNope. "We're just an intermediary between people" is a 100+ year old yarn that casinos and bookies have been trying to spin. If you're presenting a point of entry to a betting line and taking a cut, congrats, you're the house. Doesn't matter if you adjust the betting line manually based on intuition or algorithmically based on betting volume. Sometimes it doesn't get enforced because of corruption, but if this was the case, then why aren't there tons of independent unregulated poker casinos where players just play against each other? If you facilitate and take a cut, you're the house.
- somenameforme 4mo agoPolymarket doesn't take a cut. Their profit comes in transaction fees.
- FireBeyond 4mo ago"We don't take a cut of your bet, we just charge you a transaction fee on your bet" is reaching a bit.
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- somenameforme 4mo agoMy phrasing was poor, but they do so generally in a very good faith fashion. It's not just a wink wink rake type thing. For instance there are no fees at all on the most popular and high-volume markets - geopolitics and world events. And not only are there are no fees even on smaller markets for market 'makers' - people who put up an offer, but they provide a percentage of all fees collected from market 'takers' back to the makers, as a means of encouraging liquidity.
- munk-a 4mo agoThe mob boss doesn't charge me interest on my loan - he just really likes receiving expensive gifts from me.
- usrusr 4mo agoCan you name the individuals you are betting with on Polymarket? Can they name you?
- FireBeyond 4mo agoGannon Ken Van Dyke has entered the chat.
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- epolanski 4mo agoTo me this is technicality. A bet is a bet, whether it's against the house or other people it's a bet.
- chollida1 4mo agobeing pedantic here but > You aren't allowed to set up a life insurance policy on someone else's life, or a fire insurance policy on someone else's home This isn't really true. Lots of people take out life insurance on others as a hedge for many reasons, small business partner is one. Same fire insurance, we had a case where someone pledged a building as collateral and we took out separate fire insurance on the building so we'd get paid out immediately. I'm not sure where this false premise started but alot of people believe it.
- hmry 4mo agoNo no I appreciate the pedantry, thank you for the correction
- compiler-guy 4mo agoThe technical term is that you must have an “insurable interest” in what you insure. Both of your examples are people protecting their insurable interest. Ownership is the most common insurable interest, but there are many other ways to have one. This is done because the insurance company wants you to prefer that the covered event doesn’t happen, which avoids some conflicts of interest. These prediction market events don’t have the usual insurance interests involved.
- chollida1 4mo ago> The technical term is that you must have an “insurable interest” in what you insure. Yep, we're in full agreement here
- sandworm101 4mo agoUnless you short the property. Essentially, sell it now on the bet that it will drop in value later. Then it burns down and you repurchase the vacant lot and return the property to the original owner. Evil, but most everything in real estate is evil.
- emsign 4mo agoAnd that's exactly the problem with Polymarket and such, it gives an incentive to be destructive because that's easy. Entropy is easy. With an insurance this trick won't work, because the insurance company will notice what you are doing. Polymarket doesn't care.
- criddell 4mo ago> But buying an event contract that pays if someone dies or someone's house burns down is fine? You can sell your life insurance policy to somebody else. It's a way of getting money to sick people to use while thy are still alive.
- Ekaros 4mo agoRemember how things ended up when insurance policies on loans you didn't hold were allowed... I think there is quite a lot of good reasons to ban those sort of bets.
- charcircuit 4mo agoMurder and arson are illegal. Just because there is an event contract that doesn't make them legal to do.
- svachalek 4mo agoIt's also illegal to pay someone to do murder or arson, which is easy to obfuscate as an "event contract".
- selcuka 4mo agoVery true. Someone could place a huge bet for "person X will NOT be assassinated in the next 24 hours" and some lowlife could see the opportunity.
- energy123 4mo agoThere's many true crime cases where the spouse took out multiple life insurance policies then did the killing to earn money. It's a bounty. We should care about the effect in practice.
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- loeg 4mo agoSome of the prediction markets explicitly forbid payouts based on death. E.g., Kalshi refused to pay out "leaves office" when Khamenei was killed.
- munk-a 4mo agoThere are a lot of things short of death that we don't want to encourage either. There is a huge grey zone here that I frankly don't want to entrust to private entities.
- loeg 4mo agoSure, I'm not a fan of prediction markets in general either. Just responding to GP's specific claim about death incentives.
- gpm 4mo ago> Kalshi refused to pay out To be clear they had explicitly written in the contract from the start that death didn't count. And they paid out the full amount - just not to the same betters they would have if he had left office alive.
- epolanski 4mo agoI've seen contracts on whether California will burn this summer. Any bum defending these contracts is to me either a shill or way too dumb to understand the concept of incentives. Oh and there was an Israeli journalist that got life threats because he reported that an Iranian missile struck some place in Israel, and apparently there was a huge bet on it on polymarket.
- dzhiurgis 4mo agoFunny how average HNer is opposing Flock cameras that solve real crimes by covering it up as a "freedom" yet completely fine regulating contracts with hypothetical incentives.
- hackyhacky 4mo ago"Those who would give up essential Liberty, to purchase a little temporary Safety, deserve neither Liberty nor Safety."
- epolanski 4mo agoThe incentives are not hypothetical.