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What exactly is the difference between a financial derivatives exchange and a gambling platform? Both involve placing bets on uncertain future outcomes.

• morkalork 2mo ago
  One is when the president's son is a strategic advisor to the company and the other is a gambling platform
• skillina 2mo ago
  Traditional derivatives can be used to trade the risk that would already exist with or without the existence of the derivatives market. Prediction markets create risk out of thin air.
  • charcircuit 2mo ago
    Do you think insurance markets create risk out of thin air too?
    • dcrazy 2mo ago
      Insurance protects life and property (including future income). Until you wagered $100 on the Knicks winning, none of your property was threatened by them losing.
    • skillina 2mo ago
      Of course not. If a building exists, there is a risk it burns down. Insurance just moves that risk around. The only way to eliminate the risk is to not build anything anywhere.
      • charcircuit 2mo ago
        So what would be the difference between buying insurance against downtime of a service you depend on (eg. Cloudflare) vs making a bet on the prediction market that there will be downtime? Even without these markets there is risk that the service goes down. The existence of the prediction market doesn't cause it to be possible.
        • wredcoll 2mo ago
          There is no risk to me if the rockets lose their next game. Unless I bet $100 on them winning, then a risk appears.
          • usehackernews 2mo ago
            If you’re a Houston bar owner dependent on post game traffic, there would be risk of them losing. There are a thousand of exchanges that have no risk on my life, but that doesn’t mean they don’t impact others.
            • dcrazy 2mo ago
              A bar here in SF made local news for using Kalshi for just this purpose: https://sfstandard.com/2026/07/06/san-francisco-world-cup-kalshi-promotion/ https://sfstandard.com/2026/07/06/san-francisco-world-cup-ka... In a similar vein, companies that run skill competitions (hole-in-one prizes, half-court shots, etc.) can and regularly do buy insurance on those events. Under this theory, Kalshi is arguably not trading in commodities, but insurance, which is state-regulated.
              • amazingman 2mo ago
                These dishonest word games are silly. Insuring against what?
                • dcrazy 2mo ago
                  Insuring against loss. I just looked up the official name; it’s called prize indemnity insurance. In the case of those “make a free throw from half court and win a car” competitions, the risk is a known value: the prize sponsor’s wholesale vehicle cost. The sponsor pays a premium for each contest, which is calculated based on the likelihood of someone winning. This is a very well established insurance market. You as an individual can go out and buy hole-in-one insurance. It’s more popular in Korea and Japan where there is a strong societal expectation of throwing a lavish party if one hits a hole in one. Here in the States, it’ll cover a round of drinks for the clubhouse. In the case of the bar, the Kalshi bet is functioning as an insurance policy against a potentially open-ended loss. The bar could be packed, the U.S. wins and everyone drinks the bar dry. So Kalshi is fulfilling a legitimate business role here. But insurance is boring and highly regulated. The bar could likely have bought an equivalent policy from an underwriter in the Financial District. Or frankly from a rich regular. Kalshi wants to make insane amounts of money from degenerate gamblers, and to be immune from state regulators who are more answerable to citizens than the CFTC commissioners. Hence adopting the fig leaf of “futures contracts.” If you thought I’m on Kalshi’s side here, I’m definitely not.
    • amluto 2mo ago
      No. And, in fact, there is a concept called an “insurable interest” that is intended to prevent this kind of thing. If I buy an insurance contract that will pay me if your house burns down and then I burn down your house, then I’ve obviously committed arson, but I have also likely purchased that insurance contract illegally. And I don’t even need to burn down your house for that contract to be illegal. (IANAL)
      • FireBeyond 2mo ago
        There is a (possibly apocryphal) story of a man who bought an amazingly expensive Cuban cigar, insured it as it sat in his home, then smoked it... and filed an insurance claim for its loss. After back and forth with attorneys, the insurer paid the claim. And then sued him for their loss.
        • amluto 2mo ago
          But he surely had an insurable interest in that cigar!
  • brainwad 2mo ago
    If you consider not just money, but utility, then there is already a lot of pre-existing risk that sports derivatives could hedge. Theoretically, fans should short their team to be utility-neutral whether their team wins or loses. However in practice fans tend to double down by adding monetary risk to their pre-existing emotional risk...
• amazingman 2mo ago
  Regulations, skill, and access.
• brianbest101 2mo ago
  [dead]
• none_to_remain 2mo ago
  The gambling platforms are buddies with Tish James and the state, while the prediction markets are buddies with the CFTC and the feds. That's the important difference in this case
• zug_zug 2mo ago
  Well my broker (fidelity) requires certain degrees of experience and wealth before allowing certain types of risky trading. Perhaps sports-betting should fall under that category -- e.g. must be an accredited investor.