I’ll admit that in my younger days, reading Bryan Caplan and Nassim Taleb, I got caught up in the starry-eyed fantasizing about prediction markets that was (and still is) widespread in the libertarian corners of the internet. Force people to put their money where their mouth is! Combining the wisdom of crowds with Superforecasters will lead to vastly improved decision-making! Prediction markets will be so accurate eventually we’ll run the government on them! It sounds so good on paper.

The reality has been rather different. It’s just another form of gambling that’s wrecking people’s lives, and it's not obvious to me that they’re even very good at forecasting, which might help make up for it (the absurdly overpriced markets re: “is LK-99 a room-temperature superconductor” were one example). It was an interesting hypothesis but a failed experiment: shut it down and move on.

Exactly. The problem is the same as a casino, though: we now have an "industry", we have thousands of people making their living through these companies; we have a niche that Someone Will Fill if we shut down the big players and create a vacuum. Imagine getting a city to shut down its casinos when it has all the tax income flowing from them... sucking its own blood, cutting off its nose to spite its face, some such analogy. Maybe eating more sugar will cure my cancer.