Isn’t one of the points of betting markets is to incentivize this? Now me, as someone who doesn’t have access to insider knowledge, can know that there’s a noticeably increased chance of what’s going to happen. I do think maybe there should be some sort of feature to prevent last minute bets that utilizes insider knowledge, and I do admit there are considerable negative externalities to this system but it’s not clear to me that this is for sure bad.

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UncleMeat 2 hours ago | parent | next [-]

This was one of the theoretical points of betting markets.

But there are two large concrete betting markets now. And they advertise not as a "world state discovery system" but as a gambling platform for people to try their luck on. They are also large businesses that are making their owners rich. Falling back on "oh we are just interested in the intellectual exercise of information discovery" is not tenable at this point.

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colechristensen 18 hours ago | parent | prev | next [-]

The same logic can be used the opposite way, you can, with large amounts of money, manipulate events or people's responses to them.

* you can place large bets on events you have influence on the outcome for and make large amounts of money

* you can place large bets on events and then threaten people who have influence with a big stick

* you can place large bets expecting to lose money in order to change the outcome or a related outcome expecting people to look at the odds and change their behavior

And probably lots of other ways.

It corrupts events and on a world stage with unethical government in vogue... it's not impossible for people to manipulate a war in order to make bets go their way.

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Lerc 17 hours ago | parent [-]

There was recently a story about a reporter who faced threats because their reporting contained a detail that while not significantly impactful (although about a literal impact) in it's own right changed the win conditions on a prediction bet.

I think prediction markets worked as an idea to provide a wisdom of the crowd view when they were being used in good faith, but rewards cause people to prioritise winning and gaming the system pays better than playing fairly.

	▲	phil21 12 hours ago \| parent [-]
		There is no unfairly or fairly playing a prediction market. That's kind of the point. They don't work if you try to regulate them like they are a stock market or sports betting market. If you place money on one as a layman, you should consider yourself the dumb money. Lots of folks have convinced themselves they "know better" though, so it's a very easy psychological sell. You either allow a free for all, or they should be simply outright banned. I mean, they should probably be banned either way - but without the prediction part this is not a single redeeming factor for them to exist. The consequences for someone betting on classified information would need to come from the agency/government/etc. that finds out their staff is engaging in betting on privileged information. The market itself is simply taking bets and doing what it's designed to do. The bettor gets to decide if the risk is worth it.

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peter422 18 hours ago | parent | prev | next [-]

Can we at least debate the obvious externality that an insider might skew their advice or actions to personally profit instead of doing whatever they think is most appropriate for their job?

That seems like a big one

	▲	broof 17 hours ago \| parent \| next [-]
		Yeah I agree that there are big negative externalities and this is one. I’m more talking about is someone with insider knowledge but not the ability to influence - is that a bad thing specifically for these type of markets?
	▲	jMyles 17 hours ago \| parent \| prev [-]
		That phenomenon exists regardless. There may be some benefit to make it transparent. All war is for profit anyway - on sufficiently long time scales, stopping war is the imperative.

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cj 18 hours ago | parent | prev [-]

> Isn’t one of the points of betting markets is to incentivize this?

No. It’s an unintended side effect that risks breaking trust in the system by (the majority of) players who don’t have insider knowledge.

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phil21 18 hours ago | parent | next [-]

Eh what? It’s literally the only reason for prediction markets to exist. Otherwise they are simple gambling and pointless.

The only way you get more wisdom from “the crowd” is if it teases folks who hold non-public (or at least less public) information into the market to refine the odds towards what they should be.

Without insider information the entire concept is dead on arrival.

Yes randos are gonna gamble because they either don’t understand the game they are playing or are simple degenerate gamblers who want something else to gamble on. Others are going to think they know better or have limited insider information that isn’t worth as much as they think, or is not as accurate as they believe. And the delusional who simply think they know better for no logical reason but have convinced themselves otherwise.

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hatthew 18 hours ago | parent | next [-]

> Otherwise they are simple gambling

maybe I'm dumb but I thought gambling is the whole point

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UncleMeat 2 hours ago | parent | prev | next [-]

> Otherwise they are simple gambling and pointless.

People find gambling fun. Owners of gambling services make a lot of money. The prediction markets both run ads that present themselves as gambling products.

Both of these things are points that can sustain large businesses.

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cj 17 hours ago | parent | prev | next [-]

Have you been to a casino?

Gambling is a billion dollar business.

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bethekidyouwant 18 hours ago | parent | prev | next [-]

That’s not true. Consider a jar of jellybeans.

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phil21 18 hours ago | parent | next [-]

That would go under someone who thinks they have more information than they think they do. Perhaps you are great at mathematics and think you can estimate much better than the average bidder. The person who filled the jar is going to have even better information than you do. Or perhaps not. Maybe they miscounted or their manager added a handful before they screwed the top of the jar on.

If the market that is taking the bet also filled the jar, then sure it’s just outright fraud at that point. But the market exists to get the real information into the open. Betting that an insider just isn’t going to play is a variable you consider when placing your bet imo.

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8note 17 hours ago | parent | prev | next [-]

the guy who put the jellybeans in the jar can put the best bet on the result, no?

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echelon 18 hours ago | parent | prev [-]

A "market" is hypothesized to be "efficient" at price discovery.

An efficient "prediction market" would more quickly resolve to its expected outcome due to not only skin-in-the-game bets by experts, but also the influence of insiders.

Furthermore, bets are likely to shape outcomes. Betting someone will be assassinated (not allowed on Polymarket) would likely increase the probability of that outcome had there been no bet at all.

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bethekidyouwant 17 hours ago | parent [-]

I’ve heard this assassination thing said, but I don’t see it. Someone still has to kill said person and somehow profit from the unlikelihood of this outcome. I’m not saying it’s impossible but I’m just saying that it’s never happened and maybe never will.

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echelon 16 hours ago | parent [-]

There is no assassination market to test it against.

If there was, I think you'd see quite a few public figures on the list.

And I think it _would_ cause folks to die. Which is why it's banned or regulated. (I'm actually not sure what the legal status is, just that Polymarket and US prediction markets disallow it.)

	▲	Karrot_Kream 10 hours ago \| parent [-]
		Polymarket is not fully in the US and its betting on oil prices is not a CTFC-allowed market. This is after all a bet on a commodity, which is already regulated and already a product available on ICE. Technically Polymarket doesn't need to care about the assassination market rule (which is a CFTC rule for prediction markets), but I presume they adhere to it out of respect for the reasoning behind the rule.

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lovich 18 hours ago | parent | prev [-]

War is peace.

Ignorance is strength.

Openly corrupt markets that feature insiders with secret knowledge taking money from gambling addicts and rubes is actually good cause the crowd is now wiser.

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broof 17 hours ago | parent [-]

Unironically yes. Someone bet a mid sized amount and now we all share in that potential insider knowledge. A small scale example is my spouse said that the election odds from her home country were not realistic because all the westerners were betting a candidate would win but weren’t accounting for corruption that she felt was guaranteed to happen. Turns out she was right.

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lovich 17 hours ago | parent [-]

Ah good. The NBA/NFL/MLB/etc should let players bet on whether they win or lose. Letting those with the influence on events being able to make money on them has never degraded a system before.

Someone must have just mistakenly put in regulations against insider trading before, for no good reason. Luckily this isn’t anything like the normal tech play of figuring out a loophole or flat out ignoring the law and hoping you get too big before the regulators catch up.

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maxerickson 17 hours ago | parent | next [-]

If athletes didn't face consequences for manipulating betting markets, I think you'd see people become less and less likely to bet on sports outcomes. People naturally don't like a rigged game, you don't have to tell them not to play it.

With these betting markets, do you think it's critical that they exist, but with bans on insider bets? Because I'm not sure anyone you are moralizing at is taking up the argument that it's critical that they exist.

	▲	lovich 10 hours ago \| parent [-]
		> With these betting markets, do you think it's critical that they exist, but with bans on insider bets? No, I don’t think they should exist at all.

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phil21 12 hours ago | parent | prev [-]

Sports betting is specifically not a prediction market precisely because the players are banned by both law and extreme consequences from their leagues for participating.

You cannot have an open-ended prediction market with the same protections. It's just impossible from a practical standpoint, much less theoretical one.

I don't think these should be legal since it's just enabling more random gambling, fraud, etc. or even worse for no clear societal gain. But if they do exist, the only purpose for them is to lure out insider information into the open. Pretending they are just folks gambling on 'random' outcomes like a fair coin flip is naive at best.

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cyanydeez 18 hours ago | parent | prev [-]

yarg, its a betting market that takes uncontrolled bets. I dont see how anyone that's not part of the grift economy can claim it's anything but.