The current setup does sort of seem like a tax on being stupid. Why would any non-insider participate in these markets? You’re just asking to get screwed.

Though it’s not that different from the stock market, where the folks at WSB happily give their money to Citadel, Jane Street, and friends, because every once a while, one of them hits it big after going all in that the ball lands on green.

Gambling is a hell of a drug and there are good reasons why it is illegal in so many places. Prediction markets have some good externalities (information), but it’s another addictive outlet for those vulnerable to gambling addiction.

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lostlogin 3 hours ago | parent | next [-]

> The current setup does sort of seem like a tax on being stupid.

More like a tax on being ethical or having any morality.

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	▲	jaredklewis an hour ago \| parent \| prev [-]
		What is unethical? The good point of prediction markets is that they provide information. This information is available to everyone, for free, which benefits everyone. Insiders help achieve this. Insiders have information and by participating in the market they then expose and share that information. So this is good. If we ban insiders, we're just banning accurate information from getting into the market. If we do that, we might as well just ban prediction markets altogether. I don't have a strong opinion either way on that, but a prediction market without insiders is pointless.

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

>Why would any non-insider participate in these markets?

Because they are grossly mis-priced for anyone mildly informed.

	▲	direwolf20 an hour ago \| parent [-]
		Did you get rich off these markets? If not, how can you say it's true?

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mothballed 3 hours ago | parent | prev | next [-]

As a hedge. Say you own real estate in UAE, and you note that insurance does not cover acts of war. Betting on something like "Iran Bombs Dubai" creates some form of real estate insurance for you.

Even if you suppose my example is bad, you should be able to envision some case where such hedge is helpful.

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MadnessASAP 3 hours ago | parent | next [-]

Yes, but the examples where it's good has a name "insurance". It exists, it's generally well regulated, and is not easily exploited.

The reason it works better is because in a prediction market, the person betting against you has no resources or ability to go after you for fraudulent behavior. Whereas an insurance company has both.

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amelius 3 hours ago | parent | prev [-]

Why not get a real insurance, where it is actually verified that your house was bombed?

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crazygringo 3 hours ago | parent | next [-]

Because there are many things where insurance doesn't exist.

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amelius 3 hours ago | parent | next [-]

Ok let's work on that then. But meanwhile, close down unregulated websites like polymarket, where there is no verification of actual damage.

	▲	crazygringo 3 hours ago \| parent [-]
		You can't just "work on that". Insurance works on repeatable, predictable risks based on models. You can't get insurance against a military attack. But you can hedge using a prediction market. It's essentially the version of insurance for one-off events, that relies on wagers since you can't use models.

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3 hours ago | parent | prev [-]

[deleted]

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mothballed 3 hours ago | parent | prev [-]

I'm not saying it's not out there, but in many cases finding insurance for act of war is difficult. It is certainly rare and almost always far less accessible than using polymarket. If you have a very large holding you can probably get someone to write it for you though.

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direwolf20 an hour ago | parent | prev [-]

> Why would any non-insider participate in these markets? You’re just asking to get screwed.

If people who do the obvious trades (sell oil right now - it's going down) lose money, all you have to do is do the opposite (buy oil right now - it's going down) and gain money. Is it not that simple? You will profit along with the insiders when Trump blockades the strait again, although you won't have such perfect timing.