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Political betting site PredictIt to shut down after CFTC withdraws approval

146 points17 hourspredictit.org
unholiness6 hours ago

Betting on PredictIt has been a side-hobby of mine for the last 5 years, in which time I turned my fun $10 deposit into (just) over $1000. For me, it's a satisfying way of interacting with the news, motivating clear-headedness and accuracy over simplicity and filter bubbles.

The talk about "rational markets" in this thread is well-meaning, but I think it could better targeted toward BetFair and other uncapped foreign markets. PredictIt has a cap of $850 from any individual in any market, which means almost no market is dominated by "sharps" exploiting differences between prices and reality. Sure, PredictIt's prices are often more accurate than the average person's guess, but they still exhibit a lot of small and predictable biases:

- "Yes" positions are more popular

- Pro-Republican positions are more popular

- Cheap, improbable positions are more popular

- Positions confirming simple ideas are more popular

- Positions traders wish were true are more popular

- Things being discussed on the news are treated as more contentious than they are

Ultimately, almost all of my 100x growth just boiled down to finding these biases and maximizing my expected log(return) with them in mind.

I do believe PredictIt was good for discourse. Though it may have ultimately affected a small number of views, the "put-up-or-shut-up" mentality is much closer to the scientific method than media and its tendency to navel-gaze. The domain of PredictIt markets was small, but I often imagine a world which creates this kind of ecosystem for a broader array of scientific fields.

For me, though, this is the end of the line. The 2020 races (with Georgia runoffs) risk being unresolved by the 2/15 deadline, and it's impossible to predict what PredictIt will do then, much less if markets will properly price that in. It's been a fun run, and I'm glad it lasted as long as it did.

ummonk5 hours ago

The fees that PredictIt charges also make the market highly mispriced. E.g. you can't arbitrage two markets on PredictIt because PredictIt will take a cut of any profits you make in a particular market, without deducting any losses in other markets.

unholiness4 hours ago

This is true about arbitraging between markets on PredictIt, but I do think the impact of fees on market prices (and on ability to make money on PredictIt) was usually overstated.

PredictIt has two fees: A 10% fee on winnings, and a 5% fee on withdrawals.

The 10% fee on winnings is only on winnings. So when buying a share for 90¢, your $1 won will earn 99¢ and pay 1¢ in fees.

This means in a market with multiple candidates, betting "No" on all of N candidates will always earn you $(N - 1) without fees. That's is a winning bet iff all the "No" shares add up to $(N - 1.1111). In practice, the bias toward "Yes" shares alone is strong enough that buying all "No" shares, even at current asking prices, usually cost between $1.07 and $1.10 less than $N.

So, if you're only buying "No" shares in markets with multiple outcomes, the prices are set close to a point that entirely negates that 10% fee.

And of course the 5% fee on withdrawals is only on withdrawals. If you send the money straight back into another trade over and over, the fee is diluted enough to be irrelevant to any individual trading decisions.

renewiltord5 hours ago

Same, though I went $30 to $180 or some such shit and I didn't keep playing because it locks up the money. Concur with everything you're saying. On PredictIt the black swan was over-weighted.

You can take the suckers' money, but you end up still being a sucker because your money is locked up.

What I find amusing is that they have some Plaid-type integration for deposits but withdrawal still needs this routing number / account number shit.

VoidWhisperer2 hours ago

Deposits are likely more subject to KYC and things like being able to verify that the bank account exists - I imagine, atleast at the surface this might be why you see this

akelly17 hours ago

This is a huge blow to political discourse. PredictIt has been operating since 2014 with the approval of the CFTC as the largest election betting platform in the US. Today they received notice from the CFTC instructing them to cease operations by February 15th without clear justification for the decision.

One year ago, YC backed betting market Kalshi launched with CFTC approval. They employ a former commissioner of the CFTC as Chief Regulatory Officer, and two weeks ago applied for CFTC approval to have election markets. And half a year ago, the popular unapproved blockchain betting market Polymarket was fined and shut down in the US by the CFTC.

Further reading:

https://twitter.com/NathanpmYoung/status/1555387422510264321

https://www.cftc.gov/csl/22-08/download

https://astralcodexten.substack.com/p/the-passage-of-polymar...

belorn9 hours ago

In term of political discourse it is/was a good source to verify the validity of some of the more up voted stuff on HN. One top comment a few years ago predicted that the US would abolish election and be a monarchy by 2020. An other that there would be a full scale nuclear third world war in 2019. There were one saying that the US would enter a new civil war by 2021. In each case I checked betting sites to see if such views held enough popular support, but alas I could not find any to bet against.

If people who hold conspiracy theories put down money and lost, maybe that would do more to change how people think than any political debate ever could.

pessimizer8 hours ago

As far as I can tell from hanging out on Predictit for years, it's actually pretty shit at predicting things. That some event isn't something that you can gamble on, or that a particular outcome of an event isn't an option until five minutes before it actually happens, doesn't tell you anything.

> If people who hold conspiracy theories put down money and lost

If people who say that the government claim on X is true had to put money behind it, we'd see a massive wealth transfer from smirking status quo guys to little groups of conspiracy theorists. Half the time (like for example the missile strike on that family of saints as we left Afghanistan), the government line has been disproved before the press release even gets out; easy money.

edit: if anything, Predictit acts as a summary of current media coverage/sentiment.

bombcar8 hours ago

> edit: if anything, Predictit acts as a summary of current media coverage/sentiment.

This is exactly it; you have some small percentage of people "putting their money where their mouth is" but most of it is people trying to second guess and game everyone else (you could reliably make money trading shares on the news cycle, for example).

pfisch1 hour ago

If you spent time on predictit you would know the conspiracy people aren't rational and lose all their money. They bet in ways that reflect their disjointed understanding of the world.

Not understanding the odds of their bets in general, and getting wrecked on stupid, improbable maga bets about Hillary getting locked up.

Conspiracy people tend to be ultra partisan and believe things with no real evidence beyond they want these things to be true. That doesn't work when they start betting actual money.

There was tons of money to be made long after the 2020 election on whether or not trump would magically become president again.

hackernewds26 minutes ago

Not sure this is good veracity of truth. Most people also predicted Hillary Clinton would win. Given the nature of over/under there is incentives to bet on the incorrect side knowingly

floe2 hours ago

Although it doesn't make sense to have prediction markets for truly catasclymic events -- anyone who believes nuclear war is imminent is gonna prefer to buy canned food over prediction market contracts.

r00fus6 hours ago

Problem with your idea (which is conceptually valid) is that you can buy and sell on Predictit well before the closure of the "market/event". So many people who agreed with a politician or idea (that some event would happen) would still sell early (at 90c/1$) because they could use those funds in other markets.

Worse still - you have people who would pump & dump the market - pushing the contra position (Trump wins 2020) and post comments showing showing holdings supporting contra, and then dump after it gains a significant share. I've heard of some predictit users doing this same operation 5x or more on a single market (an iconic example: Iowa Dem Primary 2020).

So it's all speculation.

ProjectArcturis3 hours ago

Do you have a source on Kalshi applying to list election contracts?

In general, I agree, looks like regulatory capture by Kalshi.

jdmoreira5 hours ago

I also have strong suspicions this is related to Kalshi somehow

JoshCole8 hours ago

I know many people strongly believe in rational market theories. For these people this sort of betting site isn't just a betting site: it is the mechanism by which they engage in understanding politics and their primary means of political discourse. Beyond that, it is also an incentive for their own political engagement. They have several mathematical models that are strongly suggestive that they are right to have this belief.

From that framing the government should have no authority whatsoever to take action against PredictIt: doing so is a gross violation of natural rights. To me this seems like an error comparable to restricting freedom of religion, detaining someone so as to prevent them from voting, or the burning of an intellectuals book and the jailing of them so as to prevent the spread of their ideas. It seems an abomination.

What is the justification? Just that there was gambling or is there a deeper fundamental problem that I am missing? Gambling to me seems more fundamental to reality than breathing. Everyone engages in it all the time, but we just don't call it that when we think it might be a gambling category which is of benefit to society.

If there is no justification - what paths can be pursued to permanently sunder the governments ability to take this sort of action in the future? I say all this with no sense of judgement for the CFTC; clearly this is within their mandate under reasonable interpretations. Rather, I think other mandates - more important ones - supersede theirs and should be restricting their authority.

motohagiography7 hours ago

While I am a fan of prediction markets, I understood the main argument against them is that they create perverse incentives for people to engage in extreme acts to profit from the outcomes.

I wanted to create markets for things like individual airline flight delay insurance, and a futures market for airline tickets, but all of these are regulated as futures with the same barriers to entry that protect stock exchanges, and there are some rules in insurance about not being able to take out insurance on someone elses' property for related reasons. It's a moral hazard. Betting on politics appears to be framed in similar terms, but the counter arguments would be interesting as well.

I gave up on prediction markets years ago, but if there were a darkweb prediction market for smart contract cryptocurrencies, that would be the most subversively interesting thing to become real in a while.

inglor_cz6 hours ago

"they create perverse incentives for people to engage in extreme acts to profit from the outcomes"

So does the very existence of the media, which will amplify any sufficiently gross act of violence to the global auditorium that would otherwise never hear of it, rewarding the culprit with their 15 minutes of fame and possibly inspiring others to do the same.

That isn't a reason to censor journalists, though.

theptip7 hours ago

> I understood the main argument against them is that they create perverse incentives for people to engage in extreme acts to profit from the outcomes.

Is that the line of reasoning CFTC is using though?

> if there were a darkweb prediction market

I think this is Polymarket / Gnosis right? Or are you looking for something more obfuscated?

saurik3 hours ago

> if there were a darkweb prediction market for smart contract cryptocurrencies

Assuming you mean "using" instead of "for", isn't this Augur? (That said, I haven't used Augur personally; maybe it sucks.) Building prediction markets is one of the more common and older projects for crypto.

jjoonathan7 hours ago

> darkweb prediction market

Dammit, I had forgotten about the whole "hire a hitman while pretending to just make predictions" thing. It probably isn't just a spooky theory anymore :/

hackernewds23 minutes ago

Gambling is illegal for the same reasons drugs are illegal - the exploitative and addictive nature of it. Unfortunately the populace needs to be protected from itself. One need only look at the gambling addicts in New Orleans to see how unhinged other cities could get.

swatcoder7 hours ago

You spent a lot of time writing that post and raising questions, but all of the answers are within two clicks of the article.

PredictIt linked to CFTC and CFTC explains their original act and their justification for the withdrawal in extensive detail in documents linked from there.

If you’re actually curious and not just trading outrage for upvotes (I assume not), I’d love to see how your impression evolves in light of the actual facts available to you.

JoshCole7 hours ago

I did read that, but it doesn't address my questions. Actually, it doesn't even begin to answer them.

On one level - you don't even seem to have recognized what I was asking about. I wasn't asking about the justification for this particular decision: you'll note I explicitly mention that this is in the mandate for the organization. So any reading that thinks I'm talking about that is actually just a misreading of my point.

I'm asking if it even make sense to allow the government to prevent discussion of political issues using a mechanism which has some basis in being mathematically rational? It really doesn't seem obvious to me that the government ought to have the power to do so. I'm not asking for the justification for this decision. I'm asking if there is a justification for political oppression of the mathematically minded more generally.

That said - even under the framing that the letter answers the misunderstanding of what I was asking about - I still don't find it to have done so.

The letter is vague with respect to which particular issue they were breaking; it listed the things not which of the things they contested were not the case. The extent to which it is vague is such that even on the linked page PredictIt contends it still has not broken the commitments.

This isn't the extremely specified justification you seem to think it is - at least not to someone who isn't extensively familiar with PredictIt; and apparently given PredictIt didn't acknowledge that it felt it was out of line - it isn't even something that someone with extensive familiarity can easily spot.

evrydayhustling5 hours ago

You could make the same argument about any market. And there is a self-consistent libertarian position that no voluntary economic transactions at all should be limited for this reason. But if you accept any form of regulation, the same arguments apply for regulating any market: historically, many markets have been set up with unfair rules that cheat participants because there is a information imbalance between organizers and participants. The CFTC proactively sets standards of fair play and disclosure to address that gap.

Their letter suggests that they were specifically withdrawing the right of predictt to operate without registration. It seems like the discussion can be advanced by registering.

JoshCole4 hours ago

Thanks. This answer helped me get more clarity.

bequanna8 hours ago

The government has no problem with gambling or lotteries. They only have a problem when their percentage of the action isn’t big enough.

An alternative theory is that this market was providing information that the current regime is looking to suppress: actual popularity of candidates, policies, etc.

Any speech that violates the official narrative is deemed wrongthink and seems to be fair game for law enforcement/regulators.

JoshCole8 hours ago

> An alternative theory is that this market was providing information that the current regime is looking to suppress: actual popularity of candidates, policies, etc.

I don't mean to suggest that this is the intent.

I'm saying it seems to me that something worse than that is the fundamental consequence of the decision. Banning the mathematically rational discussion of politics is actually a bit more extreme than say murdering and burning the books of intellectuals; in terms of attacking truth it does so on a more fundamental level, it is like banning the use of addition as a method of counting - an attack on the very process by which things are known, not just a person. You aren't just murdering one person - this kills an entire category of rational agent; it isn't a ban on knowing a particular fact that is inconvenient. It disallows the seeking in a much more general way.

To try and maybe get across the nature of the violation: this seems to me about as bad as the government declaring that the scientific method was no longer allowed to be used or that people were no longer allowed to have faith. For sure methods of arriving at the truth can be very dangerous, but I don't think it follows from that that the government ought to be allowed to prevent their use for that purpose.

So I'm wondering what I'm missing - or whether there is actually an overstep of authority that ought to be reigned in.

trebbble8 hours ago

> Any speech that violates the official narrative is deemed wrongthink and seems to be fair game for law enforcement/regulators.

I see enough "democrats in disarray" or shitting on the Biden admin (maybe both justifiably! That's irrelevant for this post) from allegedly left-leaning outlets that this seems incredibly unlikely to be true. If it is, they're entirely failing at it. Or have for some reason decided to focus only on minor players while major players, with 100+x the audience (ask around in the real world and see how many people have even heard of PredictIt), carry on as usual.

vkou7 hours ago

The reason we have freedom of religion is because when we don't, we get things like holy wars, massacres, and genocides.

It's not because it's some kind of privileged form of understanding the universe. You need to do a lot more work to have your hobby horse hitched to the protections and privileges it receives.

JohnHaugeland6 hours ago

"For these people this sort of betting site isn't just a betting site"

just because you choose to assign it some other emotional value doesn't change that the core purpose is illegal

"i'm not burgling, this is how i engage in understanding economics and the primary means of discourse, and the government should have no authority to take action against me"

Kamq57 minutes ago

> just because you choose to assign it some other emotional value doesn't change that the core purpose is illegal

The comment you're replying to is an argument that it should be legal. It's current status as illegal is not a counterargument.

JoshCole6 hours ago

Theft isn't people coming together for the purpose of aligning incentives so as to share information with each other while remaining rational. This has far more in common with Truth than it does with Theft. First and foremost, because it was by agreement that they entered into the arrangement - none were forced. Second and also motivating it, because losses are taken in hope: that a better understanding of the underlying conditions is obtained by the whole of the community which is of benefit to even the losing participant.

JohnHaugeland6 hours ago
+2
JoshCole5 hours ago
StanislavPetrov5 hours ago

>just because you choose to assign it some other emotional value doesn't change that the core purpose is illegal

The bigger question here is, why is it illegal? Most rational adults understand that the arbitrary decision to ban adults from "gambling" their own money in certain ways, while promoting gambling in other ways is absolutely ridiculous. Here in New York I can today bet on sports and horse racing from my phone or my computer. I am pilloried with ads to play lotto - perhaps the worst form of gambling with only a 50% return on investment in most games - by the state itself! But it is illegal for me to gamble on a skill-based game like poker or predict-it. It reeks of the authoritarian hypocrisy that is the defining feature of our government on every level.

phpisthebest5 hours ago

Sadly I think in modern society we have shifted from having to justify why something should be illegal, and today for many the default assumption is that all activity should be illegal and one should need to justify the value, subjective "goodness", or utility of an activity, business, device, etc for it is be ruled "legal"

>by the state itself! But it is illegal for me to gamble on a skill-based game like poker or predict-it

I think you have hit on the root cause, poker and other games of skill is harder for the government to inject themselves into it, harder to control the odds and revenue (like lottery), etc.

mateo4114 hours ago

>I think you have hit on the root cause, poker and other games of skill is harder for the government to inject themselves into it, harder to control the odds and revenue (like lottery), etc.

I don't think so. You can just grant a gaming license for a card room. In order to maintain the gaming license the establishment has to pay a yearly licensing fee to the government. That seems pretty straightforward.

+1
JohnHaugeland3 hours ago
JohnHaugeland3 hours ago

> The bigger question here is, why is it illegal?

So to be clear, you're asking why unregulated online gambling is illegal?

Because that's something you can look up, you know.

.

> Most rational adults

Rational adults are what an internet economist says when they don't want to deal with the real world.

It's like when a physicist says "assume a cuboid cow three feet on an edge."

No, I don't think that I will.

Your attempt to ignore the hundreds of years of law and sociology that underpin this well examined decision with a few fly by the seat guesses about "rational adults" are not actually very compelling.

I find that people on HN frequently fail to understand that the law is a carefully crafted work by tens of thousands of professionals over centuries, that they almost cannot actually upgrade with a hot take.

.

> Here in New York I can today bet on sports and horse racing from my phone or my computer.

Hooray for you.

Maybe if you'd like to look into it, you could learn about the New York gambling regulations, and why they don't fit this institution, and why this institution went to the CFTC for an exception.

After that, maybe you can read the CFTC decision, where they said "we gave them a special exception if they followed some rules, and they didn't follow those rules."

When you're done with that, possibly you could explain to me how what you just said was in any way related to what's happening.

.

> But it is illegal for me to gamble on a skill-based game like poker

Er, no, it's not. Also, poker is not skill based. You may be surprised to learn that the ordering of the deck is random.

Yes, I know people all over the HN thread are claiming that there's a legal decision based on whether it's skill or chance based in flight, that came down to "it's skill."

I look forward to you citing that decision, because it isn't real. I expect you to attempt to cite Jack Weinstein's 2012 Brooklyn decision. I expect you to cite the New York Times article claiming that a circuit judge found that poker was a game of skill, not chance.

Of course, the Times' coverage quality has been in decline for a very long time.

At the end of that article, you will notice that it says "but the judge put off the decision." You'll notice the article was never updated.

So then you look up the decision. And gee, what do you know? It says that poker is, as is obvious, a game of chance. So do statistical analyses: fewer than 10% of 4 player 5 card draw hands can be changed win-vs-lose by player behavior. Most hands, what you drew is generally whether you win or lose.

.

> I am pilloried with ads to play lotto - perhaps the worst form of gambling

It's not gambling if it's not for money, friend.

The ads are playing an ugly game with definitions, and sooner or later they're going to get sued out of existence.

They sell you things that affect your win rates, but you don't actually pay to play, and so under the 1950s law which wasn't written with this in mind, technically it isn't gambling, because even though you can spend money, and even though you can win money, you didn't spend money for the chance to win money.

Their (legally false) argument is that it's like a chess tournament with a prize but no entry fee, which charges for food and refreshments. You can win money, they claim, without spending a dollar, and you only spend money for related enjoyment while you're there.

It's an absurd and false premise, but nobody has bothered to hunt them yet.

Now that Unity is merging with one of the worst malware offenders in the ad market, I kind of expect this to change.

.

"Most rational adults understand that the arbitrary decision to ban adults from X in certain ways, while promoting X in other ways is absolutely ridiculous."

what you just said was "if someone else can commit crime, i should be able to too."

.

> But it is illegal for me to gamble on a skill-based game like poker or predict-it.

let's just come back to this again.

much like poker is (obviously!) not a game of skill, neither is predict-it.

it's not clear to me what you think "game of skill" means under the law. it doesn't mean "a game that someone can be good at."

a game of skill, under the law, is a game where you have all the information and every choice made is fully under the control of one of the two players.

there was a 15 year stretch where people weren't sure if chess was a game of skill because you flip a coin to see who goes first, and chess has a significant first player advantage.

if a single coin flip before any choices are made means it's potentially not a game of skill, i don't see how you could possibly hold that predicting the future, or poker, are. it seems to me like you're just repeating the phrase because you've heard it, and you don't really know what it means.

one of the problems with attempting to argue the law without taking the time to learn the history is that it very frequently doesn't obey the rules that a casual observer might expect.

.

> It reeks of the authoritarian hypocrisy that is the defining feature of our government on every level.

"it's authoritarian hypocrisy that i can't use an unregulated gambling website which failed for eight years to follow the agreement that it made with the government"

lol.

phpisthebest2 hours ago

The number of logical fallacies at play are impressive, however I would like to address a couple of points

>>I find that people on HN frequently fail to understand that the law is a carefully crafted work by tens of thousands of professionals over centuries, that they almost cannot actually upgrade with a hot take.

Seems like you have a rather rose colored view, and fall into a Fallacy Of Expertise to believe that because the law was "crafted" over many years by "professionals" that is somehow makes it infallible, or correct, or anything other than what is is in reality.

Which in reality the law is a very flawed patchwork reactionary policies, regulations, rulings, and statutes all crafted by imperfect people many of which did not and do not have "the best interests" of the public in mind when they crafted them, instead have personal power, ego, or personal wealth at the center of their rational for invoking the regulation, ruling or statute into existence

I find it concerning that one would have such reverence for a clearly flawed, abusive, and often unethical institution such as "the law", there is nothing more unjust than the laws the come from "do-gooders" steeped false philanthropy attempting to tell us all what is best for us... What ever the noble origins (if there ever was any) in "the law" it has clearly been perverted by greed, ego, power, and false philanthropy

>"it's authoritarian hypocrisy that i can't use an unregulated gambling website which failed for eight years to follow the agreement that it made with the government"

It is authoritarian that one would need to seek permission from the government to run a website like PredictIT in the first place.

+1
samatman2 hours ago
Consultant3245215 minutes ago

PredictIt provides useful information to the world, positive externalities. Lotteries are a tax on the poor and innumerate and the governments run them.

caseyross8 hours ago

From the official withdrawal letter [1]:

> [Victoria University] has not operated its market in compliance with the terms of [the 2014 letter granting no-action relief].

Nowhere does the CFTC state exactly what the alleged violations where, so we can only speculate. It certainly lends support to the hypothesis that the no-action withdrawal is regulatory capture by a competing prediction market.

[1]: (Forced PDF download) https://www.cftc.gov/csl/22-08/download

robbrown4515 hours ago

I wonder if some sort of cryptocoin/blockchain alternative could be created, that would be harder to shut down.

It would probably have to be based on having an elected council (with an odd number of members) signing off on the outcome of a market. If people see a bias in their history (which of course should be public), they will factor that into their bids, hopefully discouraging people from getting on the council to make money on their own bids.

And of course the council should be elected with some kind of ranked-choice/condorcet so you tend to elect centrists rather than extremists.

peyton1 hour ago

Augur and Kleros might be worth checking out. You can find other neat designs just by trawling arxiv.

AccountAccount19 hours ago

The gambling angle is straight up dumb, why are they framing it that way? Aggregating information (however true) provides a net benefit in any endeavor, and there has to be a financial incentive to do information arbitrage, that's the whole point, because people would not even worry about it.

The whole thing is that, the media now cannot say that elective x has a 65 approval rate (based on a survey of 6 coworkers) when on Predictit is at 10%.

password43212 hours ago
wallawe2 hours ago

Thanks for the shout out, didn't expect to see this here! It's hard to find a good data source - getting the lines is easy, but the grading part is hard (or really expensive). Any ideas?

jrm46 hours ago

Okay crypto people. For better or worse, here's your use case.

flaque4 hours ago
gjs2782 hours ago
usgroup9 hours ago

This has happened many times before. Why do governments close prediction markets? What sort of problems do they cause?

mistermann4 hours ago

It may be beneficial to the government that the organized practice of epistemology remains solely with the (trustworthy) media and The (approved) Experts. The internet is enough of a problem as it is for interfering with citizen's perceptions of what is true.

failTide4 hours ago

Wow. I almost started working on a project 6 months ago based solely on the fact that PredictIt was able to get that no-action letter from the CFTC.

frellus8 hours ago

I don't understand why they can't just make them trades based on future political actors. Feels like that's what the futures market is in general - risk betting.

unethical_ban8 hours ago

"Get money out of politics"

also

"It is a shame that a financial incentive to manpiulate elections or to vote for a candidate for any reason except the voter's confidence in that candidate got banned"

I'm not saying I definitely want political bookies banned, but I don't immediately see how it is anything but a detriment to honest decision making in choosing how to respond to issues. Maybe I'll vote to take away some human rights if the election is close and I can make a few bucks?

karlkeefer4 hours ago

Prediction markets have a built-in incentive for accuracy that's absent from broadcast news. It's useful to have an aggregate answer to things like "how likely is Russia to invade Ukraine" that is to some degree shielded from the normal filters of partisanship.

Or from another angle:

Changing your individual vote in an attempt to shift the outcome of an election is extraordinarily unlikely to actually make the difference, so prediction markets most likely punish people (with losses) who try to game it with their own votes. If you and a large group of people plan to do this, that will be priced into the market, preventing you from profiting very much.

ramesh3112 hours ago

They were definitely operating in an extreme legal grey area. Without a doubt it's straight up gambling. Yet they issue you a normal 1099 at the end of the year. It felt really weird having to claim a "political consulting" business on my taxes instead of just claiming it as gambling income with a W-2G. Not sure how they were ever legally able to operate in the US honestly.

dustyleary11 hours ago

> Without a doubt it's straight up gambling

Not “without a doubt”.

Gambling means a game of chance/luck. Court cases over poker, regardless of which way the decision goes, hinge on whether the Court is convinced that poker is a game of skill, rather than luck.

Predictit definitely did not want to issue W-2G, because that is for gambling income, and their position is of course that their platform is not an illegal gambling service.

I think that it’s pretty easy to argue that consistently winning money on a prediction market is a matter of skill. Just like consistently earning money on the stock market.

Of course, both can be used for gambling.

So if prediction markets are not allowed, why are day trading or stock futures allowed? A casual read of a few relevant subreddits will show that there are a lot of people “straight up gambling” with financial markets.

It’s a real shame that prediction markets aren’t allowed to operate in the US. Markets (of any sort) are incredibly useful.

Disallowing them because you can use them for gambling is throwing the baby out with the bath water.

kube-system6 hours ago

Prediction markets for sports is reported on a W2-G, and skilled people can consistently make gains doing sports betting.

Stocks are different because they are assets. You get something for your money.

jkqwzsoo6 hours ago

Prediction markets (i.e., cash-settled futures) for interest rates, FX rates, volatility, financial index values, etc., on the other hand, don’t require W2-Gs and are even tax advantaged.

tialaramex8 hours ago

In my country gambling is legal but regulated. And so you can, indeed, bet on political outcomes, subject to certain rules. Just go to a web site, prove you're eligible, deposit money, gamble.

Now, I don't gamble, but in December 2020 I was able to use that platform to "bet" that Donald Trump had lost the US presidential election he lost the previous month. I "won" a bunch of money. Because lunatics had decided facts aren't true, we can just make up whatever we want, and it took a few weeks for that to get knocked down and meanwhile you could just bet against these morons.

As to financial instruments: For a bunch of the instruments you are actually buying something, and these are clearly just fine. If you buy Oil futures or Pork futures that actually literally deliver oil (or pork) and you're holding them when they come due, you're getting oil (or pork). This is probably not what you wanted, but that's what those instruments do, the people who were supposed to be buying them want oil, or pork, and so they're happy, too bad for you.

I agree that some derivative instruments might just be gambling, these instruments are also too risky and poorly understood, so if you say we should ban those with gambling I don't see why not. Again, gambling is legal in my country, and so are these derivatives, but the Americans can choose different, as they have on many things.

ramesh317 hours ago

> Now, I don't gamble, but in December 2020 I was able to use that platform to "bet" that Donald Trump had lost the US presidential election he lost the previous month. I "won" a bunch of money. Because lunatics had decided facts aren't true, we can just make up whatever we want, and it took a few weeks for that to get knocked down and meanwhile you could just bet against these morons.

Yep. Betting on politics in 2020 was as close to free money as you’ll ever see. On election night, the odds for Texas flipping blue were 70/30. Literally free money.

jdmoreira2 hours ago

> Literally free money.

I'm pretty sure that's not what "literally" means :)

User238 hours ago

> Gambling means a game of chance/luck. Court cases over poker, regardless of which way the decision goes, hinge on whether the Court is convinced that poker is a game of skill, rather than luck.

I think it really just has to have an element of uncertainty. For example one can gamble on chess tournaments. I suppose one can broadly construe an element of "luck" if Magnus somehow botches a game, but it strikes me as something quite different from whether or not one's lottery numbers come up.

As you say, poker is the archetypical example of a skill game with an element of chance. Backgammon is another good example. I would say darts is another example that falls further on the skill end.

> So if prediction markets are not allowed, why are day trading or stock futures allowed?

As noted in another comment on this submission, it appears one can greatly increase the chances of regulators approving an activity by having former regulators on staff. Needless to say traditional finance companies enthusiastically hire those people.

Bostonian8 hours ago

This is terrible. I wish things would go in the opposite direction, with the CFTC allowing futures exchanges such as the CME to trade presidential party election futures.

salawat11 hours ago

Seems to me they've got things branded incorrectly. Don't make a prediction market. Make a PasteIt.

Think about it, you're trying to get people to process and offer up unknown information, right? Focus on that.

It's bounties for verifiable information. Not predicting, or a game of chance. You pay for information to be brought up that you would never have thought to look for.

If you do it that way, you're completely sidestepping the issue of providing a gambling primitive. You're just incentivizing data collection and dumping. The outcome becomes secondary, the context generated maintains primacy, and I wager what markets are really interested in is looking at highly accurate predictors and trying to infer what channels of information they're privy to in order to expand data observation pipelines.

Unless these "prediction markets" really are just some high brow word for gambling parlors. Then again, I always figured that was all futures and derivatives trading were, yet there is a staunch refusal to classify them as such.

Georgelemental10 hours ago

In an anonymous pastebin, there is no incentive for you to provide info that is accurate and complete. Prediction markets give you an incentive to find the right answer.

salawat4 hours ago

Doesn't have to be anonymous... Did I unintentionally stumble on a name that implied that?

seaourfreed7 hours ago

We need prediction markets. It is evil that government kills prediction market companies. Prediction markets are needed to OUT establishment politicians that are far worse that challengers. (For both sides of the partisan spectrum) It is evil that government kills prediction market companies.