Comment by JumpCrisscross
21 hours ago
> it gives very powerful people a vehicle to make lobsided bets on outcomes they control
I'm sceptical that prediction markets uniquely enable this. Like, if you want to bet on U.S. airstrikes in the short term, you could always buy oil options (or short exposed companies). If you're in for the long term, you're buying something that benefits from cheaper gas, e.g. an additives company.
All of these things are much more subject to the problem that effects policy generally: the law of unintended consequences. Betting on the policy, rather than an intended/expected longer-term outcome that is easily derailed by intervening events outside of your direct control is much more direct (plus, if you are corrupt enough to bet on policy you control, that policy is probably already seeking a longer-term aim that serves your existing financial interests, so the ability to bet on the policy itself makes the corruption more attractive by providing a more immediate and certain payoff on top of the longer-term, less certain one.)
You are not wrong, and I should clarify I also have a big problem with the current state of legal insider trading of elected officials, but this polymarket problem is much more extreme. You can get a guaranteed 100-1 payout by blowing up some random people on the other side of the planet. Way worse than making even 2-5x on a leveraged futures bet with insider info. In that example, the victim is usually just other rich people.
If we want to go turtles all the way down, we could create a market to predict trading by decision makers and thus incentivize leaks from the betting markets.
Well, insider trading should be legalised in general. It would be better for the general public.
See https://en.wikipedia.org/wiki/Insider_trading#Arguments_for_...
So if you buy stock in company A, have it go to zero because the business went bust, find the CEO already knew it was bust when he was selling the stock to you, you'd be fine with that?
It would deter those who are not insiders from investing as returns would shift from them to insiders.
As the biggest social benefit securities markets provide is to enable raising capital this is a huge drawback and makes things worse for the general public.
2 replies →
Prediction markets don't uniquely enable it, but they make it far more effective and easy.
Insider trading is illegal. And for trades that aren't technically insider trading, often having some information ahead of time isn't as useful as it seems. Markets are known to react unpredictably to news; sometimes they move the opposite way from what you'd think, especially over the mid-long term, and there are many other influences on the price.
With a prediction market though, if you know what'll happen in the world, you know exactly what you'll win in the market.
> Insider trading is illegal.
Only in some markets and in some jurisdictions and some of the time.
Eg until fairly recently 'insider trading' in commodities wasn't anything you were punished for in the US.
You can also just... not place bets on completely bizarre prediction markets like "how many times this person says this word". The market can sort it out, etc.
You have completely missed my point. I don't give 2 shits about people losing money gambling. I give a shit about the Whitehouse doing insane things just so they can use the insider information to personally make money. Did you know on Oct 10th someone made $200M on a BTC short position made 30 minutes before Trumps announcement of 100% tariffs on China?
People make short positions all the time in crypto, and long, and levered long and short, because of hedging. Same in equities market