Comment by smeej

I think the problem is that I don't think it would end up primarily being about gambling.

I already live in a world where people make odds about whether I'm going to die. They're called "actuaries," and they work at life insurance companies. There are also oddsmakers of the same kind at car insurance companies, etc.

Right now, I hate that people who can actually analyze enough data to make odds about these things can only earn a living working for companies that are incentivized to find ways not to pay out when the odds do break against them. I'd much rather these people be able to make their livings just calculating odds, placing bets, and being right. I would like to have access to their calculations, and not be in a position of "just take it or leave it" when I'm evaluating a prospective plan from a life insurance company, for example.

Yes, by all means, there will be gamblers in these markets. There will always be some amount of noise, just like there is in the stock market. But why would that end up being the bulk of the industry? Just like with Wall Street, I would expect companies to grow up around these markets that specialize in getting the odds of things right, and making money off of their predictions. If the market ever became truly efficient, I think we would have a MUCH better idea than we do now about the likelihood of all kinds of things.

Heck, even if I think of something as apparently mundane as weather forecasting, if somebody came up with a breakout model that was right substantially more often, I would expect they would be able to raise all sorts of capital around it and start winning in all the weather forecasting markets, which would then make their predictions a reliable signal, and we'd finally have better information about what the weather is going to do.

I think one part I must be missing is why so many people are assuming that the primary user of prediction markets would be gamblers instead of specialists, especially once they operated at scale. I just don't see why that would happen. Anywhere there's an opportunity to make money reliably by coming up with better analysis or prediction tools, capital will flock there and incentivize coming up with better analysis or prediction tools.

I think I really would like to live in a world where that was highly incentivized, and I'm confused why people would not want that.

ETA: I don't think the gamblers would ruin this any more than they ruin Wall Street. I don't think they have enough capital to matter. (They are, after all, prone to losing money.)