Comment by Traster

I'm kind of surprised the article doesn't spell out why these are "prediction markets". They're prediction markets because it used to be that what they were doing was illegal. It was illegal to just set up a gambling website in the US and so these "prediction markets" were the same thing as crypto, masking what was really happening behind some tech speak. In the same way that in the crypto market you regularly get behaviour that would get you locked up if it were to occur on the CME, what happens on these prediction markets would be illegal if you were just a betting company.

The reason they're getting big now though, is because we know none of those regulations are going to be enforced. So through regulartory arbitrage, these gambling sites are just going to eat the entire regulated industry until nothing is left.

It used to be Harry Enten's former boss would joke about Scottish teens, when talking about betting markets because frankly, the betting markets didn't seem predictive and were so niche, it seemed like the people on them were generally just betting with no idea what they were betting on.

But today, let's face it, soon we're going to see a contract on whether the S&P goes up or down tomorrow, and when you have that contract, gamblers are going to be betting on it instead of going to Robinhood and buying some Puts.

It's a real test to see if what all those people who talk about the halo effect of trusted well regulated markets are actually correct. The conventional wisdom is that most of the users of these sites are going to get their faces ripped off, and the companies will get very rich doing that.