Comment by riskable

You've got the problem of prediction gambling framed incorrectly. It's not a matter of people losing money on bad bets, it's all about incentivized corruption and causing bad events (even catastrophic) so that a few may profit from them. It creates a perverse incentive for bad things to happen.

As the odds shift and the potential payout grows, prediction markets can essentially fund crimes of all kinds and cause disasters. Simple example: Imagine if the payout for someone being assassinated goes really high. Eventually, people will be placing bets on that person being assassinated and make sure it happens.

But it can get much worse than that! Imagine bets on dam collapse, buildings burning down, school shootings, even traffic accidents!

Prediction markets are a bad idea all around and should be banned everywhere. It should be a no-brainer. In fact, we should all place bets that the world leaders of countries that allow prediction markets will be assassinated!