Comment by firloop
1 day ago
> And now here come the prediction markets, such as Polymarket and Kalshi, whose combined 2025 revenue came in around $50 billion.
Bizarre to call trading volume "revenue". Last year, trading fees for Kalshi amounted to about $263 million[0], whereas Polymarket largely did not have fees in 2025 and is turning them on in a few days[1].
[0]: https://finance.yahoo.com/news/kalshi-fee-revenue-2025-263-1...
[1]: https://gamingamerica.com/news/polymarket-free-ride-over-int...
I can't believe people are throwing so much money on zero/negative sum games that on average have no benefit to anyone including yourself. I mean I know gambling is a thing but at least we are counting that as an addiction. But we seem to take polymarket more seriously.
With proper constraints, there is a major positive externality in aggregating public and private information through market mechanisms. Robin Hanson wrote about this subject extensively. Dismissing it outright as a zero-sum game is a bit naive.
It also creates a lot incentives for creating unpredictable chaos as an insider.
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v. edgelordy
>With proper constraints, there is a major positive externality in aggregating public and private information through market mechanisms. Robin Hanson wrote about this subject extensively. Dismissing it outright as a zero-sum game is a bit naive.
It's only gambling when you are betting of completely random events. If you know what the odds are of something happening, even with some approximation, then it is not gambling.
Of course, over 99% people placing bets on Polymarket are gamblers, but some aren't.
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Also, I really feel like so many of the people defending prediction markets don't understand the very basics of economy and behavioral science: incentives.
You're creating a legalized system with the incentives to influence events to make terrible stuff happen.
We've already seen huge bets on the deadline of US attack to Venezuela spike few hours/days before the actual aggression.
Which means that insiders not only hold information, but have the incentives to make stuff happen.
And naysayers (which seem to be dropping from the same basket of NFT/crypto cultists) will tell you that this is about probability and information discovery.
And the naysayers would be right. They come from two approaches:
- Property rights: bettors are waging using their own property at their own direct risk. To prohitbit such a thing is to violate their property rights, plain and simple; - Information aggregation: prediction markets originally appeared to help make informed decisions about an event by proof-of-stake. If I'm not mistaken, this idea was originally developed by NSA/CIA/FBI for this purpose.
You mentioned misincentives like hold information (which isn't actually related to prediction markets, but more so to NDAs and similar) and "making stuff happen". The latter is functionally the same as policemen/judges/prosecutors/prisons having an incentive to create more criminals. Really, most goals people have may be achieved via criminal means. We don't outlaw free will because people have an incentive to achieve their goals via criminal means, we increase punishments (increasing potential loses), improve tracking/prevention (reducing success chances), etc.
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There is genuine value in a wisdom of the crowds assessment of future events that is only sharpened up by the requirement to put money on the line.
The often-repeated "wisdom of the crowds" justification is misapplied to online betting markets. Like people, crowds can either be wise or unwise depending on the situation. Famous experiments like guessing how many gumballs are in a jar work because each person who can see the jar has a source of valid information, and in aggregate that can be surprisingly accurate.
You can't assume that the majority of individuals participating in betting markets have a source of valid information. Given the destructiveness of these markets to both individuals and society, the aggregate wisdom of the individuals participating in these markets is highly doubtful. Any meager value above more traditional forecasting does not justify the cost, corruption and a loss of trust in institutions.
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There is definitely value in that, but that value is outweighed - dominated, even - by the incentive produced to fix outcomes, incentivized by that money put on the line.
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It would be useful to predict things like earthquakes and tornados. Gambling on what politicians and celebrities will do is not science it's degenerate court gossip.
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I think you're right broadly, but when that wisdom is applied to e.g. how many dildos will be thrown at WNBA players, I don't know how much actual value is created.
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There's value in that only if assessments made by people using the prediction for something aren't better than crowd wisdom. I would guess that a large part of prediction market participants are simple gamblers whose assessment is worse than the prediction of someone doing it because they need the information for something.
So if people who need predictions for decision-making start relying on prediction markets with a lot of low value gambler predictions and opinion manipulators (wealthy participants can use the platform to mislead people as well) the value of these things might be negative.
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Genuinely asking: has there been a case of the prediction markets being "right" or valuable about something outside of the norm?
That's why the metaverse happened. Lots of money bet on it's success
My understanding of the world is enhanced immensely because suckers can bet on how many times the president will reference the lips of his press secretary in a speech.
Wisdom such as the mass purchase of GameStop shares, temporarily inflating the value of an ultimately doomed company?
It can be useful for insurance/hedging purposes.
For example if you're a European farmer it might be rational to protect yourself from fertiliser price swings by buying/shorting natural gas futures, derivates or long dated delivery contracts. Polymarket bets on specific geopolitical events are just another option for this, which can be attractive depending on the price.
Prediction markets have a pretty unique benefit in terms of offering political protection. For example if you're a DEI NGO it might have been worth making bets on Trump winning so you have enough funds to ride out measures that target your traditional funding sources from gov/corps/edu.
There are a lot of baked in assumptions here. For instance, as an extreme example, betting on nuclear war or climate collapse happening and then "winning" doesn't really provide you anything of much use in the society you will be living in after such events.
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There's three kinds of players on Polymarket & others
* The insider trading ones that will never lose money
* The wallstreetbets degenerates with enough money that it's a fun game even if you lose money
* People that have seen every chance they have at becoming moderately wealthy disappear under the current economic state of their country, where overwhelming debt is likely. The era of making it wealthy from a job is gone, an enormous part of the population is stuck going from small job to ubering, while being showered with videos of wealth from social media. The only way to make it out is gambling. Whether that's polymarket, sports betting, etc.
When you're already in a shit situation with no hope, "it's a zero sum game" isn't a good counterargument.
There are also large trading/market making firms providing liquidity, especially on markets associated with up/down bets on crypto, stocks etc. They use all the options trading machinery they've already built for more 'respectable' venues like CME/Eurex etc, further squeezing the margins for retail traders.
They're active on bets that are even considered "meme" bets. Example: Jesus returning in 2026 - If you can get a loan at 4% as a big well respected trading firm and plonk it on Jesus not returning at 94 cents, you're making ca. 2% for 'free'. (Unless Jesus returns, in which case you have bigger problems than your portfolio pnl).
Note that #1 will get kicked off the platform immediately. Even non-inside traders who win significantly more than expected will be kicked off. If you’re on the platform, you’re losing.
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Buy a movie ticket and that money is gone. Throw $20 on a parlay for the weekend sportsball and thats actually interesting, something off script might happen. And that money might not actually be gone.
Thank you for this call out. I was blown away by that number because it would have meant volume was maybe pushing 1T.
It's DT, don't expect honesty from his posts (unless he is bashing unions or workers, he's very honest about that).
Typo. It's obvious it can't be a revenue. Previous paragraph is dealing with the size of online gambling industry, next paragraph is about the same but for prediction market.
Well, the previous paragraph compares how much people bet online with how much people spend on airfare, which also isn't quite right. It assumes 100% of what people bet is lost. For sure, the house always wins, but the amount lost is probably closer to 50-60% of what is quoted.
Same as Block booking crypto trades as revenue.
Are the referenced companies referring to their volume as revenue?