Comment by doctaj
11 hours ago
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.
11 hours ago
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.
This is true for traditional gambling platforms, because they bet directly against their users, and make money when their users lose those bets.
Polymarket has a different incentive. They profit when their users bet more money, through percentage fees. Insider trading helps them achieve this by bringing in more money to the platform--they won't kick insider traders off.
At the moment being, Polymarket has an enormous reputational incentive against behaving like a predatory gambling company. People rely on it as a kind of decentralized alternative to New York Times. Distorting this effect would be very short-sighted.
I believe they are incentivized to discourage insider bets and essentially "rigged" wins. I do not think they will ever be able to control the problem of insiders leveraging guaranteed knowledge to take money for the poor suckers who don't know the game they are playing. Maybe that's too pessimistic, but at this point I don't see how anything but a pessimistic view is warranted.
Rigged wins aren't a real problem. Everyone knows that sports betting apps are rigged, and it doesn't affect them at all. In fact, the latest explosion of customers has been accompanied by even more blatant rigging in the form of unwinnable multi-leg parlays. Hasn't slowed them down.
3 replies →
Putting bounties on insider knowledge is the ideological justification for these kinds of betting markets, so I doubt they’re going to stop this kind of thing
That's true for now. A part of me hopes that one day prediction markets will have the same set of technical constraints, norms and laws that make the stock market mostly work. Let's wait and see.
And online sports books have the same reputational incentives, but don't seem to be suffering any damage.
That was my initial opinion, but more recently it's been established that there's quite a bit of a cat and mouse game here – people have come up with elaborate workarounds to avoid getting booted or limited by the platform, while the platforms come up with increasingly sophisticated monitoring to catch them before they win too much.
Though to your point I think these big winners are not representative of most users, who in my experience often think they're beating the system but in reality just don't log their losses very well. The house always wins etc etc.
Do these platforms care since the insider traders aren’t taking money from the house?