[ramesh31]

They were definitely operating in an extreme legal grey area. Without a doubt it's straight up gambling. Yet they issue you a normal 1099 at the end of the year. It felt really weird having to claim a "political consulting" business on my taxes instead of just claiming it as gambling income with a W-2G. Not sure how they were ever legally able to operate in the US honestly.

[dustyleary]

> Without a doubt it's straight up gambling

Not “without a doubt”.

Gambling means a game of chance/luck. Court cases over poker, regardless of which way the decision goes, hinge on whether the Court is convinced that poker is a game of skill, rather than luck.

Predictit definitely did not want to issue W-2G, because that is for gambling income, and their position is of course that their platform is not an illegal gambling service.

I think that it’s pretty easy to argue that consistently winning money on a prediction market is a matter of skill. Just like consistently earning money on the stock market.

Of course, both can be used for gambling.

So if prediction markets are not allowed, why are day trading or stock futures allowed? A casual read of a few relevant subreddits will show that there are a lot of people “straight up gambling” with financial markets.

It’s a real shame that prediction markets aren’t allowed to operate in the US. Markets (of any sort) are incredibly useful.

Disallowing them because you can use them for gambling is throwing the baby out with the bath water.

[kube-system]

Prediction markets for sports is reported on a W2-G, and skilled people can consistently make gains doing sports betting.

Stocks are different because they are assets. You get something for your money.

[jkqwzsoo]

Prediction markets (i.e., cash-settled futures) for interest rates, FX rates, volatility, financial index values, etc., on the other hand, don’t require W2-Gs and are even tax advantaged.

[tialaramex]

In my country gambling is legal but regulated. And so you can, indeed, bet on political outcomes, subject to certain rules. Just go to a web site, prove you're eligible, deposit money, gamble.

Now, I don't gamble, but in December 2020 I was able to use that platform to "bet" that Donald Trump had lost the US presidential election he lost the previous month. I "won" a bunch of money. Because lunatics had decided facts aren't true, we can just make up whatever we want, and it took a few weeks for that to get knocked down and meanwhile you could just bet against these morons.

As to financial instruments: For a bunch of the instruments you are actually buying something, and these are clearly just fine. If you buy Oil futures or Pork futures that actually literally deliver oil (or pork) and you're holding them when they come due, you're getting oil (or pork). This is probably not what you wanted, but that's what those instruments do, the people who were supposed to be buying them want oil, or pork, and so they're happy, too bad for you.

I agree that some derivative instruments might just be gambling, these instruments are also too risky and poorly understood, so if you say we should ban those with gambling I don't see why not. Again, gambling is legal in my country, and so are these derivatives, but the Americans can choose different, as they have on many things.

[ramesh31]

> Now, I don't gamble, but in December 2020 I was able to use that platform to "bet" that Donald Trump had lost the US presidential election he lost the previous month. I "won" a bunch of money. Because lunatics had decided facts aren't true, we can just make up whatever we want, and it took a few weeks for that to get knocked down and meanwhile you could just bet against these morons.

Yep. Betting on politics in 2020 was as close to free money as you’ll ever see. On election night, the odds for Texas flipping blue were 70/30. Literally free money.

[jdmoreira]

> Literally free money.

I'm pretty sure that's not what "literally" means :)

[User23]

> Gambling means a game of chance/luck. Court cases over poker, regardless of which way the decision goes, hinge on whether the Court is convinced that poker is a game of skill, rather than luck.

I think it really just has to have an element of uncertainty. For example one can gamble on chess tournaments. I suppose one can broadly construe an element of "luck" if Magnus somehow botches a game, but it strikes me as something quite different from whether or not one's lottery numbers come up.

As you say, poker is the archetypical example of a skill game with an element of chance. Backgammon is another good example. I would say darts is another example that falls further on the skill end.

> So if prediction markets are not allowed, why are day trading or stock futures allowed?

As noted in another comment on this submission, it appears one can greatly increase the chances of regulators approving an activity by having former regulators on staff. Needless to say traditional finance companies enthusiastically hire those people.