[xenadu02]

Goodhart's Law for those who don't remember: any measure used as a performance target ceases to become a good measure.

Or put another way: when people can maximize their profit by manipulating the measurement or market at least some of them will attempt to do so.

Stock markets are more difficult (but far from impossible) to control. To make Target's numbers come in low you'd have to suppress their retail sales or their supply chain. Whereas who wins X Race is a singular event that only requires one person (in the most optimistic case) to participate thereby controlling the outcome. In a sense a lot of what prediction markets make book on amounts to penny stocks and are just as risky. If you want to make such markets widely available you need regulation on what kind of events allow bets and strict rules against insider trading (eg sports participants and their families must be prohibited from participating).