[firloop]

> 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...

[worldsayshi]

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.

[vovavili]

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.

[worldsayshi]

It also creates a lot incentives for creating unpredictable chaos as an insider.

[vovavili]

I explicitly accounted for this incentive with my first three words.

[ses1984]

What constraints and how do you enforce them?

[worldsayshi]

I'm curious what positive externalities you're thinking about? Being able to make plans for the future?

[sneed-oil]

A male in a country that is about to enter a war could decide to leave to avoid conscription, depending on the odds

[vovavili]

Again, as I said, "aggregating public and private information through market mechanisms".

[guzfip]

Ah yes, vague non-solutions.

They will be uttered in response to criticism and then quietly ignored until the inevitable. Rinse and repeat. A true mark of a grifter.

[syngrog66]

> With proper constraints,

load bearing phrase there

nothing about the US currently can be characterized as having proper constraints

generic "bet on anything" betting markets massively encourage corruption and market manipulation via shock events and insider trading. false flag attacks, etc

[DeathArrow]

>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.

[ses1984]

Why does knowing the odds make it not gambling?

The odds are known in a game of roulette, is that not gambling?

You can calculate the odds in games like blackjack to attempt to gain an edge, is that not gambling?

[mlazos]

Randomness does not imply the uniform distribution

[account42]

There are much bigger negative externalities: see e.g. all the enshittification driven by number must go in the global gambling system.

[bcjdjsndon]

v. edgelordy

[well_ackshually]

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.

[cherryteastain]

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).

[doctaj]

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.

[setsewerd]

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.

[Miraste]

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.

[vovavili]

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.

[HelloMcFly]

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.

[lux-lux-lux]

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

[Miraste]

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.

[vovavili]

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.

[FatherOfCurses]

And online sports books have the same reputational incentives, but don't seem to be suffering any damage.

[tguedes]

Do these platforms care since the insider traders aren’t taking money from the house?

[epolanski]

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.

[bit-anarchist]

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.

[singleshot_]

Gambling -> bad gamblers lose -> bankruptcy -> creditors eat losses

Technically, a lot of gamblers are gambling someone else’s money, they just havens lost enough yet for it to matter.

If you want to bring back debtors prison I guess I’d be fine with legalized gambling. If I’m stuck holding the coupon, I’ll pass.

[bit-anarchist]

I feel like we are skipping a lot implicit things that shouldn't be left implicit. How are you paying for the bad gamblers' losses? Are you deliberately lending to gamblers without due check? Probably not, that would be very imprudent.

If you aren't the creditor, then I suggest that you make it explicit how you are losing wealth with this. Good chance the issue might be somewhere along the way.

[Terr_]

> bettors are waging using their own property [...] To prohitbit such a thing is to violate their property rights

This is technically true but doesn't deserve top-billing. Any fraudster or embezzler (or mugger or drunk-driver) will incidentally be risking some of their own property while exercising their right to control it.

> informed decisions about an event by proof-of-stake

A large chunk of the problem here occurs when people (politicians, judges, police, CEOs, etc.) are wagering assets and outcomes that aren't actually theirs, but things they control in (violated) trust. In other words, the personal "stake" of their overt bet is actually far too small.

> The latter is functionally the same as policemen/judges/prosecutors/prisons having an incentive to create more criminals. [...] we increase punishments

So... repercussions like "is is a crime for those people to possess a private account on the anonymous bribery website"?

[bit-anarchist]

In regards to first point, I might not have made it clear, but betting, on its own, does not harm others, contrary to mugging or hitting a car. Property rights come with the associated duty of respecting others' properties afterall. Failure to do will result in the duty to repair and pay to restore the "correct" state to best of their abilities.

Onto the second, I don't think the people you mentioned actually wager stuff that they don't own. To be more precise, the problem is that they use criminal means to "rig" the bet in their favor. That, at least, seems to be what OP is talking about with incentives.

Finally, regarding the last, I agree that roles that require trust should have more norms and rules to enforce that trust. In case of strictly private roles, I personally believe they should be done via contracts and cultural pressures. For governmental roles, they should be enforce by laws (such as the one you suggested). Since this is a top-level, abstract, description, we can get into more about more specific cases (such as CEOs).

[epolanski]

No, they would be wrong.

Have them have a prediction market on whether their house will be arsoned tomorrow or they will be hit by a car and instantly they will recognize the danger of the incentives and the bs of "information hedging based on price discovery".

Cause way worse events allow betting and profiting.

Give me a break, we're at the complete decadence of society and its intellect. Nobody can recognize right or wrong anymore let alone understand why insider trading, betting, etc, has been outlawed and prosecuted forever.

We live in the vilest era I remember since I was born, this is beyond disgusting.

[bit-anarchist]

I suggest that you think rationally about what you just said. Why wound anyone open a bet on "rando's house will be set on fire"? Why would they bet on "yes"? You can't present a generic case such as that without going into details about motivations and actual incentives.

Those way worse events also have a lot of extra political motivations behind it. If someone starts a war with the sole intention of winning a bet, there might worser problems than prediction markets.

The third paragraph might as well have been written by a consertive nutcase. Surely, if only you can recognize rights and wrongs, then you can objectively and undeniably prove them to this forum. On its own, it isn't much more than a appeal to tradition.

[Terr_]

> I suggest that you think rationally about what you just said. Why wound anyone

That doesn't read like a good-faith response. Parent-poster brought up an archetypal scenario asserting that certain people are ignoring malice/harms because they are not personally affected, exhibiting a latent logical contradiction or double-standard.

Instead of addressing the actual point (the existence/seriousness of the harm category) you've begun nitpicking that there aren't enough irrelevant operational details about the hypothetical arsonist and hypothetical attack.

_______

"They are correct that rain is natural and normal, this isn't a big deal."

"If it was your house being flooded by neighbors' failure to control runoff flooding created by impermeable construction, you wouldn't say that, you would recognize the harm!"

"Pish tosh! I suggest you think rationally about the fact that my house is on a hill! For what possible reason would I put myself in such a situation?"

[singleshot_]

> Why wound anyone open a bet on "rando's house will be set on fire"? Why would they bet on "yes"?

Bettor is an impoverished arsonist with no morals and confidence in his anonymity.

Better question: why would a person ask a question with such a breathtakingly obvious answer?

[epolanski]

Ay, didn't see your nickname, and your other posts.

Thanks for confirming what I said.

> 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.

Also, I ain't conservative, prediction markets, in their actual scope provide no benefits and plenty of wrong incentives.

The rest of your post makes no sense.

Plenty of world events have been impacted by people with misaligned interests, including by spies and double agents. Hell, wars in recent years have been started as distractions from internal political affairs.

And you want to argue to me that there's no people in position of power that may want to influence events they can bet on?

There's a reason why we prevent people in sport from betting: it's a matter of incentives. Give people incentives they will bend everything.

The fact that you can bet on a country attacking another is a tragedy.

[Spacecosmonaut]

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.

[doginasuit]

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.

[kqr]

Nobody says this on assumption. It's well-evidenced.

https://polymarket.com/accuracy

https://www.metaculus.com/questions/track-record/

[_DeadFred_]

Please show the dollar/realized benefit to society VS (in response to OPs statement) the results don't "justify the cost, corruption and a loss of trust in institutions" along with a breakdown of the cost/negatives to society that result from those factors.

This isn't big oil (yet) you can't just externalize all the downside and say the product is a net benefit.

[Terr_]

Pish tosh, my dear sir, it's simply common-sense that there are oodles of people out there with secrets that would be completely ethical to distribute and would undeniably better all humankind, but they're sitting on them purely because they haven't figured out how to make a profit from it. /s

In other words, the overlap between these is too small to justify the idea that prediction markets are a net-benefit by default:

1. Is valuable

2. Not already known

3. No current reward mechanism exists (e.g. patents)

4. Not criminal or unethical to disclose

[doginasuit]

Well-evidenced by marketing from those same betting markets, got it.

[kqr]

I'd be interested in learning in what ways it is factually incorrect.

[automatic6131]

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.

[Breza]

How dare you impugn the mystical powers of the wisdom of the crowd. Why would anybody fix outcomes?

Wait a minute, you can bet on pro wrestling? OK I'm out of ideas.

https://www.betus.com.pa/sportsbook/entertainment/wwe/

[jappgar]

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.

[super256]

Game theory can be applied to these problem, and if you can correctly model reward, cost and motives, you can predict decisions of politicians more often than not.

[meta_gunslinger]

> you can predict decisions of politicians more often than not

What makes you believe this? The performance of economist/sociology experts using game theory to make predictions has been worse than a coin-flip up to this point. It also has done enormous damage.

[taeric]

Even granting the idea that game theory can be applied successfully here; that does not really help with one-off events. Consider, knowing the odds of a coin flip does not grant you any real help in knowing what the next coin flip will be.

This is also ignoring that game theory of partisan games breaks if any of the participants knows what the other will do. Is one of the more famous ideas.

To that end, if you want to predict what someone will do, more often than not you are best looking at their experience doing said thing.

[Breza]

I don't think Nash envisioned politicians and their aides being able to profit from making decisions. Do you launch an attack on Eastasia? Well the market right now says there's a 40% chance, so I guess it's a good idea to grab your crypto keys and make some bets before you call the Joint Chiefs.

[nsvd2]

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.

[amfarrell617]

That… that actually seems like something which society should want to predict with more precision so that we can hire someone with a net on a stick.

[dgabriel]

It's also a real world event that can be influenced by the existence of the bet.

[TFYS]

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.

[jkubicek]

Or if decision makers start using the gambling markets to drive their decisions, the value of these things will go extremely negative.

The headline bet in Polymarket right now is on when US troops will invade Iran. If some unscrupulous official can pull some strings to get boots in the ground in the next few days, they stand to win a significant amount of money.

[michaelbuckbee]

Genuinely asking: has there been a case of the prediction markets being "right" or valuable about something outside of the norm?

[malfist]

That's why the metaverse happened. Lots of money bet on it's success

[Spooky23]

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.

[jon-wood]

Wisdom such as the mass purchase of GameStop shares, temporarily inflating the value of an ultimately doomed company?

[kjkjadksj]

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.

[spacebanana7]

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.

[kiliantics]

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.

[spacebanana7]

Extreme events are always poorly priced in markets. For example, there's no point in making a trade for the S&P 500 falling by 90% because if it does we'll be in such a catastrophe that money doesn't matter any more.

Insurance / hedging is most useful in protecting you from realistic well defined risks that affect you personally but not the wider system.

[DeathArrow]

>Insurance / hedging is most useful in protecting you from realistic well defined risks that affect you personally but not the wider system.

But a powerful earthquake can't affect the wider system in a country? and yet, people do buy insurances for earthquakes.

[spacebanana7]

Perhaps I should’ve said financial system plus some system that allows you to spend money on things you’d like.

[appletrotter]

Very astute observation. Might I even add, as humans we never know when our last day could be. So I find it silly to gamble, since I could easily die in a car accident on my way to pick up my winnings.

[roxolotl]

Thank you for this call out. I was blown away by that number because it would have meant volume was maybe pushing 1T.

[shimman]

It's DT, don't expect honesty from his posts (unless he is bashing unions or workers, he's very honest about that).

[xeyownt]

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.

[firloop]

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.

[xeyownt]

It's market size. It shows the interest in some activity. Laundry and airfare are for sure necessary & valuable activities, whereas the interest of betting (for a society) is questionable.

The question is what do you do with your money. If you are a pharaon, and pay a good salary to build pyramids, is that good? People get paid, pharaon gets his pyramid. However, as a society, the loss is all the efforts that could have been spent on something much more useful, like hospitals, schools, roads... For the betting industry, no money is lost, it goes to the winner or the house. But how will these people use their money next?

[pbreit]

Same as Block booking crypto trades as revenue.

[firloop]

Are the referenced companies referring to their volume as revenue?