There's a saying in poker that if you sit down at the table and can't immediately find the donkey(1), you are the donkey. At some point, anyone playing around in a prediction without insider info will be the donkey.
The value of that to the public is pretty minimal though, seeing as that private information becomes public 1-4 hours before it would've been publicized in the more traditional way. And the signal itself is extremely noisy.
We get it but what good is it if the insiders come and bet mere hours before the event happens? So we could have known a few hours early? I feel like this is just people trying to justify gambling. In the UK bookies have been doing this forever, it's nothing new. It's just gambling.
The way it's working though is that they don't provide much information, because there's very little time between their public bet and the outcome they bet on.
Now look at Polymarket's advertising. It is 100% presented as a gambling platform, not an information discovery system. There is nothing saying "don't play if you don't have insider information." I do not think that we can reasonably fall back on this defense of these platforms anymore.
I also don't much societal value in these platform's ability to suggest political events a few hours before they happen.
And this wasn't even really the original theoretical claim for these markets. The goal was to financially incentivize research and deep investigation, not to financially incentivize people who have access to hidden information by default. If somebody developed a system for predicting cease fires and used that to win in these markets then we've created a new thing for society. If somebody is just in the room when a cease fire is decided we haven't progressed society at all. All we've done is create a new way for people with power to extract personal wealth.
Yes, I suppose. Remember people are parts of various nations. Your "national security threat" might be a "national security opportunity" for someone else ;)
Leaking classified information is a crime, and I don't see why foreign adversaries can't monitor Polymarket to get advanced warning of military actions. A less corrupt US government would ban betting on matters involving national security.
Also I doubt any adversary worth their salt needs to monitor Polymarket.
I remember reading once that when the US was working on the SR-71 Blackbird out in the desert the Soviets could read its cross section by using satellites to pick up the thermal signature its presence on the ground left behind. State level actors aren't doing pedestrian stuff like watching pizza deliveries to guess what the Pentagon is up to.
No, its main function is to extract as much money as possible from those who bet without that private information and without ability to influence bets. They do not actually make the information public.
How does making a wager cause insider info to be public? All it means is an anonymous account placed money on the outcome, how does it make public anything that an insider knows? It doesn’t.
It incentives them to keep the info secret in order to profit or a wager on a related outcome. The insider info remains secret, all people know is some bloke stood up a new account and placed a big bet.
And for these short timespan bets, it seems utterly useless. If the wagers were only allowed on things two weeks out, and not allow bets on short term events then maybe it could show more info.
The price movement is the indicator that there is insider information.
Of course there are lots of problems with this theory - in large markets a single trader has to make large bets to move the market, and with the current leadership the price moves large amounts unpredictably as well based on the latest statements.
But the mechanism itself makes sense.
It's unclear if that's a good thing. Of course some people know secret information before hand. Is disclosing that always good?
Another problem is, people may actually want to bet on random outcomes, because of money laundering or simply because this is how gambling essentially works. That huge account could be an insider or a billionaire with a few hundreds k to burn. Or maybe they want to orient people’s opinions towards a certain outcome.
Claiming that price movement in a prediction market reveals some amount of truth implicitly assumes that:
- people bet on something they believe to be true, and not to sway other people’s opinions or simply to burn money,
- people bet on something they believe to be true because they have specific private information (e.g. I bet on the Red Sox not because I think they’re good but because I know things other don’t about their opponents, their physical conditions and so on).
- their belief is actually correct (eg if I’m in the CIA and I know that the Soviets are about to launch a nuclear missile I can bet on it… but I don’t know that an officer down the line will refuse to do that).
Even if this was true, there is an issue of timing and consequences. Example: imagine it’s 2011 and some CIA or DoD officer makes huge, sudden bets on the fact that Bin Laden will be caught. Some AQ people get wind of this and move Bin Laden somewhere else. Congrats, your price movement signaled non public information to the market!
Another issue is that these bets tend to rely on public sources, news reports and so on. A journalist in Israel was threatened to change his news reports so that certain people didn’t have to lose on a prediction market. This could become more and more common, and with the advent of AI generated pictures who are you going to believe? Are you losing money because you bet on the wrong outcome or simply because someone with enough resources ensured that your outcome was never going to be reported?
> Congrats, your price movement signaled non public information to the market!
so from bin laden's perspective, this would've been a good outcome isnt it?
Can't say what a good outcome is without saying who.
What if enemies of the USA had corrupt generals who also make bets on anti-US actions to profit personally, and inadvertently reveal information to the CIA/NSA, who then prevent such anti-US actions? Would that not have been a good outcome as well?
Information is information - and one cannot say if it's good or not. However, i am a believer that more information generally do good than bad - assuming the consumer of said information is smart.
> Are you losing money because you bet on the wrong outcome ...
It doesnt matter, because you chose to bet. You do not need to bet in order to make use of the information being revealed by those who are betting.
>so from bin laden's perspective, this would've been a good outcome isnt it?
Of course
> Information is information - and one cannot say if it's good or not. However, i am a believer that more information generally do good than bad - assuming the consumer of said information is smart
Smart doesn’t always equal good.
The consumer can be smart and use the information to benefit themselves (and possibly harming others), but this doesn’t necessarily justify releasing information. In fact, even Snowden, who famously released a lot of information, didn’t release everything. He applied his judgment and avoided publishing some stuff. Was his judgment correct? I don’t know. The question is - at some point, is information release always neutral?
> Are you losing money because you bet on the wrong outcome ...
It doesnt matter, because you chose to bet. You do not need to bet in order to make use of the information being revealed by those who are betting.
What I’m saying is, if I bet on event X and X happens, I would expect to be paid. Instead I may not get paid simply because someone else who bet against X has the power to suppress any proof of X happening (via threats, money,…). This doesn’t happen with regular sport bets because sport events inherently have a lot of witnesses (physically present at the place where things are happening), there are referees, the teams themselves advertise the results, there is a professional league keeping scores and so on. If you bet on someone getting killed abroad by some military abroad, or military skirmish happening in a remote place, or other plausible but hard to verify event, faking something with AI or a friendly reporter is easier. And because people use cryptocurrencies in this platform, how can you prove active manipulation vs bona fide in some video some reporter published? “Hey, I just saw this video, who knew it was wrong?”.
The argument that you can lose money simply because it’s a bet, even when you should have won, is not convincing. Ok, I can lose but if I win shouldn’t I get the money?
But that’s not the claim people bandy about on the gambling markets.
They claim it incentives sharing of info, but what you’re saying is it’s only sharing meta info. That the info remains secret and the wagers reveal that it’s possible insider info exists - not what the info is.
Honestly, this has all the same smell as NFT justifications. I’d be suprised if the main touts of prediction markets weren’t previously touting NFTs and “smart” contracts. Actually, it even seems like the markets are inspired by those.
I'm so tired of hearing this explanation. It completely ignores reality. As everyone has said, what's the point? You get information 2 minutes ahead of time? But how do you know that guy actually has the real info? Because he put a lot of money on it? Okay, then how am I supposed to make use of that information.
I'm so tired of people parroting this line as if it somehow explains everything. These new Prediction Markets are nothing but a new way of gambling. period.
> These new Prediction Markets are nothing but a new way of gambling.
There are two kinds of participants, those with inside information and liquidity providers. The liquidity providers incentivize the insiders to share the information.
Yes sure there are gamblers, but here they're doing something useful – providing liquidity. If they just went to the casino, the money would be lost without any useful output.