Prediction Markets: Last Week Tonight with John Oliver (HBO)

The social costs of gambling, particularly compulsive gambling, cannot be so easily dismissed. I would encourage you to visit your local Gamblers’ Anonymous group or seek out addicts’ stories of loss and despair to get a fuller picture of it. As for expected losses, yes, there is a legitimate trade in securities in which some will earn money from their investments and some will lose money from them. Securities like stocks, bonds, derivatives, commodities, and so forth have real things of value underneath them, like business income and stuff made from the commodities. (And it’s not a minority who earn long-term gains from these; there are entire pension schemes covering millions of people that are funded from them from 401(k)s to TIAA.) Predictions, on the other hand, are valued solely based on human estimations. That’s not in itself a problem, but the issue is that predictions markets, unlike securities markets, are not regulated. Compare the fact that insider trading of securities is illegal and punished with fines and imprisonment, while in a predictions market, insider trading is incentivized and occurs with unsurprising frequency (e.g. big wins by a privileged few who bet on the timing of military actions). Market manipulation is the problem, not that some will make the wrong bets. The rules and conditions of the game must be fair, even if the outcome of the game isn’t. And I haven’t even begun to mention the issue of the things you can bet on in prediction markets that a