Author Topic: Should for profit prediction markets be made legal?  (Read 137 times)

roobee

  • Posts: 149
Should for profit prediction markets be made legal?
« on: April 18, 2019, 01:57:41 PM »
Prediction markets are where you bet on the outcomes of events. In many countries, you can only bet play money instead of real money on these. Prediction markets could be said to provide a service to the public of predicting events, differentiating it from normal gambling.

As a comparison, imagine trading non-dividend stocks after the initial IPO. So imagine the buyer and seller are not part of the company of the stock. To my understanding, the main service this trading provides to the public is a prediction of how valuable the company is.

There are differences between the two. For stock trading, it also helps motivate the people who buy the initial IPO. And there may be bad effects from people manipulating prediction market to make profit. Though that might be mitigated by limiting the questions prediction markets are allowed to post. And arguably this already happens in stocks where people make companies fail even if it would be better for the company if the company fared well.

So if trading non-dividend stocks is legal should for profit prediction markets similarly be legal? Or are there important differences between the two that justifies their different treatment? And if so, what are they?

mansa

  • Posts: 9680
Re: Should for profit prediction markets be made legal?
« Reply #1 on: April 18, 2019, 02:16:00 PM »
Isn't that just an excuse for insider trading?
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Marauder Moe

  • Posts: 12956
Re: Should for profit prediction markets be made legal?
« Reply #2 on: April 18, 2019, 02:29:29 PM »
I'm not a fan.

Society is already cracking under the weight of financial feedback loops. 

It's hard enough to regulate insider trading on the stock market.  Policing people who deliberately alter world events to make a buck on these markets seems like it would be an order of magnitude harder, especially so given how cheap and far-reaching social media manipulation can be.