For the record, Minnesota currently has a complete ban on sports betting.
We've seen a couple other states that allow sports betting go after prediction markets. Personally, I feel that any state that allows sports betting is going to struggle to argue a case to ban prediction markets because you're essentially arguing over implementation details. Even arguments that certain prediction markets are ripe for insider trading or morally wrong fall a bit flat when you realize that traditional sportsbooks let you bet on things like college basketball player props and the little league world series.
I'm still not sure Minnesota will win their case, but it feels like that detail gives them a lot better chance of winning compared to many other states.
I think you could make a case in separating the two, of course opening further discussion, but because sports betting takes place in a comparatively very controlled environment I think the risk profile is pretty different versus, idk, betting that the temperate will be at or above a certain point and then someone sticks a hair dryer on the thermostat[1]. Cheating can happen in sports of course, but the risk profile and real-world impact I think is quite a bit different. Worth discussing, but I think that's an important distinction.
Separately, I believe over time that prediction markets will become the source of real world truth. Why? Because money is at stake and so validity and verification matter. It'll be interesting to see how, if this comes to fruition, how laws in states like Minnesota affect news reporting and journalism. It seems likely to me that at a certain point prediction markets will buy traditional media and news outlets to hire out the fact-finding and reporting teams to ensure ground truth, and of course to use journalism as the gateway to the market. So you read an article "China disappears random person" and then at the end you click a button and bet whether that person is alive or dead or whatever.
> I think you could make a case in separating the two, of course opening further discussion, but because sports betting takes place in a comparatively very controlled environment I think the risk profile is pretty different versus, idk, betting that the temperate will be at or above a certain point and then someone sticks a hair dryer on the thermostat[1]. Cheating can happen in sports of course, but the risk profile and real-world impact I think is quite a bit different. Worth discussing, but I think that's an important distinction.
That's kind of the point I was getting that. That's not really an argument about prediction markets, it's about what things should we be allowed to bet on.
I'm looking at FanDuel right now and I can bet on 1v1 eSports games of FIFA. The bets aren't even just who will win, but it's things like how many goals will a team score or who will score first. During the last Superbowl books were offering bets on things like what color tie the announcers would wear. I get that there's maybe a slight difference between that and betting on what words a sports announcer will say during the broadcast, but IMO, you're splitting hairs. They're both very easily to manipulate and very open to insider trading.
I think you probably agree with this, but IMO, there needs to be two separate conversations. One, are prediction markets sportsbooks by another name? Two, are there certain markets that we should not allow betting on?
Personally, I think the answer to both of those is yes, but I think if you smush them together into one conversation it makes things really messy.
> So you read an article "China disappears random person" and then at the end you click a button and bet whether that person is alive or dead or whatever.
So think really hard about what the problem with this whole concept might be...
The environments of various bets have varying degrees of "control" from insider trading. I wouldn't say that sports is more controlled than most other environments. Point shaving scandals are certainly as old as college sports.
The real question is what the purpose of prediction markets are. For sports, there isn't really much of a purpose to the markets except entertainment for the bettors, and harvesting cash for the bookies. There are also various advantage bettors (who may be involved in corruption or not), who attempt to harvest cash from some combination of the bookies and the bettors. Generally IMO these are bad due to simple human frailty though. We figured out a long time ago that for the most part, making gambling available to the general public was a net negative to society, because it mostly transfers money from addicts to big corporations, destroying lives.
For major world events, one purpose of prediction markets is just to generate a price. It's potentially useful for people to know that, in an adversarial market, what the aggregate probability of an event is. It can also be useful theoretically to hedge risks. Whether it's practical to do that depends on the depth of the market though, and with the current markets, it's not. Even more traditional "prediction" markets like commodity futures aren't deep enough to usefully hedge most risks. For example, you might think that major oil companies might hedge future pricing risks, e.g. they want to drill an oil field with a high production cost, but they're worried that the price might go down before they finish production on the wells. Generally though, the markets aren't deep enough for them to be able to do this, so they just won't drill fields that have a production cost more than roughly the lowest price in the past 20-30 years, depending on the age of the executives in charge of the decision.
There's this other purpose of prediction markets though, which is money/information laundering. People may have secret information where their employer has a strong interest in it remaining private, however the person with the information isn't that well compensated, so they monetize the information on prediction markets. On the darker side, you can have wildly illegal markets like "assassination futures" where people bet on when someone will die, and you can bet on a particular outcome, and then make it come true. There are lots of markets somewhere in the middle where someone can take an action in the context of them being a trusted agent of an organization, but instead of following their duty as an agent, they do what is profitable based on their bets in the prediction market.
Overall, IMO there are some good uses for prediction markets that allow people to hedge risk on both sides and enable useful economic activity, but most of the uses I've seen in practice are a net negative.
I think the argument for hedging is further weakened by how large actors have other (better?) ways to hedge, such as with futures contracts or insurance policies.
Those may have the added benefit of protecting you from price changes. If I need widgets and I'm worried a geopolitical event will disrupt supply, the money from a "won" bet might be minimal compared to the new costs as everyone raises the price of widgets.
> So you read an article "China disappears random person" and then at the end you click a button and bet whether that person is alive or dead or whatever.
Congratulations, you just created a murder market.
Create “Is person X dead?”, and put a large limit order buying No.
Anyone with means can capitalise on it by fulfilling the physical obligation of the market and buying up the limit order.
Don’t create the murder market.
---
It would be a stupid thing to do given the trail, bit it gives the person ordering it sort of plausible deniability.
I have a website I run that is focused on sportsbetting so while I know high level what is legal where, I'm not actually in Minnesota, so I don't know every single detail especially when it comes to what's allowed in person.
My guess would be that either A) that's tribal land and there's an exemption for that in the current laws or B) they have a casino, but don't offer sports betting or C) they only allow sports betting on the property by either requiring all bets to be placed in person or the app they offer is for sportsbetting is geo-fenced to their property (which is how states like WA do it)
Long story short it is a compromise between the Mdewakanton Sioux, the state, and Canterbury to keep gambling exclusive to Mystic Lake Casino and Caterbury. The State flirted with the idea of expanding gambling and started moving in that direction, but Mystic basically now props up Canterbury, lets them have some amount of gambling on site, and the State did not expand gambling and generally is protective of Mystic. It's like a pressure release valve on gambling with some small kickbacks to the nearby legacy horse racing track. It's a strange local arrangement. Grew up in Prior Lake and had a few tribe members in school so this is just my bias on the arrangement.
I mean, that's exactly why a state has the right to regulate this, historically it has been an extremely regulated activity. You can personally feel however you want, but the fact that a state does allow sports betting does not diminish this even slightly.
This has been banned for generations. It's called gambling.
Of course, we all have to sit through another round of Silicon Valley pretending they've discovered some new exciting business model that's just vice.
Unlicensed gypsy cabs, SROs, shift work, patent medicines, narcotics dealing, customs fraud, and smuggling already had established market entrants I guess.
But I thought the Supreme Court said online sports betting was interstate commerce and out of the domain of state legislation. Or did I get that completely wrong?
No, the SC said the federal government can't outright ban sports betting. The logic was that a ban interferes with states right to legalize sports betting.
(To be clear, it is still an nonsensical decision though. Congress does still have the power to regular gambling under the interstate commerce clause, just not outright ban it)
I think it is a inconsistent position that the federal government can regulate gambling but not ban it.
The Controlled Substances Act also rests on the interstate commerce clause. Can you imagine if the federal government was allowed to regulate heroin sales but not ban it?
My question wasn't so much about the contradiction between regulating & banning authority, but questioning the authority to do either in the first place. I.e. I don't understand why gambling must necessarily be considered to be inter-state. But I now think this is unrelated to the point you were trying to make.
I agree that the broad reading of the interstate commerce clause seems dubious, but the same precedent [1] underlies the controlled substance act, clean water act, violence against women act, endangered species act and a whole lot of other laws. Unless you are willing to hack away a large chunk of US law, you can't really undo that one.
[1] Wickard v. Filburn ruled that growing wheat FOR USE ON YOUR OWN FARM can be regulated as interstate commerce because otherwise that demand would tend to raise prices on a interstate grain market.
You have it backwards. Murphy v NCAA ruled that the federal legislation banning sports betting was unconstitutional, and that it was up to the states to regulate gambling.
I think sports betting is a lot less harmful than prediction markets. With sports betting if someone throws a game to get a pay day, for instance, the only real consequence is on the reputation of the sport. In prediction markets, people can do all sorts of awful things to make money as insiders..
Most available data suggests that sports betting is much worse for the people making the bets, as it better targets people with poor impulse control. Bad bets in political markets aren't causing measurable increases in bankruptcy and domestic violence rates (https://thezvi.substack.com/p/the-online-sports-gambling-exp...).
Sports gambling a few advantages over any other subject that seem near insurmountable to me:
- it has the semi-respectable veneer of something that normal people have done throughout human history
- it has completely parasitized existing sports media to target new users in ways that aren't available for other topics
- some variant of 'sports' is happening 24/7/365 with enough prop bet granularity to capture the full attention and disposable income of addicts. There's an ongoing controversy with a star college football quarterback who was going to MLB games to place bets on every single individual pitch.
You can basically think of gambling addicts as a finite resource that these different companies are competing for. Many people get addicted to lootbox/gacha games at an early age, and even larger portion are already deep in sports gambling. The target demo for non-sports prediction markets roughly matches to people in earlier times who got into commodities futures or optimal strategies for casino games (which clearly existed but never at a scale to rival what we see with sports betting right now).
I don't think that article supports your claim that bad bets in political markets aren't causing measurable increases in bankruptcy and domestic violence rates. It only tells us about online sportsbetting, and it was written in 2024 before prediction markets really took off. If anything, it provides evidence weakly in favor of the argument that bad bets in political markets would negatively affect the bettors.
I live in IL, and digital slots have taken over so many spaces. Online sports betting is bad enough, but more than that is going on.
Not just bars, but restaurants. Places you might take a date for nice Italian food have little corners with digital slots. Gas stations, Taco joints, sometimes an entire business in a strip mall dedicated to digital slots.
It's insane. The only place like it I'd seen prior to a some years back was Nevada. Businesses must be making crazy money off of them to be so prolific in putting them in, and that money comes from somewhere (i.e. not likely to be casual players).
I passed through some of the cities around Chicago and was shocked by seeing the random slot machines everywhere. It brought to mind the hospital scene in idiocracy https://www.youtube.com/watch?v=wymc2SGJkk0
That said, I actually played one at a restaurant while waiting for a carry out order and it ended up killing some time and paying for our meal that day. The impending downfall of society paid off for me that afternoon.
First, over 90% of the wagers on Polymarket and Kalshi are already on sports (quoting John Oliver's Last Week Tonight on that one). Despite the headlines, Kalshi and Polymarket are mainly just sportsbooks.
Second, while yes, some of the markets available on prediction markets can push people to do awful things, there are plenty that are harmless. I'm cherry picking to make an extreme point, but I would so much rather have someone betting on what the temperature in Los Angeles is going to be tomorrow on Kalshi than betting on who will win the little league world series on DraftKings.
I support regulation saying certain things should not be allowed to be bet on, but allowing bets on morally questionable things isn't a quality unique to prediction markets.
Technically they are betting exchanges. But they also probably have contracts with some of the big sportsbooks to provide liquidity too making them also kinda a sportsbook. I used to work at a betting exchange and we did have liquidity partners that made sure to increase the liquidity on our exchange.
>Kalshi and Polymarket are mainly just sportsbooks.
How? They sell contracts between two users. One side each. Completely different from a sportsbook where users are betting that the lines they set are not correct.
90% of the betting volume on Kalshi is betting on sports. I know how prediction markets work and how they're different that traditional sportsbooks, but they ultimately allow customers to do the same things.
If you are saying Kalshi isn't a sportsbook because the house isn't on the other side of the bet, you might as well argue that DraftKings isn't a sportsbook because they don't actually track your wagers in a book.
If they sell contracts on market prediction, then any person doing for example insider trading on corporations, fixing outcomes of sport events, directly paying out others to force event outcome, blackmailing people, or just directly adjusting some result like the CDG weather guy are completely in line with the platform rules and all that is perfectly legal. But since Poly and Kalshi themselves admit that those things are "unfair" and forbidden they have themselves removed their "just a contract" status and transitioned to a gambling status, where indeed fixing matches is bad.
Yeah, prediction markets are like if you could bet on arbitrary decisions a coach or manager might make. Like starting lineup or different trades of players between teams or the size of a players contract in dollars, rather than events that happen during gameplay. There are people who know the facts already but the public does not.
There's a pretty decent counter-argument though: Prediction markets are just a market for users to counterparty each-other. Which means, technically, for every trade there is a winner and a loser, and both the winner and the loser are generally just normal people (or market makers). Polymarket/Kalshi just take X% on the top as a fee. Versus, with sports betting, the counterparty is the casino. Its the difference of trying to outsmart a massive casino, versus a more peer-to-peer system; the potential for ROI is (probably) higher in prediction markets.
I am still very, very anti prediction market, to be clear. But that is one reason why I would agree with a soft statement like "prediction markets are less harmful than sports betting" (in much the same way that a handgun is less harmful than a fully automatic rifle).
The counterparty in prediction markets are whales though, and those are the few players making money off it. The ROI is also less negative in casinos and sports betting than prediction markets.
Arguing over implementation details is a pretty common thing for laws to do. Maybe it would weaken the logical consistency of their laws, but that's not really a thing that matters.
Why do states allow hunting some animals and not others? Why do states distinguish between different forms of income to tax? It's all implementation details.
I don't see why it even would weaken the logical consistency. Just because a state allows gambling does not mean they need to allow anyone to open a casino or betting site. You still need to apply for a licence and follow local regulations. If the prediction markets make sure to follow the regulations they should obviously be granted a licence to operate.
I wasn't saying we shouldn't debate the implementation details. I just think they should be separate arguments.
It's like if someone killed my dog with 3d printed gun and so everyone started talking about banning or regulating 3d printers. It's like, yes, debating 3d printer regulation is probably a worthwhile debate to have, but regardless of where we end up on that it doesn't change the fact that that person killed my dog.
We should be having a debate as to whether there are certain things that are off limits to bet on, but regardless of where that debate goes, if a state has banned sports betting, it should be banned regardless of the platform.
> any state that allows sports betting is going to struggle to argue a case to ban prediction markets because you're essentially arguing over implementation details
I think their point was that your "going to struggle to argue a case" belief does not logically follow from a need to argue "over implementation details"
This is both one of my pet peeves and a thing that legislators seem to love: Somebody does a thing that is already illegal, but in a slightly novel way. Perfectly valid statute exists to prosecute, but legislators want to be seen as doing something, so they pass another law to make the already criminal action more specifically criminal.
Arguably bans on cellphone use while driving are a good example. It's not that it isn't bad, it's that distracted driving already carries a hefty fine without being specific as to the mode of distraction. So does causing an accident, which presumably is the harm we're actually trying to avoid.
Making laws more explicit in important cases is valuable because it reduces uncertainty about legal interpretation. Using your example of cellphone use, under distracted driving laws the prosecution would have to prove that the specific case of cellphone use was distracting enough to be a safety hazard. With the more specific ban on cellphones, that is no longer an obstacle.
The CFTC uses the following argument in their press release: [1]
> This Minnesota law turns lawful operators and participants in prediction markets into felons overnight,” said CFTC Chairman Michael S. Selig. “Minnesota farmers have relied on critical hedging products on weather and crop-related events for decades to mitigate their risks. Governor Walz chose to put special interests first and American farmers and innovators last.
Its an interesting angle; how do you draw the line between "a prediction market about what the temperature will be" and a futures contract that's used as a legitimate hedge? Minnesota's law is EXTREMELY broad in its definition: [2]
(e) "Prediction market" means a system that allows consumers to place a wager on the future outcome of a specified event that is not determined or affected by the performance of the parties to the contract, including but not limited to: (1) an athletic event or game of skill, or portions thereof or individual performance statistics therein; (2) any game played with cards, dice, equipment, or any mechanical or electronic device or machine; (3) war, state or national emergencies, natural or human-made disasters, mass shootings, acts of terrorism, or public health crises, or the ancillary effects thereof; (4) any event or events happening to a natural person or group of people;(5) a federal, state, or local election, or the actions or conduct of the federal, state, or local government and the government's agencies, employees, and officers; (6) legal actions, including but not limited to a civil or criminal suit, grand jury action, jury trial, settlement, plea, or conviction; (7) the death, assassination, or attempted killing of a person or group of persons, or mass casualty events; (8) short-term weather events or conditions; (9) events in popular culture, including but not limited to awards and the date a piece of entertainment will be released; and (10) whether a person will make a particular statement.
There's a bunch of exceptions that reference prior laws, which I haven't gone through, though they'd likely have to exempt, you know, Chase Bank, because if not that definition would clearly disallow Stocks.
A better question to ask: Regulated futures markets haves existed in the US for over 100 years. Why haven't they added sports (or any other category that prediction markets cover)? The answer is simple: There is no legitimate economic need.
Right. Futures markets exist to hedge some already present risk.. airlines can buy fuel futures to protect against the risk of fuel price rises, etc. Prediction markets create a new source of risk.
> Personally, I feel that any state that allows sports betting is going to struggle to argue a case to ban prediction markets because you're essentially arguing over implementation details.
This seems to be based on the false assumption that state legislation on distinct but related topics must generally be based on a coherent, consistent rationale. This is, very much, not the case under any law that binds US states, nor is it a rule that, despite not existing in binding law, is in practice imposed as a constraint on state governments by the actions of the voters.
(Conversely, even if such a rule was imposed, in law or otherwise, any state that has rules regulating the offering of insurance contracts, including who could buy insurance against what events—which, as it turns out, every state does—would have exactly the basis they need to apply the same kinds of rules to prediction markets.)
I don't particularly care for sports betting, but I'm extremely against the prediction markets that blatantly violate he Dodds Frank act, such as bets on whether America Will attack another country or if fires will swallow California.
the argument that prediction models are sports betting is not much different than the argument that stocks are sports betting. Who's to say that capitalism isn't a competitive sport? I mean consider that people have agents making trades for them. It is basically a video game at this point.
I'm not a fan of sports betting, but surely you can see how betting on a game is not the same thing as betting on a war? People generally don't die because of a sports game (although it happens rarely).
I think the case is pretty clear regardless: gambling is supposed to be a state-regulated activity, and Kalshi is gambling but is regulated by the CFTC at the federal level. So I think the argument is "we want to be the ones to regulate sports gambling in our state," whoch is independent of whether or not it's currently legal in the state.
Or maybe I'm wrong, and "we don't want sports gambling" is different legally from "we want to be the regulator of gambling." But it seems like they're just variations of the same question, which is: do states have the power to regulate this?
> The prohibition extends to services supporting prediction markets, like virtual private networks, that could allow consumers to disguise their location and get around the ban.
Yikes. I am all for banning prediction markets but I feel like this is overreaching.
Yeah that seems like a massive reach. Does banking count as a "supporting service"? After all a prediction market isn't very useful if you can't get money in/out.
If you don't actually sell someone something illegal, but take them to buy illegal things using the safety of your car so they avoid detection - are you innocent?
Drinking and driving exists and is illegal, but going to the grocery store isn't. Should we do an all or nothing sort of ban, either allowing drunk driving or banning cars altogether? No one would do this - some uses are illegal, most aren't.
A law that allows legal uses of your car but disallows illegal activity isn't all that unheard of.
This is great news. From my perspective from someone who grew up in the 90s, America feels like we took the turn towards Biff Tannen's Pleasure Paradise. A future very fa from our promise filled with gambling, social degradation, and worse economic prospects for everyone. Gambling sites like Polymarket are just a symptom. More states need to move in this direction, because its just a tax levied on the uninformed to insider cashing in
I lived there, and I am familiar with that. I would be happy if they did away with all of it, including the state-administered lottery. But this is a great start of low-hanging fruit.
While it's obviously sports betting, the fact is that federal law gives the CFTC the power to determine what is and isn't a future and expressly preempts state intervention in futures markets. And, the case as to why futures markets generally should be subject only to federal oversight is quite strong IMO. So, the case can quickly become whether or not the CFTC should consider sports betting to be a future, and judges typically defer to the executive branch when it's not obvious (and in this case I don't think it is, the bar owner in Philly hedging an Eagles loss is an entirely plausible, albeit unlikely and uncommon, situation).
While I am partial to the argument that the CFTC is actually taking away the states' 10th Amendment police power right, that is a somewhat tenuous case in comparison to the enumerated right of the federal government to provide sole jurisdiction to the executive branch to enforce a law (and not to mention a law that impacts interstate commerce).
I imagine Minnesota loses this case and what's far more likely is either a more liberal congress changes what is a future by law or a more liberal executive branch reduces the protections for Kalshi et al.
90% agree, the CFTC doesn't consider these futures contracts, it regulates them under its "contract market" authority, that Congress designated and updated periodically over time
This is the authority on the CFTC's own website on prediction markets "For more information" section
And yes, both the Supremacy clause and the Interstate commerce clause neutralize any 10th amendment claim, unless the Federal government or any of its agencies was completely mum on the activity. But since the Federal government has exerted authority over that industry, via the interstate commerce clause, states can pound sand.
Federal judges and SCOTUS have some times ruled in favor of states or in favor of the federal government with the 10th amendment being at the center of an argument
I could imagine cases where prediction markets could offer some actual insight, but in practice they seem few and far between. Most markets I've seen devolve into one or more of: betting on unimportant events (e.g. sports games), insider trading, or poorly written ambiguous resolution criteria. It's just hard for me to imagine that, on net, these markets will offer more societal good than the harm we've seen from sports betting.
I asked this elsewhere, but do you have an example of this knowledge? Have prediction markets ever revealed genuine knowledge? If so, has anyone ever acted on the newly revealed knowledge in a meaningful way?
> I could imagine cases where prediction markets could offer some actual insight
I could imagine that there's very little insight to be gained when some 23 year old has so little hope for his financial future that he's spending some of what he earned last night delivering food for uber eats on making a completely uninformed bet on a geopolitical situation involving a country he couldn't even find on a map just in case it pays out well enough that he can afford some of the needed medical care he's been putting off. That's the type of user I imagine most people participating in prediction markets are. It's telling that the vast majority of the people making bets lose their money. Are their predictions really valuable data?
ThAt's one of the interesting(?) aspects of prediction markets. Some meaningful percentage of people in the market need to be bringing some useful insight. If everyone is just making random guesses, the market isn't very useful (other than, perhaps, financially to the lucky).
What insights are being gained? Every time this topic comes up, I see someone vaguely mentioning insights from prediction markets. But no one ever has concrete examples - real or even hypothetical.
Can you give an example of insights derived from prediction markets? Who benefited from the insights, and how did they act on the insights?
It looks like the markets aren't very useful except for the small percentage of people with inside information, the exceptionally lucky, and the platforms themselves that get to take a cut of the action and/or collect personal data to sell.
as the article notes, prediction markets are regulated by the CFTC as a commodities futures contract, so I'm not sure how any state law survives a federal pre-emption challenge. On the other hand, it's a little unusual to see a federal agency suing to protect its turf. Would've expected a class action by a Minnesota user of the service to bring the challenge instead.
I'm curious to see how this works out, because sports betting is _not_ in the CFTC's remit, and Kalshi etc's argument that states can't regulate them because they're not technically sports betting is contrary to the spirit of the law
And there is no house in pool betting, poker or backgammon either. We still count all of them including betting exchanges (what has now been rebranded as prediction markets) are still normally regulated as gambling.
Have you heard of Betfair? A UK company which has done "prediction markets" since 2000. In the Europe it is called a betting exchange and regulated like sports betting. And betting pools is another form of betting which is way older than that and there are no house in them either.
And by your argument poker or backgammon would not be gambling either.
> because sports betting is _not_ in the CFTC's remit
Traditionally it has not been, but the current CFTC says that 'prediction bets on sports' ARE under their purview. This has not been fully challenged in court, though.
If Congress intended for the CFTC to regulate sports betting, it would have had that language in the act that originated the agency. It's telling that only recently the CFTC has discovered such authority. No previous leadership of the CFTC read the act to mean what the current leadership thinks it means.
This should not be downvoted and is a legitimate criticism. Trump Jr. has a "special advisory role" in both Kalshi and polymarket. It would track with this administration to deploy a rapid defense of a corruption generation market where the current president's son is getting paid off by the two main competitors in the market.
The law also goes after payment providers and network providers (vpn) etc if they "knowingly" provide service to anyone who engages in prediction market betting.
The law[0] as written is a mess. You could in theory shut down the "legal" Minnesota state lottery that is otherwise carved out from the law by claiming they are providing data on outcomes via the internet if someone outside the state is betting on the outcome of the lottery in a prediction market.
I get a lot of value from prediction markets and query for them most days. Today for the Los Angeles Mayor's race and the Kentucky 4th district Representative race. In both cases I saw a big difference between the market and the vibe on my feeds. I believe that the market emits higher quality predictions.
Each market is a community with a financial incentive to think outside of the bubble.
Those markets create pressure to ensure that real physical goods and useful services are priced accurately. Prediction “markets“ are in my estimation no different than roulette.
If you cross your eyes hard enough, you could claim that roulette gambling provides economic pressure to ensure that roulette wheels are balanced evenly. But when the roulette wheel is Vanah White’s dress color, what does that mean? Charitably, it’s a fun pass time. Through a dystopian lens, prediction markets pressure all public figures to play a kind of Keynsian Beauty Contest with their own behavior. Like social cooling for the celebrity/owning class.
there is one upside, its a big incentive to indirectly leak things like album release dates and military operations. anything that helps get some secrets out is a positive in my book
No, this doesn't work. Predictions markets can only resolve to things that are publicly verifiable, so any leaked information is information that was destined to become public anyway. Furthermore, the leaker is disincentivized to leak in such a way that the act of leaking could compromise their insider knowlege; the structure of the markets means that leakers don't want you to have this information in any way that opponents could usefully invalidate.
They're just gambling. I'm not trying to argue for or against gambling here, but please stop trying to delude yourselves into thinking these gambling sites are anything other than gambling.
There's the same upside as pretty much all other forms of gambling. Plenty of people enjoy it and it can be used to generate tax revenue for the state.
Don't get me wrong, there's tons of harm that can come from it, but the arguments to allow them are essentially the same arguments for allowing sports betting.
This is true, however many of those arguments are weaker when applied to things for which the outcome is more consequential than the outcome of a sporting game.
Sure, but that's not really an argument to ban prediction markets, it's an argument to regulate what the public can or cannot bet on.
Most major online sportsbooks have taken bets on the US presidential election for well over a decade. I can't imagine anyone really arguing that it's okay for DraftKings to offer that market, but not okay for Polymarket to offer it.
I put it somewhere else in this thread, but there are actually two different questions that need to be answered separately. Are prediction markets just sportsbooks by another name and are there certain things that we should not allow people to gamble on.
The argument around prediction markets always seems to squish those two into one which I think does people who want regulation a disservice. I think to most people, the answer to first question (are prediction markets just sportsbooks by another name) is a pretty resounding yes. The second question has a lot more room for debate though. Even if people agree that there should be things we don't allow people to bet on, there's still plenty to argue over where we draw the line. The problem is that as long as we mush these two together, people will use the disagreement over the second question to prevent action from being taken on the first.
> Sure, but that's not really an argument to ban prediction markets, it's an argument to regulate what the public can or cannot bet on.
I wasn't making any argument above in either way. But the reality is that sports betting is not legal in much of the US. DraftKings is only legal in about half of US states.
Minnesota does not permit DraftKings to operate in their state. They don't permit any kind of online gambling whatsoever, and I don't think they think any differently about Polymarket... and Minnesota's regulators have answered that clearly in this case by enumerating it specifically.
And more generally speaking, laws apply to what someone is actually doing, not what they claim they are doing. If a law bans wagers on the outcome of a sporting event, it doesn't actually matter whether you call it something different. Someone can't sell crack cocaine and call it a "dietary supplement" and get away with it, because the law doesn't depend on the label the actor gave their own actions, it hinges on the definitions of the actions as defined under the law.
And as for the second question, in gambling there's always a risk of harm to the bettors themselves. I don't think most Americans have a problem with that, currently.
But, there's also risk to corrupting the subject of the bet itself. In a casino, this is easily mitigated by regulating the game, and the potential risk is only to the participants. In sports betting, this risks corrupting the games themselves. This is a slightly larger risk, and it risks corrupting sportsmanship for the athletes involved, but ultimately it is still a game.
But wagering on other events up to and including literal war literally poses a much larger human risk than simply spoiling a game.
You could take this "prediction market" laundering of words to an absurd conclusion: "A large binary option that someone will [insert any illegal action]" is just literally a payment for someone to do a crime using different words.
> Most major online sportsbooks have taken bets on the US presidential election for well over a decade. I can't imagine anyone really arguing that it's okay for DraftKings to offer that market, but not okay for Polymarket to offer it.
DraftKings is legal in about half of the US. It is not legal in Minnesota.
I totally agree with your response to my first point. I have another comment in this thread that might be at the top right now, but I basically say that I think the fact that Minnesota, a state that has a complete ban on online sports betting, is bringing this case actually gives them an advantage over previous states who've brought cases because the entire argument can just be "if it walks like a duck and talks like a duck..." as opposed to trying to explain why betting on the Super Bowl on Kalshi is somehow different than making the same bet on DraftKings.
On your second point, I don't disagree, but those issues aren't tied to prediction markets. Traditional online sportsbooks have allowed gambling on presidential and state elections for at least a decade now. Kalshi and Polymarket have taken this to the extreme, but they didn't start the fire.
We should be restricting what people can bet on regardless of the technology used. My concern with tying these two points together is that law makers will assume that solving problem one also solves problem two, when it doesn't. I'm worried that law makers will just outright ban prediction markets and go, "job done" leaving the door open to bring them back by creating some new gambling method that technically isn't a prediction market.
I don't want Polymarket allowing bets on whether we're going to war, but I also don't want DraftKings offering that bet. On the flip side, I frankly don't care if someone wants to bet on the Super Bowl, or the winner of Survivor, of how much rain New York will get tomorrow whether it's on Polymarket, or Kalshi, or DraftKings, or anywhere else. Prediction markets are how people are placing bets. I don't actually care how the bets are places, I care what is being bet on and I think most people would agree with that.
> as opposed to trying to explain why betting on the Super Bowl on Kalshi is somehow different than making the same bet on DraftKings.
I think the answer to that is also the same: if they're the same thing, and both are gambling, then Kalshi should have to be subject to gaming regulations and inspections the same as DraftKings is. Gaming is highly regulated even where it is legal.
Personally I don't have an issue with gambling, and I also don't have an issue with states that decide to ban it.
But I do have an issue with Polymarket, Kalshi, etc, using bullshit language to pretend they're not doing what they are obviously doing. They are obviously booking wagers. And as such, they are subject to the laws that states have outlined regarding those that take wagers.
90% of the volume on prediction market sites is on sports. Yes, there are smaller markets that are easy to manipulate, but that's no different from traditional sportsbooks.
Yes, What MrBeast says on his next video is easy to fix, but so is something like betting on a D3 basketball player to have less than 10 points or some English 5th league soccer player to have a yellow card.
Whenever I see something weird happen in a sports game, or even a lack of effort by individual players, my first thought is if sports betting was responsible.
Information aggregation is the theoretical upside of prediction markets. Granted, their effectiveness in that role is an empirical question. For gambling in general, the upside is that people obviously enjoy it, not to mention the right/freedom to make choices about how one spends time and money as a responsible adult.
If harm to the consumer and societal burden are the downsides you're concerned about, you could justify banning smoking, alcohol, and junk food for the same reasons. We don't generally do that because we recognize that where there's demand there will be a market, whether it's legal or illegal. So you also need to weigh the potential harms of a black market against those of a legal and regulated market.
And GameStop would probably like a minute (or maybe not) to discuss the tenuous connection between some underlying economic valuations and stock price.
Yes, the stock market is underpinned by real economic activity. But, be real, there's a lot of essentially betting involved too.
Commodities futures markets on which what are traded are contracts for future delivery of goods do that.
Prediction markets—forums for gambling on the outcome of a platform-provided referee as to how a proposition about the future will be resolved—do not do that at all.
Now, the legal definition of commodities markets for regulatory purposes in some jurisdictions may be broad enough that prediction markets are legally a subtype of commodities market despite doing a very different thing than traditional commodities markets, but that’s an artifact of a legal definition being drawn in a very broad way at a time when it didn’t matter because nothing like prediction markets existed.
I think in 10 years we'll see the rise of online sports betting, including in prediction markets form, as a new opioids epidemic.
For some amount of people they use it recreationally to blow off some steam, but theres a segment of the population that ruins their lives on it.
In some sense it may be worse than opioids because a husband (its always the guy) can ruin their families finances in secret before the wife's credit card gets declines & she pulls on the threads to find six figures of hidden debt from it and realize they are about to lose their home.
In some ways, historically having gambling located in specific geographic areas that were not within most peoples daily travel routine ensured safer use.
One of the biggest commodity trading companies is in Minnesota (Cargill), where I would think that commodities are a prediction market too: They predict the harvest and relate that to a future price. Also there are quite some real estate investors in Minnesota, also due to tax arrangements.
Wonder how that will pan out.
Given that exactly the same thing has been regulated as gambling in Europe under the name "betting exchange" for 25 years the case for it being gambling is quite strong.
The difference in my mind is that prediction markets and gambling are betting on outcomes, not long term behaviors. You could make the argument that they are the same, in the sense that buying a stock is "betting" on a company to do well, but I think you'd be making a silly argument. Stocks are intangible these days, but they were traditionally a physical thing that one would trade. If you're betting on prediction markets, there's nothing to trade after the event happens, just payouts.
Stocks are shares of ownership. Now, in practice many people buy them as bets, but even those aren't really predictions. Prediction markets are time-boxed all-or-nothing plays. You are either correct, or you lose your entire stake.
Now yes, people bet on the derivative value of those ownership shares... but that also happens to basically every asset. If a stock is a prediction market, then so is corn, and gold, and your home.
Yes, they are. Accurate prediction is rewarded in every market, for every asset or asset class. There are adjacent order benefits (I live in my home, I eat corn, I have a say in how a company is run) but these are never divorced from the impact of prediction and prediction in aggregate is just a crowdsourced leading indicator of value; oil spikes the moment a missile hits Iran not because the 2 are explicitly linked, but because the market has predicted the effect on the flow of that oil over some subsequent timeframe and priced itself accordingly
Yes, but all of these things have underlying assets that are not themselves predictions. You can buy and sell corn commodities, but at the end of the contract, actual corn is delivered. Predictions markets are different in that they betting on the prediction itself and have no associated asset.
Couldn’t we say that any market rewards prediction? And that this is generally seen as a beneficial quality that results in more accurate valuations with better liquidity?
The stock market by itself has similar outcomes to the prediction markets (you buy X hoping it'll go up so you can earn $Y), but there's actual value being purchased. If I buy an apple stock, I own 0.001% or whatever of the company. If the company goes up to $10T in value, my little share is a percentage of that. I can sell it and be happy.
If the company goes to $0 then I own a portion of nothing, and so does everyone else who owns a share.
With prediction markets you don't own anything, and regardless of the outcome, someone can still win if they "bet right"
That said, futures and derivatives seem similar to prediction markets but I don't know enough about them to say more.
> The prohibition extends to services supporting prediction markets, like virtual private networks, that could allow consumers to disguise their location and get around the ban.
That's a creative interpretation by NPR. The law doesn't mention VPNs. The law bans:
> provid[ing] supportive services to a prediction market or consumer knowing that the services will be used to identify a consumer’s location, transfer money, or make or process payments for the purpose of allowing consumers to make wagers or to settle wagers made by consumers in violation of this section.
There should be a ban on the instagram reels showing gambling like it's not a big deal. They are deliberately targeting teens and it's quite sickening.
If you work at one of these companies it's the same as working for a payday loan company. You are making blood money.
I recently learned that a World of Warcraft AWC champion that I used to follow has been streaming slots on Twitch for hours a day, every day for the last year. I don't watch Twitch, so I was blown away that they allow that kind of thing on their platform. The cherry on top is that he runs some kind of fake gambling extension in his chat while he's streaming, where viewers bet on how much money he'll win or lose and they'll win or lose Twitch chat points alongside him.
I have no problem with Twitch channel points gambling via predictions, but doing that alongside actual* gambling is really messed up. It's blurring the line to the viewers between the two. And probably putting ideas in their head like "oh I won so many channel points predicting the outcomes, I should do some real gambling!"
*It could be sponsored and thus either rigged or all of the money being used was provided by the company under the expectation that it would be paid back to them through losses.
Remember in the late 2010s when the hack Ajit Pai, then fCC Chair, said that the FCC couldn't or shouldn't enforce Obama-era Title 8 net neutrality? Remember how states like California then said "OK, it's not a federal issue so we'll do it at the state level"? Then remember how the DoJ, at the FCC's direction, sued California [1]?
Well, which is it? Was net neutrality a state or federal issue? The answer is it's, as always, a Schrodinger's STate's rights issue. That is, it's a "state's rights" issue when it suits them, a federal issue when it suits them and it's neither when it suits them. Lack of any kind of regulation is the goal. This isn't some libertarian pipe dream. It's just naked pro-company and pro-billionaire gutting of government to boost profits.
Fast forward to prediction markets. The CFTC regulates this (arguably). Another deregulation hack is in charge. And again, states like Minnesota who already ban sports betting are being sued. "State's rights" btw. We're seeing the exact same pattern.
This on the same day that the president who sued the IRS, which was defended by the president's DoJ and the recess appointee Attorney-General settled a $10 billion lawsuit right as a federal judge tosses it because the case lacked adversity [2].
Besides the J6 slush fund, part of this settlement is that the IRS is barred from ever investigating Trump, his family or the Trump Organization for tax fraud.
The level of corruption and kleptocracy here is beyond belief and what's really frightening is that a good 35-40% of the population not only don't care but actively support something they will never benefit from and there hasn't been (and won't be) any political price paid for any of it. The president's endorsement still carries weight and just today, we've had the most expensive Congressional primary in history (~$35 million) where Trump unseated a sitting Congressmen for daring to push for releasing the Epstein files.
SCOTUS will probably soon rule that extracting wealth from alienated gamblers is a fundamental American right, that the founding fathers had in mind when drafting the constitution.
They're not banning prediction markets from out-of-state, they're banning it entirely. A state cannot ban out-of-state alcohol, but it can ban alcohol outright if it wanted to.
Yeah but there's a difference there. I can buy alcohol out of state and if I bring it back in, that's on me.
Does anyone think that Minnesotans who are out of MN at the time of their bet will be allowed to bet? I don't think they'll be allowed, but they should be.
I assume most people need to put on an address or credit card info linking them to their home state. They likely wouldn't be allowed to have an account.
They're not going to get rid of them, they're just going to drive them underground, which will make them impossible to regulate, which will make using them less safe. I don't participate in prediction markets, but I would bet everything I own on this outcome.
Exactly. I see this common idea trotted out that "where there's a will, there's a way" -- if the government bans something, the ban will never be effective, because people still want that thing, and so a ban will just encourage violating the law.
But that's highly contingent on that thing being something people are willing to violate the law over, and on the convenience of that thing not being significantly impacted by prohibition. Neither of which are true for prediction betting (it's almost identical to sports betting in that regard, imo.) The only reason these markets proliferate is precisely because they are legal.
That's already what it is. They are an underground gambling site pretending that they're not doing things that they literally do by calling it something else. They're like a drug dealer who thinks they're slick by calling their drugs "research chemicals".
For the record, Minnesota currently has a complete ban on sports betting.
We've seen a couple other states that allow sports betting go after prediction markets. Personally, I feel that any state that allows sports betting is going to struggle to argue a case to ban prediction markets because you're essentially arguing over implementation details. Even arguments that certain prediction markets are ripe for insider trading or morally wrong fall a bit flat when you realize that traditional sportsbooks let you bet on things like college basketball player props and the little league world series.
I'm still not sure Minnesota will win their case, but it feels like that detail gives them a lot better chance of winning compared to many other states.
I think you could make a case in separating the two, of course opening further discussion, but because sports betting takes place in a comparatively very controlled environment I think the risk profile is pretty different versus, idk, betting that the temperate will be at or above a certain point and then someone sticks a hair dryer on the thermostat[1]. Cheating can happen in sports of course, but the risk profile and real-world impact I think is quite a bit different. Worth discussing, but I think that's an important distinction.
Separately, I believe over time that prediction markets will become the source of real world truth. Why? Because money is at stake and so validity and verification matter. It'll be interesting to see how, if this comes to fruition, how laws in states like Minnesota affect news reporting and journalism. It seems likely to me that at a certain point prediction markets will buy traditional media and news outlets to hire out the fact-finding and reporting teams to ensure ground truth, and of course to use journalism as the gateway to the market. So you read an article "China disappears random person" and then at the end you click a button and bet whether that person is alive or dead or whatever.
[1] https://finance.yahoo.com/markets/options/articles/polymarke...
> I think you could make a case in separating the two, of course opening further discussion, but because sports betting takes place in a comparatively very controlled environment I think the risk profile is pretty different versus, idk, betting that the temperate will be at or above a certain point and then someone sticks a hair dryer on the thermostat[1]. Cheating can happen in sports of course, but the risk profile and real-world impact I think is quite a bit different. Worth discussing, but I think that's an important distinction.
That's kind of the point I was getting that. That's not really an argument about prediction markets, it's about what things should we be allowed to bet on.
I'm looking at FanDuel right now and I can bet on 1v1 eSports games of FIFA. The bets aren't even just who will win, but it's things like how many goals will a team score or who will score first. During the last Superbowl books were offering bets on things like what color tie the announcers would wear. I get that there's maybe a slight difference between that and betting on what words a sports announcer will say during the broadcast, but IMO, you're splitting hairs. They're both very easily to manipulate and very open to insider trading.
I think you probably agree with this, but IMO, there needs to be two separate conversations. One, are prediction markets sportsbooks by another name? Two, are there certain markets that we should not allow betting on?
Personally, I think the answer to both of those is yes, but I think if you smush them together into one conversation it makes things really messy.
> So you read an article "China disappears random person" and then at the end you click a button and bet whether that person is alive or dead or whatever.
So think really hard about what the problem with this whole concept might be...
No need, it's very obvious. I'm just stating what I think the future is likely to be, not necessarily the one that is the best.
The environments of various bets have varying degrees of "control" from insider trading. I wouldn't say that sports is more controlled than most other environments. Point shaving scandals are certainly as old as college sports.
The real question is what the purpose of prediction markets are. For sports, there isn't really much of a purpose to the markets except entertainment for the bettors, and harvesting cash for the bookies. There are also various advantage bettors (who may be involved in corruption or not), who attempt to harvest cash from some combination of the bookies and the bettors. Generally IMO these are bad due to simple human frailty though. We figured out a long time ago that for the most part, making gambling available to the general public was a net negative to society, because it mostly transfers money from addicts to big corporations, destroying lives.
For major world events, one purpose of prediction markets is just to generate a price. It's potentially useful for people to know that, in an adversarial market, what the aggregate probability of an event is. It can also be useful theoretically to hedge risks. Whether it's practical to do that depends on the depth of the market though, and with the current markets, it's not. Even more traditional "prediction" markets like commodity futures aren't deep enough to usefully hedge most risks. For example, you might think that major oil companies might hedge future pricing risks, e.g. they want to drill an oil field with a high production cost, but they're worried that the price might go down before they finish production on the wells. Generally though, the markets aren't deep enough for them to be able to do this, so they just won't drill fields that have a production cost more than roughly the lowest price in the past 20-30 years, depending on the age of the executives in charge of the decision.
There's this other purpose of prediction markets though, which is money/information laundering. People may have secret information where their employer has a strong interest in it remaining private, however the person with the information isn't that well compensated, so they monetize the information on prediction markets. On the darker side, you can have wildly illegal markets like "assassination futures" where people bet on when someone will die, and you can bet on a particular outcome, and then make it come true. There are lots of markets somewhere in the middle where someone can take an action in the context of them being a trusted agent of an organization, but instead of following their duty as an agent, they do what is profitable based on their bets in the prediction market.
Overall, IMO there are some good uses for prediction markets that allow people to hedge risk on both sides and enable useful economic activity, but most of the uses I've seen in practice are a net negative.
Why must things have a purpose? If something has a purpose, can it be an objective purpose?
When something has negative outcomes, the thing requires justification.
The negative outcome has to be placed on a third, unrelated party that has not consented to having that outcome on them.
If the only negative outcome is on the person who consented (e.g., the gambler), then why should they be denied their choice to participate?
I think the argument for hedging is further weakened by how large actors have other (better?) ways to hedge, such as with futures contracts or insurance policies.
Those may have the added benefit of protecting you from price changes. If I need widgets and I'm worried a geopolitical event will disrupt supply, the money from a "won" bet might be minimal compared to the new costs as everyone raises the price of widgets.
> So you read an article "China disappears random person" and then at the end you click a button and bet whether that person is alive or dead or whatever.
Congratulations, you just created a murder market. Create “Is person X dead?”, and put a large limit order buying No. Anyone with means can capitalise on it by fulfilling the physical obligation of the market and buying up the limit order. Don’t create the murder market.
---
It would be a stupid thing to do given the trail, bit it gives the person ordering it sort of plausible deniability.
The state can make it unprofitable to murder. Meaning that the existence of such a market is not a source of potential profit.
> Minnesota currently has a complete ban on sports betting.
Canterbury Park would like a word…
I have a website I run that is focused on sportsbetting so while I know high level what is legal where, I'm not actually in Minnesota, so I don't know every single detail especially when it comes to what's allowed in person.
My guess would be that either A) that's tribal land and there's an exemption for that in the current laws or B) they have a casino, but don't offer sports betting or C) they only allow sports betting on the property by either requiring all bets to be placed in person or the app they offer is for sportsbetting is geo-fenced to their property (which is how states like WA do it)
Long story short it is a compromise between the Mdewakanton Sioux, the state, and Canterbury to keep gambling exclusive to Mystic Lake Casino and Caterbury. The State flirted with the idea of expanding gambling and started moving in that direction, but Mystic basically now props up Canterbury, lets them have some amount of gambling on site, and the State did not expand gambling and generally is protective of Mystic. It's like a pressure release valve on gambling with some small kickbacks to the nearby legacy horse racing track. It's a strange local arrangement. Grew up in Prior Lake and had a few tribe members in school so this is just my bias on the arrangement.
I mean, that's exactly why a state has the right to regulate this, historically it has been an extremely regulated activity. You can personally feel however you want, but the fact that a state does allow sports betting does not diminish this even slightly.
This has been banned for generations. It's called gambling. Of course, we all have to sit through another round of Silicon Valley pretending they've discovered some new exciting business model that's just vice.
Unlicensed gypsy cabs, SROs, shift work, patent medicines, narcotics dealing, customs fraud, and smuggling already had established market entrants I guess.
But I thought the Supreme Court said online sports betting was interstate commerce and out of the domain of state legislation. Or did I get that completely wrong?
The core holding was this
> "congress can regulate sports gambling directly, but if it elects not to do so, each state is free to act on its own."
Ok, thank you, I had it wrong!
No, the SC said the federal government can't outright ban sports betting. The logic was that a ban interferes with states right to legalize sports betting.
(To be clear, it is still an nonsensical decision though. Congress does still have the power to regular gambling under the interstate commerce clause, just not outright ban it)
Ok, thank you, I had it wrong!
Why is this nonsensical? Gambling is not necessarily inter-state?
I think it is a inconsistent position that the federal government can regulate gambling but not ban it.
The Controlled Substances Act also rests on the interstate commerce clause. Can you imagine if the federal government was allowed to regulate heroin sales but not ban it?
My question wasn't so much about the contradiction between regulating & banning authority, but questioning the authority to do either in the first place. I.e. I don't understand why gambling must necessarily be considered to be inter-state. But I now think this is unrelated to the point you were trying to make.
I agree that the broad reading of the interstate commerce clause seems dubious, but the same precedent [1] underlies the controlled substance act, clean water act, violence against women act, endangered species act and a whole lot of other laws. Unless you are willing to hack away a large chunk of US law, you can't really undo that one.
[1] Wickard v. Filburn ruled that growing wheat FOR USE ON YOUR OWN FARM can be regulated as interstate commerce because otherwise that demand would tend to raise prices on a interstate grain market.
You have it backwards. Murphy v NCAA ruled that the federal legislation banning sports betting was unconstitutional, and that it was up to the states to regulate gambling.
Ok, thank you, I had it wrong!
I think sports betting is a lot less harmful than prediction markets. With sports betting if someone throws a game to get a pay day, for instance, the only real consequence is on the reputation of the sport. In prediction markets, people can do all sorts of awful things to make money as insiders..
Most available data suggests that sports betting is much worse for the people making the bets, as it better targets people with poor impulse control. Bad bets in political markets aren't causing measurable increases in bankruptcy and domestic violence rates (https://thezvi.substack.com/p/the-online-sports-gambling-exp...).
Likely because this type of betting is still niche. Give it some time.
Sports gambling a few advantages over any other subject that seem near insurmountable to me:
- it has the semi-respectable veneer of something that normal people have done throughout human history
- it has completely parasitized existing sports media to target new users in ways that aren't available for other topics
- some variant of 'sports' is happening 24/7/365 with enough prop bet granularity to capture the full attention and disposable income of addicts. There's an ongoing controversy with a star college football quarterback who was going to MLB games to place bets on every single individual pitch.
You can basically think of gambling addicts as a finite resource that these different companies are competing for. Many people get addicted to lootbox/gacha games at an early age, and even larger portion are already deep in sports gambling. The target demo for non-sports prediction markets roughly matches to people in earlier times who got into commodities futures or optimal strategies for casino games (which clearly existed but never at a scale to rival what we see with sports betting right now).
I don't think that article supports your claim that bad bets in political markets aren't causing measurable increases in bankruptcy and domestic violence rates. It only tells us about online sportsbetting, and it was written in 2024 before prediction markets really took off. If anything, it provides evidence weakly in favor of the argument that bad bets in political markets would negatively affect the bettors.
I live in IL, and digital slots have taken over so many spaces. Online sports betting is bad enough, but more than that is going on.
Not just bars, but restaurants. Places you might take a date for nice Italian food have little corners with digital slots. Gas stations, Taco joints, sometimes an entire business in a strip mall dedicated to digital slots.
It's insane. The only place like it I'd seen prior to a some years back was Nevada. Businesses must be making crazy money off of them to be so prolific in putting them in, and that money comes from somewhere (i.e. not likely to be casual players).
I passed through some of the cities around Chicago and was shocked by seeing the random slot machines everywhere. It brought to mind the hospital scene in idiocracy https://www.youtube.com/watch?v=wymc2SGJkk0
That said, I actually played one at a restaurant while waiting for a carry out order and it ended up killing some time and paying for our meal that day. The impending downfall of society paid off for me that afternoon.
First, over 90% of the wagers on Polymarket and Kalshi are already on sports (quoting John Oliver's Last Week Tonight on that one). Despite the headlines, Kalshi and Polymarket are mainly just sportsbooks.
Second, while yes, some of the markets available on prediction markets can push people to do awful things, there are plenty that are harmless. I'm cherry picking to make an extreme point, but I would so much rather have someone betting on what the temperature in Los Angeles is going to be tomorrow on Kalshi than betting on who will win the little league world series on DraftKings.
I support regulation saying certain things should not be allowed to be bet on, but allowing bets on morally questionable things isn't a quality unique to prediction markets.
Technically they are betting exchanges. But they also probably have contracts with some of the big sportsbooks to provide liquidity too making them also kinda a sportsbook. I used to work at a betting exchange and we did have liquidity partners that made sure to increase the liquidity on our exchange.
>Kalshi and Polymarket are mainly just sportsbooks.
How? They sell contracts between two users. One side each. Completely different from a sportsbook where users are betting that the lines they set are not correct.
90% of the betting volume on Kalshi is betting on sports. I know how prediction markets work and how they're different that traditional sportsbooks, but they ultimately allow customers to do the same things.
If you are saying Kalshi isn't a sportsbook because the house isn't on the other side of the bet, you might as well argue that DraftKings isn't a sportsbook because they don't actually track your wagers in a book.
Whether the people betting on the sports are betting directly with each other or not is a very small difference.
If they sell contracts on market prediction, then any person doing for example insider trading on corporations, fixing outcomes of sport events, directly paying out others to force event outcome, blackmailing people, or just directly adjusting some result like the CDG weather guy are completely in line with the platform rules and all that is perfectly legal. But since Poly and Kalshi themselves admit that those things are "unfair" and forbidden they have themselves removed their "just a contract" status and transitioned to a gambling status, where indeed fixing matches is bad.
Yeah, prediction markets are like if you could bet on arbitrary decisions a coach or manager might make. Like starting lineup or different trades of players between teams or the size of a players contract in dollars, rather than events that happen during gameplay. There are people who know the facts already but the public does not.
There's a pretty decent counter-argument though: Prediction markets are just a market for users to counterparty each-other. Which means, technically, for every trade there is a winner and a loser, and both the winner and the loser are generally just normal people (or market makers). Polymarket/Kalshi just take X% on the top as a fee. Versus, with sports betting, the counterparty is the casino. Its the difference of trying to outsmart a massive casino, versus a more peer-to-peer system; the potential for ROI is (probably) higher in prediction markets.
I am still very, very anti prediction market, to be clear. But that is one reason why I would agree with a soft statement like "prediction markets are less harmful than sports betting" (in much the same way that a handgun is less harmful than a fully automatic rifle).
The counterparty in prediction markets are whales though, and those are the few players making money off it. The ROI is also less negative in casinos and sports betting than prediction markets.
Arguing over implementation details is a pretty common thing for laws to do. Maybe it would weaken the logical consistency of their laws, but that's not really a thing that matters.
Why do states allow hunting some animals and not others? Why do states distinguish between different forms of income to tax? It's all implementation details.
I don't see why it even would weaken the logical consistency. Just because a state allows gambling does not mean they need to allow anyone to open a casino or betting site. You still need to apply for a licence and follow local regulations. If the prediction markets make sure to follow the regulations they should obviously be granted a licence to operate.
I wasn't saying we shouldn't debate the implementation details. I just think they should be separate arguments.
It's like if someone killed my dog with 3d printed gun and so everyone started talking about banning or regulating 3d printers. It's like, yes, debating 3d printer regulation is probably a worthwhile debate to have, but regardless of where we end up on that it doesn't change the fact that that person killed my dog.
We should be having a debate as to whether there are certain things that are off limits to bet on, but regardless of where that debate goes, if a state has banned sports betting, it should be banned regardless of the platform.
> any state that allows sports betting is going to struggle to argue a case to ban prediction markets because you're essentially arguing over implementation details
I think their point was that your "going to struggle to argue a case" belief does not logically follow from a need to argue "over implementation details"
This is both one of my pet peeves and a thing that legislators seem to love: Somebody does a thing that is already illegal, but in a slightly novel way. Perfectly valid statute exists to prosecute, but legislators want to be seen as doing something, so they pass another law to make the already criminal action more specifically criminal.
Arguably bans on cellphone use while driving are a good example. It's not that it isn't bad, it's that distracted driving already carries a hefty fine without being specific as to the mode of distraction. So does causing an accident, which presumably is the harm we're actually trying to avoid.
Making laws more explicit in important cases is valuable because it reduces uncertainty about legal interpretation. Using your example of cellphone use, under distracted driving laws the prosecution would have to prove that the specific case of cellphone use was distracting enough to be a safety hazard. With the more specific ban on cellphones, that is no longer an obstacle.
They already made the argument themselves: they’re skirting current laws by calling them financial derivatives.
In states which allow sports betting it is still regulated. Thet are just an illegal betting sites.
The CFTC uses the following argument in their press release: [1]
> This Minnesota law turns lawful operators and participants in prediction markets into felons overnight,” said CFTC Chairman Michael S. Selig. “Minnesota farmers have relied on critical hedging products on weather and crop-related events for decades to mitigate their risks. Governor Walz chose to put special interests first and American farmers and innovators last.
Its an interesting angle; how do you draw the line between "a prediction market about what the temperature will be" and a futures contract that's used as a legitimate hedge? Minnesota's law is EXTREMELY broad in its definition: [2]
(e) "Prediction market" means a system that allows consumers to place a wager on the future outcome of a specified event that is not determined or affected by the performance of the parties to the contract, including but not limited to: (1) an athletic event or game of skill, or portions thereof or individual performance statistics therein; (2) any game played with cards, dice, equipment, or any mechanical or electronic device or machine; (3) war, state or national emergencies, natural or human-made disasters, mass shootings, acts of terrorism, or public health crises, or the ancillary effects thereof; (4) any event or events happening to a natural person or group of people;(5) a federal, state, or local election, or the actions or conduct of the federal, state, or local government and the government's agencies, employees, and officers; (6) legal actions, including but not limited to a civil or criminal suit, grand jury action, jury trial, settlement, plea, or conviction; (7) the death, assassination, or attempted killing of a person or group of persons, or mass casualty events; (8) short-term weather events or conditions; (9) events in popular culture, including but not limited to awards and the date a piece of entertainment will be released; and (10) whether a person will make a particular statement.
There's a bunch of exceptions that reference prior laws, which I haven't gone through, though they'd likely have to exempt, you know, Chase Bank, because if not that definition would clearly disallow Stocks.
[1] https://www.cftc.gov/PressRoom/PressReleases/9233-26
[2] https://www.revisor.mn.gov/bills/94/2026/0/SF/4760/versions/...
A better question to ask: Regulated futures markets haves existed in the US for over 100 years. Why haven't they added sports (or any other category that prediction markets cover)? The answer is simple: There is no legitimate economic need.
Right. Futures markets exist to hedge some already present risk.. airlines can buy fuel futures to protect against the risk of fuel price rises, etc. Prediction markets create a new source of risk.
> Personally, I feel that any state that allows sports betting is going to struggle to argue a case to ban prediction markets because you're essentially arguing over implementation details.
This seems to be based on the false assumption that state legislation on distinct but related topics must generally be based on a coherent, consistent rationale. This is, very much, not the case under any law that binds US states, nor is it a rule that, despite not existing in binding law, is in practice imposed as a constraint on state governments by the actions of the voters.
(Conversely, even if such a rule was imposed, in law or otherwise, any state that has rules regulating the offering of insurance contracts, including who could buy insurance against what events—which, as it turns out, every state does—would have exactly the basis they need to apply the same kinds of rules to prediction markets.)
I don't particularly care for sports betting, but I'm extremely against the prediction markets that blatantly violate he Dodds Frank act, such as bets on whether America Will attack another country or if fires will swallow California.
There's just too many wrong incentives at play.
the argument that prediction models are sports betting is not much different than the argument that stocks are sports betting. Who's to say that capitalism isn't a competitive sport? I mean consider that people have agents making trades for them. It is basically a video game at this point.
I'm not a fan of sports betting, but surely you can see how betting on a game is not the same thing as betting on a war? People generally don't die because of a sports game (although it happens rarely).
Prediction markets dont just include markets for how many children america will dismember, there are also markets on who wins elections etc.
I think we can all see that betting on the Superbowl is the same thing as betting on the presidential election.
I think the case is pretty clear regardless: gambling is supposed to be a state-regulated activity, and Kalshi is gambling but is regulated by the CFTC at the federal level. So I think the argument is "we want to be the ones to regulate sports gambling in our state," whoch is independent of whether or not it's currently legal in the state.
Or maybe I'm wrong, and "we don't want sports gambling" is different legally from "we want to be the regulator of gambling." But it seems like they're just variations of the same question, which is: do states have the power to regulate this?
> The prohibition extends to services supporting prediction markets, like virtual private networks, that could allow consumers to disguise their location and get around the ban.
Yikes. I am all for banning prediction markets but I feel like this is overreaching.
Does it actually ban VPNs? or just ban VPNs from being used to access prediction markets?
Yeah that seems like a massive reach. Does banking count as a "supporting service"? After all a prediction market isn't very useful if you can't get money in/out.
I think "supporting services" is in reference to ways to disguise the location, which is why they used VPN as an example.
I don't know how they will enforce it but the fact that they want to control it is concerning.
If you don't actually sell someone something illegal, but take them to buy illegal things using the safety of your car so they avoid detection - are you innocent?
Drinking and driving exists and is illegal, but going to the grocery store isn't. Should we do an all or nothing sort of ban, either allowing drunk driving or banning cars altogether? No one would do this - some uses are illegal, most aren't.
A law that allows legal uses of your car but disallows illegal activity isn't all that unheard of.
If you are a taxi company and a bank robber takes a taxi to the bank, are you innocent?
Yes? I mean it depends probably but by default - yes
Using your analogy, this is a law that bans cars for everyone so that people can't go to the store to buy an illegal lottery ticket.
Maybe as often, the laws is just a pretext for this little nuget. They innovate for once, not using terrorists or pedophiles, nobody checked.
This is great news. From my perspective from someone who grew up in the 90s, America feels like we took the turn towards Biff Tannen's Pleasure Paradise. A future very fa from our promise filled with gambling, social degradation, and worse economic prospects for everyone. Gambling sites like Polymarket are just a symptom. More states need to move in this direction, because its just a tax levied on the uninformed to insider cashing in
Good on Minnesota.
Not even. Minnesota is fine with betting as long as it is tribal betting and lawmakers are getting their share of the cut. Look it up.
I lived there, and I am familiar with that. I would be happy if they did away with all of it, including the state-administered lottery. But this is a great start of low-hanging fruit.
Once a vice is taxed, it becomes a budget line item for the local government and is much harder to get rid of
Exactly.
This is not a law to protect people, this is a law to protect entrenched special interests (Reservation and State-owned casinos).
And Biff is the president D:
While it's obviously sports betting, the fact is that federal law gives the CFTC the power to determine what is and isn't a future and expressly preempts state intervention in futures markets. And, the case as to why futures markets generally should be subject only to federal oversight is quite strong IMO. So, the case can quickly become whether or not the CFTC should consider sports betting to be a future, and judges typically defer to the executive branch when it's not obvious (and in this case I don't think it is, the bar owner in Philly hedging an Eagles loss is an entirely plausible, albeit unlikely and uncommon, situation).
While I am partial to the argument that the CFTC is actually taking away the states' 10th Amendment police power right, that is a somewhat tenuous case in comparison to the enumerated right of the federal government to provide sole jurisdiction to the executive branch to enforce a law (and not to mention a law that impacts interstate commerce).
I imagine Minnesota loses this case and what's far more likely is either a more liberal congress changes what is a future by law or a more liberal executive branch reduces the protections for Kalshi et al.
90% agree, the CFTC doesn't consider these futures contracts, it regulates them under its "contract market" authority, that Congress designated and updated periodically over time
This is the authority on the CFTC's own website on prediction markets "For more information" section
https://www.cftc.gov/LearnandProtect/PredictionMarkets
https://uscode.house.gov/view.xhtml?hl=false&edition=prelim&...
And yes, both the Supremacy clause and the Interstate commerce clause neutralize any 10th amendment claim, unless the Federal government or any of its agencies was completely mum on the activity. But since the Federal government has exerted authority over that industry, via the interstate commerce clause, states can pound sand.
Oh interesting, I didn't know that about the contract market authority.
yeah, the agencies are kind of placeholders for oversight that diverges from the agency name and mission statement
Congress lobs tangentially related delegation to existing agencies so you have to check how an authority is rationalized
It gets interesting
Has any judge every ruled using the 10th amendment in a federal case?
Federal judges and SCOTUS have some times ruled in favor of states or in favor of the federal government with the 10th amendment being at the center of an argument
Yes, I know it's not common but it is used https://www.law.cornell.edu/constitution-conan/amendment-10/...
I could imagine cases where prediction markets could offer some actual insight, but in practice they seem few and far between. Most markets I've seen devolve into one or more of: betting on unimportant events (e.g. sports games), insider trading, or poorly written ambiguous resolution criteria. It's just hard for me to imagine that, on net, these markets will offer more societal good than the harm we've seen from sports betting.
Insider trading does offer actual insight
Getting inside traders to publicize their knowledge for a price is like half of the point of prediction markets
Does polymarket then have a full profile of its users to be able to distinguish insider trades vs noise?
Genuine question as I haven’t used the site and everything I know about them are comments and some articles.
I asked this elsewhere, but do you have an example of this knowledge? Have prediction markets ever revealed genuine knowledge? If so, has anyone ever acted on the newly revealed knowledge in a meaningful way?
> I could imagine cases where prediction markets could offer some actual insight
I could imagine that there's very little insight to be gained when some 23 year old has so little hope for his financial future that he's spending some of what he earned last night delivering food for uber eats on making a completely uninformed bet on a geopolitical situation involving a country he couldn't even find on a map just in case it pays out well enough that he can afford some of the needed medical care he's been putting off. That's the type of user I imagine most people participating in prediction markets are. It's telling that the vast majority of the people making bets lose their money. Are their predictions really valuable data?
ThAt's one of the interesting(?) aspects of prediction markets. Some meaningful percentage of people in the market need to be bringing some useful insight. If everyone is just making random guesses, the market isn't very useful (other than, perhaps, financially to the lucky).
What insights are being gained? Every time this topic comes up, I see someone vaguely mentioning insights from prediction markets. But no one ever has concrete examples - real or even hypothetical.
Can you give an example of insights derived from prediction markets? Who benefited from the insights, and how did they act on the insights?
It looks like the markets aren't very useful except for the small percentage of people with inside information, the exceptionally lucky, and the platforms themselves that get to take a cut of the action and/or collect personal data to sell.
The CFTC commission comprises five seats, four of which are currently vacant: https://www.cftc.gov/About/Commissioners/index.htm
Anyone taking bets on how that ban will last?
Anyone taking bets on whether that bet will be available in prediction markets by the end of the week?
I hope someone is. From the bill:
> EFFECTIVE DATE This section is effective August 1, 2026, and applies to crimes committed on or after that date.
as the article notes, prediction markets are regulated by the CFTC as a commodities futures contract, so I'm not sure how any state law survives a federal pre-emption challenge. On the other hand, it's a little unusual to see a federal agency suing to protect its turf. Would've expected a class action by a Minnesota user of the service to bring the challenge instead.
I'm curious to see how this works out, because sports betting is _not_ in the CFTC's remit, and Kalshi etc's argument that states can't regulate them because they're not technically sports betting is contrary to the spirit of the law
There’s no “house” or “book” aspect to Kalshi. They are nothing more than contracts that are bought and sold between individuals.
How do they make money?
Just like other exchanges.
They charge trading fees.
What about the special partners that put up bets that are basically just methods to launder the fact that there's a house?
They also place their own bets within their own market. They don't just make money on trading fees.
Kalshi does not trade against its users.
That's their PR department talking.
https://straighttothepoint.substack.com/p/you-cant-have-it-b...
https://www.sportico.com/business/sports-betting/2025/kalshi...
Kalshi definitely does this
They just don't make any money off it.
A different entity provides liquidity.
There’s no house like in sportsbooks.
And there is no house in pool betting, poker or backgammon either. We still count all of them including betting exchanges (what has now been rebranded as prediction markets) are still normally regulated as gambling.
Not in the US.
Is there any state that allows organized poker tournaments, but not gambling or sports betting?
Sounds like a glaringly obvious conflict of interest?
Of course it is, people will do whatever they can get away with.
Be careful, the market makers always win. If you go against them, you make yourself a target.
Lots of types of contracts bought and sold between individuals are prohibited by law.
They problem is the federal government considers these particular contracts are generally legal, and the states have no authority.
Have you heard of Betfair? A UK company which has done "prediction markets" since 2000. In the Europe it is called a betting exchange and regulated like sports betting. And betting pools is another form of betting which is way older than that and there are no house in them either.
And by your argument poker or backgammon would not be gambling either.
>And by your argument poker or backgammon would not be gambling either.
They aren't. A sportsbook explicitly sets lines and you are betting that the line they set is incorrect.
> because sports betting is _not_ in the CFTC's remit
Traditionally it has not been, but the current CFTC says that 'prediction bets on sports' ARE under their purview. This has not been fully challenged in court, though.
If Congress intended for the CFTC to regulate sports betting, it would have had that language in the act that originated the agency. It's telling that only recently the CFTC has discovered such authority. No previous leadership of the CFTC read the act to mean what the current leadership thinks it means.
This is 2026. We don’t need your stinking laws.
What if CFTC would start to claim they are allowed to regulate online casinos or online poker? I feel that would be about as non-sensical.
https://www.cnn.com/2026/03/21/politics/trump-prediction-mar...
> it's a little unusual to see a federal agency suing to protect its turf.
This is Don Jr's consulting fee at work.
This should not be downvoted and is a legitimate criticism. Trump Jr. has a "special advisory role" in both Kalshi and polymarket. It would track with this administration to deploy a rapid defense of a corruption generation market where the current president's son is getting paid off by the two main competitors in the market.
Nevada was able to get it banned. The casino pull is huge.
*Minnesota becomes first state to ban the use of prediction markets as a loophole for sports gambling.
I wonder if it can really be enforced. It's clear that prediction markets are a scourge -- there seems to be no upside whatsoever.
Thanks to crypto it can't be enforced and is here to stay, like all forms of online gambling.
Polymarket is not a dark web hidden service. It has owners with names and addresses known to the government.
> I wonder if it can really be enforced.
At the very least maybe it would make the advertising (tv, college campuses, etc) of prediction markets illegal in Minnesota?
That alone seems like a good thing.
The law also goes after payment providers and network providers (vpn) etc if they "knowingly" provide service to anyone who engages in prediction market betting.
The law[0] as written is a mess. You could in theory shut down the "legal" Minnesota state lottery that is otherwise carved out from the law by claiming they are providing data on outcomes via the internet if someone outside the state is betting on the outcome of the lottery in a prediction market.
[0]: https://www.revisor.mn.gov/bills/94/2026/0/SF/4760/versions/... (search for "ARTICLE 8")
I get a lot of value from prediction markets and query for them most days. Today for the Los Angeles Mayor's race and the Kentucky 4th district Representative race. In both cases I saw a big difference between the market and the vibe on my feeds. I believe that the market emits higher quality predictions.
Each market is a community with a financial incentive to think outside of the bubble.
prediction more easily allow people to convert money into public opinion, which is suboptimal.
Do you also believe there is no upside in crowdsourced information found in, say, commodities, equities and futures markets?
Those are not the same as prediction markets
Those markets create pressure to ensure that real physical goods and useful services are priced accurately. Prediction “markets“ are in my estimation no different than roulette.
If you cross your eyes hard enough, you could claim that roulette gambling provides economic pressure to ensure that roulette wheels are balanced evenly. But when the roulette wheel is Vanah White’s dress color, what does that mean? Charitably, it’s a fun pass time. Through a dystopian lens, prediction markets pressure all public figures to play a kind of Keynsian Beauty Contest with their own behavior. Like social cooling for the celebrity/owning class.
No upside whatsoever? Clearly you're not an insider trader.
there is one upside, its a big incentive to indirectly leak things like album release dates and military operations. anything that helps get some secrets out is a positive in my book
No, this doesn't work. Predictions markets can only resolve to things that are publicly verifiable, so any leaked information is information that was destined to become public anyway. Furthermore, the leaker is disincentivized to leak in such a way that the act of leaking could compromise their insider knowlege; the structure of the markets means that leakers don't want you to have this information in any way that opponents could usefully invalidate.
They're just gambling. I'm not trying to argue for or against gambling here, but please stop trying to delude yourselves into thinking these gambling sites are anything other than gambling.
Unresolved markets transmit information too. A market doesn't need to resolve to transmit information.
Sure, and a white noise generator transmits information too.
But they don't get secrets out, they just make a bet? Show me any information like this on any of the prediction markets...
> there seems to be no upside whatsoever
There's the same upside as pretty much all other forms of gambling. Plenty of people enjoy it and it can be used to generate tax revenue for the state.
Don't get me wrong, there's tons of harm that can come from it, but the arguments to allow them are essentially the same arguments for allowing sports betting.
This is true, however many of those arguments are weaker when applied to things for which the outcome is more consequential than the outcome of a sporting game.
Sure, but that's not really an argument to ban prediction markets, it's an argument to regulate what the public can or cannot bet on.
Most major online sportsbooks have taken bets on the US presidential election for well over a decade. I can't imagine anyone really arguing that it's okay for DraftKings to offer that market, but not okay for Polymarket to offer it.
I put it somewhere else in this thread, but there are actually two different questions that need to be answered separately. Are prediction markets just sportsbooks by another name and are there certain things that we should not allow people to gamble on.
The argument around prediction markets always seems to squish those two into one which I think does people who want regulation a disservice. I think to most people, the answer to first question (are prediction markets just sportsbooks by another name) is a pretty resounding yes. The second question has a lot more room for debate though. Even if people agree that there should be things we don't allow people to bet on, there's still plenty to argue over where we draw the line. The problem is that as long as we mush these two together, people will use the disagreement over the second question to prevent action from being taken on the first.
> Sure, but that's not really an argument to ban prediction markets, it's an argument to regulate what the public can or cannot bet on.
I wasn't making any argument above in either way. But the reality is that sports betting is not legal in much of the US. DraftKings is only legal in about half of US states.
Minnesota does not permit DraftKings to operate in their state. They don't permit any kind of online gambling whatsoever, and I don't think they think any differently about Polymarket... and Minnesota's regulators have answered that clearly in this case by enumerating it specifically.
And more generally speaking, laws apply to what someone is actually doing, not what they claim they are doing. If a law bans wagers on the outcome of a sporting event, it doesn't actually matter whether you call it something different. Someone can't sell crack cocaine and call it a "dietary supplement" and get away with it, because the law doesn't depend on the label the actor gave their own actions, it hinges on the definitions of the actions as defined under the law.
And as for the second question, in gambling there's always a risk of harm to the bettors themselves. I don't think most Americans have a problem with that, currently.
But, there's also risk to corrupting the subject of the bet itself. In a casino, this is easily mitigated by regulating the game, and the potential risk is only to the participants. In sports betting, this risks corrupting the games themselves. This is a slightly larger risk, and it risks corrupting sportsmanship for the athletes involved, but ultimately it is still a game.
But wagering on other events up to and including literal war literally poses a much larger human risk than simply spoiling a game.
You could take this "prediction market" laundering of words to an absurd conclusion: "A large binary option that someone will [insert any illegal action]" is just literally a payment for someone to do a crime using different words.
> Most major online sportsbooks have taken bets on the US presidential election for well over a decade. I can't imagine anyone really arguing that it's okay for DraftKings to offer that market, but not okay for Polymarket to offer it.
DraftKings is legal in about half of the US. It is not legal in Minnesota.
I totally agree with your response to my first point. I have another comment in this thread that might be at the top right now, but I basically say that I think the fact that Minnesota, a state that has a complete ban on online sports betting, is bringing this case actually gives them an advantage over previous states who've brought cases because the entire argument can just be "if it walks like a duck and talks like a duck..." as opposed to trying to explain why betting on the Super Bowl on Kalshi is somehow different than making the same bet on DraftKings.
On your second point, I don't disagree, but those issues aren't tied to prediction markets. Traditional online sportsbooks have allowed gambling on presidential and state elections for at least a decade now. Kalshi and Polymarket have taken this to the extreme, but they didn't start the fire.
We should be restricting what people can bet on regardless of the technology used. My concern with tying these two points together is that law makers will assume that solving problem one also solves problem two, when it doesn't. I'm worried that law makers will just outright ban prediction markets and go, "job done" leaving the door open to bring them back by creating some new gambling method that technically isn't a prediction market.
I don't want Polymarket allowing bets on whether we're going to war, but I also don't want DraftKings offering that bet. On the flip side, I frankly don't care if someone wants to bet on the Super Bowl, or the winner of Survivor, of how much rain New York will get tomorrow whether it's on Polymarket, or Kalshi, or DraftKings, or anywhere else. Prediction markets are how people are placing bets. I don't actually care how the bets are places, I care what is being bet on and I think most people would agree with that.
> as opposed to trying to explain why betting on the Super Bowl on Kalshi is somehow different than making the same bet on DraftKings.
I think the answer to that is also the same: if they're the same thing, and both are gambling, then Kalshi should have to be subject to gaming regulations and inspections the same as DraftKings is. Gaming is highly regulated even where it is legal.
Personally I don't have an issue with gambling, and I also don't have an issue with states that decide to ban it.
But I do have an issue with Polymarket, Kalshi, etc, using bullshit language to pretend they're not doing what they are obviously doing. They are obviously booking wagers. And as such, they are subject to the laws that states have outlined regarding those that take wagers.
https://i.imgflip.com/as8d2j.jpg
Yep. I totally agree.
For the record, I'm actually a very active Kalshi user, but I cannot see how anyone can seriously argue that it's not sports betting.
not really because there are mechanisms in place to prevent "insider trading" in sports (not that they're entirely successful)
90% of the volume on prediction market sites is on sports. Yes, there are smaller markets that are easy to manipulate, but that's no different from traditional sportsbooks.
Yes, What MrBeast says on his next video is easy to fix, but so is something like betting on a D3 basketball player to have less than 10 points or some English 5th league soccer player to have a yellow card.
Whenever I see something weird happen in a sports game, or even a lack of effort by individual players, my first thought is if sports betting was responsible.
Information aggregation is the theoretical upside of prediction markets. Granted, their effectiveness in that role is an empirical question. For gambling in general, the upside is that people obviously enjoy it, not to mention the right/freedom to make choices about how one spends time and money as a responsible adult.
If harm to the consumer and societal burden are the downsides you're concerned about, you could justify banning smoking, alcohol, and junk food for the same reasons. We don't generally do that because we recognize that where there's demand there will be a market, whether it's legal or illegal. So you also need to weigh the potential harms of a black market against those of a legal and regulated market.
How is it different from the stock market?
Stocks are linked to entities that perform economic activity, i.e. make a profit, and share that profit. i.e. everyone can win.
Predictions markets are just bets: one person wins, one loses.
Options (especially 0DTE options) are a lot like sports betting.
And GameStop would probably like a minute (or maybe not) to discuss the tenuous connection between some underlying economic valuations and stock price.
Yes, the stock market is underpinned by real economic activity. But, be real, there's a lot of essentially betting involved too.
Prediction markets ensure that there is always produce in your store.
Commodities futures markets on which what are traded are contracts for future delivery of goods do that.
Prediction markets—forums for gambling on the outcome of a platform-provided referee as to how a proposition about the future will be resolved—do not do that at all.
Now, the legal definition of commodities markets for regulatory purposes in some jurisdictions may be broad enough that prediction markets are legally a subtype of commodities market despite doing a very different thing than traditional commodities markets, but that’s an artifact of a legal definition being drawn in a very broad way at a time when it didn’t matter because nothing like prediction markets existed.
I think in 10 years we'll see the rise of online sports betting, including in prediction markets form, as a new opioids epidemic.
For some amount of people they use it recreationally to blow off some steam, but theres a segment of the population that ruins their lives on it.
In some sense it may be worse than opioids because a husband (its always the guy) can ruin their families finances in secret before the wife's credit card gets declines & she pulls on the threads to find six figures of hidden debt from it and realize they are about to lose their home.
In some ways, historically having gambling located in specific geographic areas that were not within most peoples daily travel routine ensured safer use.
One of the biggest commodity trading companies is in Minnesota (Cargill), where I would think that commodities are a prediction market too: They predict the harvest and relate that to a future price. Also there are quite some real estate investors in Minnesota, also due to tax arrangements. Wonder how that will pan out.
What did the prediction markets predict for this? Theoretically, if they're good at predicting then they should have predicted they'd be banned
It’s hard to pretend this isn’t at least gambling-adjacent when most people are simply betting on outcomes.
It’s easy to pretend, just really hard to convince anyone without a direct financial interest.
Given that exactly the same thing has been regulated as gambling in Europe under the name "betting exchange" for 25 years the case for it being gambling is quite strong.
It's gambling sure and gambling should generally be legal. People are bizarrely puritanical about this.
Isn't the stock market a prediction market as well?
I think the stocks don't have a arbiter managing a discrete outcome between parties that don't have any KYC compliance.
The difference in my mind is that prediction markets and gambling are betting on outcomes, not long term behaviors. You could make the argument that they are the same, in the sense that buying a stock is "betting" on a company to do well, but I think you'd be making a silly argument. Stocks are intangible these days, but they were traditionally a physical thing that one would trade. If you're betting on prediction markets, there's nothing to trade after the event happens, just payouts.
Not exactly. Kalshi is binary options. Not stocks.
Stocks are shares of ownership. Now, in practice many people buy them as bets, but even those aren't really predictions. Prediction markets are time-boxed all-or-nothing plays. You are either correct, or you lose your entire stake.
No, a stock is a share of ownership in a company.
Now yes, people bet on the derivative value of those ownership shares... but that also happens to basically every asset. If a stock is a prediction market, then so is corn, and gold, and your home.
Yes, they are. Accurate prediction is rewarded in every market, for every asset or asset class. There are adjacent order benefits (I live in my home, I eat corn, I have a say in how a company is run) but these are never divorced from the impact of prediction and prediction in aggregate is just a crowdsourced leading indicator of value; oil spikes the moment a missile hits Iran not because the 2 are explicitly linked, but because the market has predicted the effect on the flow of that oil over some subsequent timeframe and priced itself accordingly
Yes, but all of these things have underlying assets that are not themselves predictions. You can buy and sell corn commodities, but at the end of the contract, actual corn is delivered. Predictions markets are different in that they betting on the prediction itself and have no associated asset.
That's my point. Where to draw the line and why?
Polymarket bad because it's accessible to everyone, futures trading on the CME good because it's only available to the rich?
Stock prices are a prediction built on crowdsourced information.
Couldn’t we say that any market rewards prediction? And that this is generally seen as a beneficial quality that results in more accurate valuations with better liquidity?
A commenter noted that MN already bans sports-betting, which is far closer to what prediction markets are than asset trading.
A closer stock analogy would be options.
Stocks aren't prediction markets, but options and futures are.
The stock market by itself has similar outcomes to the prediction markets (you buy X hoping it'll go up so you can earn $Y), but there's actual value being purchased. If I buy an apple stock, I own 0.001% or whatever of the company. If the company goes up to $10T in value, my little share is a percentage of that. I can sell it and be happy.
If the company goes to $0 then I own a portion of nothing, and so does everyone else who owns a share.
With prediction markets you don't own anything, and regardless of the outcome, someone can still win if they "bet right"
That said, futures and derivatives seem similar to prediction markets but I don't know enough about them to say more.
Cue in the talking heads to tell us how devastating this ban is.
I hope play money prediction markets are untouched. They are useful and fun, and as far as I know, dont have the downsides of real prediction markets.
Does this ban the prediction markets that don’t use real money but instead tokens that are worthless?
If the tokens are worthless, where's the thrill in the gambling?
Just for love of the game.
> The prohibition extends to services supporting prediction markets, like virtual private networks, that could allow consumers to disguise their location and get around the ban.
I'm sorry, what the fuck?
That's a creative interpretation by NPR. The law doesn't mention VPNs. The law bans:
> provid[ing] supportive services to a prediction market or consumer knowing that the services will be used to identify a consumer’s location, transfer money, or make or process payments for the purpose of allowing consumers to make wagers or to settle wagers made by consumers in violation of this section.
"knowing" is key here.
They're only doing this because they know Brock "Legnar" is gonna win at Summerslam
/s but not /s iykyk
It would be good if they banned Learing Centers.
They do ban fraudulant learning centers...
They've been banned for generations. It's called gambling.
Of course, we all have to sit through another round of Silicon Valley pretending they've discovered some new exciting business model that's just vice.
Unlicensed gypsy cabs, SROs, shift work, patent medicines, narcotics dealing, customs fraud, and smuggling already had established market entrants I guess.
You left out ponzi schemes, aka crypto.
Gambling works and is normal in most of the world. No idea why the USA is puritanical about this. It's like the oldest business on the planet.
Er, I agree it's incredibly old, but also has been treated as societal ill and subject to regulation for its entire history.
Wanting to control the non-violent actions of others is also a social ill. Just one most haven’t woken up to yet.
Should cannabis and other currently illegal substances remain as such?
I mean, I don't think we should legalize Fentanyl.
There's degrees of harmfulness. Weed is on the mild side along with alcohol (possibly even less harmful than alcohol).
Congrats Minnesota and good luck with enforcement.
Love it here, only sane state there is these days. Everywhere else is either brain dead, too hot, or too mean
Maybe the states will save us when the Federal government finally succumbs to the cancer that is Trump.
There should be a ban on the instagram reels showing gambling like it's not a big deal. They are deliberately targeting teens and it's quite sickening.
If you work at one of these companies it's the same as working for a payday loan company. You are making blood money.
I've seen a lot of YouTube ads recently for illegal gambling apps
I recently learned that a World of Warcraft AWC champion that I used to follow has been streaming slots on Twitch for hours a day, every day for the last year. I don't watch Twitch, so I was blown away that they allow that kind of thing on their platform. The cherry on top is that he runs some kind of fake gambling extension in his chat while he's streaming, where viewers bet on how much money he'll win or lose and they'll win or lose Twitch chat points alongside him.
I have no problem with Twitch channel points gambling via predictions, but doing that alongside actual* gambling is really messed up. It's blurring the line to the viewers between the two. And probably putting ideas in their head like "oh I won so many channel points predicting the outcomes, I should do some real gambling!"
*It could be sponsored and thus either rigged or all of the money being used was provided by the company under the expectation that it would be paid back to them through losses.
Remember in the late 2010s when the hack Ajit Pai, then fCC Chair, said that the FCC couldn't or shouldn't enforce Obama-era Title 8 net neutrality? Remember how states like California then said "OK, it's not a federal issue so we'll do it at the state level"? Then remember how the DoJ, at the FCC's direction, sued California [1]?
Well, which is it? Was net neutrality a state or federal issue? The answer is it's, as always, a Schrodinger's STate's rights issue. That is, it's a "state's rights" issue when it suits them, a federal issue when it suits them and it's neither when it suits them. Lack of any kind of regulation is the goal. This isn't some libertarian pipe dream. It's just naked pro-company and pro-billionaire gutting of government to boost profits.
Fast forward to prediction markets. The CFTC regulates this (arguably). Another deregulation hack is in charge. And again, states like Minnesota who already ban sports betting are being sued. "State's rights" btw. We're seeing the exact same pattern.
This on the same day that the president who sued the IRS, which was defended by the president's DoJ and the recess appointee Attorney-General settled a $10 billion lawsuit right as a federal judge tosses it because the case lacked adversity [2].
Besides the J6 slush fund, part of this settlement is that the IRS is barred from ever investigating Trump, his family or the Trump Organization for tax fraud.
The level of corruption and kleptocracy here is beyond belief and what's really frightening is that a good 35-40% of the population not only don't care but actively support something they will never benefit from and there hasn't been (and won't be) any political price paid for any of it. The president's endorsement still carries weight and just today, we've had the most expensive Congressional primary in history (~$35 million) where Trump unseated a sitting Congressmen for daring to push for releasing the Epstein files.
[1]: https://www.justice.gov/archives/opa/pr/justice-department-f...
[2]: https://www.msn.com/en-us/news/insight/trump-eyes-1-776b-irs...
[3]: https://www.washingtonpost.com/national-security/2026/05/19/...
Doesn’t this violate commerce between states, effectively?
It does, but the constitution's already been shredded and it's dog-eat-dog in the political space right now, so we'll see how it goes.
SCOTUS will probably soon rule that extracting wealth from alienated gamblers is a fundamental American right, that the founding fathers had in mind when drafting the constitution.
No.
They're not banning prediction markets from out-of-state, they're banning it entirely. A state cannot ban out-of-state alcohol, but it can ban alcohol outright if it wanted to.
Yeah but there's a difference there. I can buy alcohol out of state and if I bring it back in, that's on me.
Does anyone think that Minnesotans who are out of MN at the time of their bet will be allowed to bet? I don't think they'll be allowed, but they should be.
I assume most people need to put on an address or credit card info linking them to their home state. They likely wouldn't be allowed to have an account.
They should ban the stock market as well then since the stock market is essentially just a prediction market.
That would be awesome.
What a waste of time and energy
Agreed, instead of focusing on the rampant fraud happening under their watch they are focusing on consensual behaviour between adults.
There's rampant fraud on the "prediction markets".
If a prediction market uses AI will this violate the federal ban on states impeding AI?
Using AI to identify the ideal neighborhoods to sell meth in doesn't mean it's legal to sell meth.
What if AI is trained on prediction market data?
They're not going to get rid of them, they're just going to drive them underground, which will make them impossible to regulate, which will make using them less safe. I don't participate in prediction markets, but I would bet everything I own on this outcome.
Making using them less safe means that certain kinds of better are less likely to use them, which may be a purpose of this legislation.
Exactly. I see this common idea trotted out that "where there's a will, there's a way" -- if the government bans something, the ban will never be effective, because people still want that thing, and so a ban will just encourage violating the law.
But that's highly contingent on that thing being something people are willing to violate the law over, and on the convenience of that thing not being significantly impacted by prohibition. Neither of which are true for prediction betting (it's almost identical to sports betting in that regard, imo.) The only reason these markets proliferate is precisely because they are legal.
Especially if there's also a ban on related advertising. Polymarket and others are absolutely flooding the world with ads at the moment.
That's already what it is. They are an underground gambling site pretending that they're not doing things that they literally do by calling it something else. They're like a drug dealer who thinks they're slick by calling their drugs "research chemicals".