I wonder if the UK bookies' losses on Brexit is relevant. As I saw reported, the stay bets by the establishment-types were typically $500, while the exit bets were typically $50, so the odds were dramatically skewed to match the money. The stay bets were viewed as a lock (odds indicating a near-certainty), and Brexit as an extreme speculation (odds indicating a long shot). Yet, Brexit prevailed comfortably.
The underlying is what interests as a prediction market, i.e., people get one vote each in the outcome, but prediction/betting markets are weighed by the amount of money wagered. Your example of Billy Walters seems to confirm this market failure (Or market structure failure).
I don't think it's market failure, it's market structure failure. What would the odds of Brexit have been if there was a DCO/DCM marketplace where every buy had to match to a sell? I bet the odds would have been far different. The OTC style marketplace gave an unrealistic view of the actual odds.
I've played election prediction markets from as early as 2008, when the Irish exchange, Intrade, was going strong. I deposited $2000 from a bank in Ft. Lauderdale and while I was waiting in line, the bank's flat screen TV was tuned to CNN as Obama was delivering his, "throw grandma under the train" speech, in the wake of the Rev. Wright fallout. Intrade used a TT like DOM order entry system that showed the book. I bought Al Gore contracts from 5 cents to 8 cents. As soon as I finished buying, he was right back to nickel sellers. (I thought there was an undervalued shot of Obama and Clinton being in a stalemate at the DNC, and Gore would get the nomination as a compromise, white night.)
In 2016, and this is more to your point, Jeff, I bet on Trump with a conventional Costa Rican sportsbook at just worse than 3-1 odds. (I timed my bet horribly, right after a debate where Trump over performed) Everyday I monitored the President market on a site whose name I don't remember, but it was the exchange that Predicit ultimately beat out for market share. A week to three before the election, Trump was wallowing around in the high teens to mid-20's (binary odds) but then explode to 40 on the Comey/Weiner laptop news. By Monday (pre-election) night, Trump was back in the teens (6-1 odds) and I remember waking up on election day and seeing Trump move up to 21. At that point, I really thought he'd win, because if he was indeed toast, the market would probably be sub-10.
Imo, had Brexit been tradable, it would have been priced similar to Trump. I for one wasn't at all shocked. You may remember, Britain's largest circulation newspaper (The Sun lol) came out in favor and without doubt, changed the mind of just enough Labour protectionists, to move the needle.
in the mid-2000's I suggested to my company which was doing R&D on pesticides that perhaps an internal prediction market (PM) might be a parallel method of evaluating which chemicals in the pipeline were good candidates for development. I had implemented an open-source PM as a base on which to build, but no one was buying my suggestion and it died.
While I understand you points regarding these markets, I am sure that gambling in any form is dangerous to a significant number of our population. I believe legalized gambling outside of NV is happening only because of the tax revenue collected and the powerful people who are making lots of dollars. I've seen the devastation of individuals and families who became addicted to gambling. A large percentage of people become addicted. Our Governor Pritzker in IL just released his tax figures and of course he made millions on his gambling investments.
Jeff can correct me, but as I see it, prediction markets are markets, not gambling. You are in a sense making a bet that something will happen, but that's not any different that buying a future in a commodity or other futures markets. Also, as he says, you are buying a position (?) that someone is selling.
Correct. I agree with Ronald that gambling is exploding nationwide because of tax revenue, not out of concern for citizens. I'd compromise with a fence around sports gambling with regard to prediction markets only because they aren't additive to anything policy, business or economywise. I am surprised Gov Pritzker could win at blackjack. I know he can't do math. I have seen his budgets.
I wonder if the UK bookies' losses on Brexit is relevant. As I saw reported, the stay bets by the establishment-types were typically $500, while the exit bets were typically $50, so the odds were dramatically skewed to match the money. The stay bets were viewed as a lock (odds indicating a near-certainty), and Brexit as an extreme speculation (odds indicating a long shot). Yet, Brexit prevailed comfortably.
The underlying is what interests as a prediction market, i.e., people get one vote each in the outcome, but prediction/betting markets are weighed by the amount of money wagered. Your example of Billy Walters seems to confirm this market failure (Or market structure failure).
Thoughts?
I don't think it's market failure, it's market structure failure. What would the odds of Brexit have been if there was a DCO/DCM marketplace where every buy had to match to a sell? I bet the odds would have been far different. The OTC style marketplace gave an unrealistic view of the actual odds.
I've played election prediction markets from as early as 2008, when the Irish exchange, Intrade, was going strong. I deposited $2000 from a bank in Ft. Lauderdale and while I was waiting in line, the bank's flat screen TV was tuned to CNN as Obama was delivering his, "throw grandma under the train" speech, in the wake of the Rev. Wright fallout. Intrade used a TT like DOM order entry system that showed the book. I bought Al Gore contracts from 5 cents to 8 cents. As soon as I finished buying, he was right back to nickel sellers. (I thought there was an undervalued shot of Obama and Clinton being in a stalemate at the DNC, and Gore would get the nomination as a compromise, white night.)
In 2016, and this is more to your point, Jeff, I bet on Trump with a conventional Costa Rican sportsbook at just worse than 3-1 odds. (I timed my bet horribly, right after a debate where Trump over performed) Everyday I monitored the President market on a site whose name I don't remember, but it was the exchange that Predicit ultimately beat out for market share. A week to three before the election, Trump was wallowing around in the high teens to mid-20's (binary odds) but then explode to 40 on the Comey/Weiner laptop news. By Monday (pre-election) night, Trump was back in the teens (6-1 odds) and I remember waking up on election day and seeing Trump move up to 21. At that point, I really thought he'd win, because if he was indeed toast, the market would probably be sub-10.
Imo, had Brexit been tradable, it would have been priced similar to Trump. I for one wasn't at all shocked. You may remember, Britain's largest circulation newspaper (The Sun lol) came out in favor and without doubt, changed the mind of just enough Labour protectionists, to move the needle.
I'm waiting for the gov't to re-institute the FutureMAP program (https://www.cia.gov/resources/csi/static/Prediction-Markets-Enhance-Intel.pdf) to use prediction markets for terrorist events and other strategic intelligence.
They could use it internally I bet.
I agree, though I think the original program was internal. Its cancellation, though, was public, if belated.
I did send a note to one of my senators asking about it. I expect a pro forma response.
in the mid-2000's I suggested to my company which was doing R&D on pesticides that perhaps an internal prediction market (PM) might be a parallel method of evaluating which chemicals in the pipeline were good candidates for development. I had implemented an open-source PM as a base on which to build, but no one was buying my suggestion and it died.
Bad Beats is the only ESPN show worth watching.
While I understand you points regarding these markets, I am sure that gambling in any form is dangerous to a significant number of our population. I believe legalized gambling outside of NV is happening only because of the tax revenue collected and the powerful people who are making lots of dollars. I've seen the devastation of individuals and families who became addicted to gambling. A large percentage of people become addicted. Our Governor Pritzker in IL just released his tax figures and of course he made millions on his gambling investments.
Jeff can correct me, but as I see it, prediction markets are markets, not gambling. You are in a sense making a bet that something will happen, but that's not any different that buying a future in a commodity or other futures markets. Also, as he says, you are buying a position (?) that someone is selling.
Correct. I agree with Ronald that gambling is exploding nationwide because of tax revenue, not out of concern for citizens. I'd compromise with a fence around sports gambling with regard to prediction markets only because they aren't additive to anything policy, business or economywise. I am surprised Gov Pritzker could win at blackjack. I know he can't do math. I have seen his budgets.