Comment Text:
Prediction markets are functionally gambling- but much worse, because it both permits and indeed encourages insider trading and rigging. There is no reason not to find a bet that you can manipulate, place a series of bets on it, and then go out and actually change the outcome, or place big bets on things you have insider information on. Aside from the fact that this is effectively fraud, you can bet on almost anything - imagine placing big bets on when the next wildfire will be in California, and then go out and set a fire to ensure your bet wins. The incentives for bad action are enormous.
But honestly, none of that really matters, because again, it's gambling. Gambling is already heavily regulated, because we KNOW it's wildly harmful to both individuals and society. The only thing keeping gambling from being more of a problem in the past is that you had to travel to the place where the gambling was. Now, the gambling is on your phone - with you all the time, wherever you are.
Regarding regulations and which kinds of contract are contrary to public interest, the obvious conclusion is... All of the contracts are contrary to popular interests. If hedging is the goal, those mechanisms already exist in stock options and futures. If predictions are the goal, polls do this without sapping money from the vulnerable and creating avenues for corruption. There are negligible benefits and massive harms from letting this continue. I know corruption is becoming more commonplace, but that doesn't mean we don't take the opportunities we can get to prevent it from spreading. We all have to live in the country our actions create - and I for one don't want to have to worry if my governor or city council is making political decisions to win a bet, or if some criminal is going to go set a bunch of houses on fire just to juice the monthly arson statistics.
