Comment Text:
Prediction markets financially incentivize people who own a stake in a prediction contract to potentially criminal behaviors.
Advocates for these platforms say that they are a public good because they give insiders an outlet for guiding the public with their insider information. However, the ethical or legal weight of their information bears no impact on their incentive to participate. This gives many participants an in-fact incentive to act against public interest.
Take for example, the market contract that predicted the recent attacks on Iran. I think many people would agree that the US attacking Iran was a bad thing for our foreign policy outcomes. Even just politically, it polls very poorly. Briefly before the attacks, hundreds of thousands of dollars were pumped into the affirmative on that contract. There is evidence that much of this stake was held by white house insiders. After that stake is made, there is a perverse incentive not to reverse course. In those active situations, we cannot have these major decisions outweighed by personal financial considerations.
That is a governmental example. Even in the private sphere, we shouldn't have this dilemma become commonplace.
This comment doesn't even cover the extractive nature of prediction markets. Once again, we have a situation where people who can afford to burn capital on an enormous stake, without much personal risk, will be the winners in the prediction markets. I think that is bad for the median American as a prediction market participant.
