Comment Text:
Prediction markets need at a minimum the following regulations:
1) Token holders must be transparent about their financial connections and are conflicted from making bets at all, let alone on the outcomes they verify. The fact that a token holder can hold contracts on the outcomes they verify is absurd.
2) Contracts that involve death and physical injury or threat of death and physical injury should be a finable offense. Not only make them illegal. Not only ask the holding company to not allow them, but provide a financial penalty valued at twice the total capital in the contract so that it never is profitable to allow people to profit on direct misery and death.
3) Contract holding organizations should be regulated by state gambling commissions, or else not able to facilitate contracts on traditional gambling events like sports. Period. If your users can make money on deciding the outcome or details of a sporting event, you should be regulated by the state gambling commissions.
4) Easily manipulative events (like choices a public figure may make, or details of an event where there is a lag between public disclosure and the event like taped events) should not be allowed. They encourage corruption.
5) Contracts should only be made by agents where financial commitments are transparent, and this should be well regulated. Determining the financial connections to both prevent insider actors as well as facilitate investigation and punishment of insider trading is lacking.
These are really no brainer changes. Gambling should be regulated like gambling is, even if it has a fancy word change. The system where the holding organizations should can incentivize an organization to place positions opposite means they set odds like a sports book. Positions on sporting events is the same as gambling at the user level and so needs oversight to prevent exploitation since gambling is known to cause harm to the user. Being able to decide on the definition of the outcome you hold a position in is absurd. And being able to take positions on easily manipulatable events is inviting corruption. Clearly the holding organizations and market forces have not prevented these things so we turn to the government when the market has failed to regulate itself.
