Prediction Markets: Tales from the Election • Hacker News Board

Re: Prediction Markets: Tales from the Election

#101

Post by Tenoke » Fri, Feb 19, 2021, 7:15 PM UTC

PragmaticPulp wrote: post #85

ttul wrote: post #80

Say what you will about cryptocurrencies, it sounds like a damn interesting area in which to be spending your time as an engineer, even if 90% of the stuff ends up being total crap or a fraud.

> even if 90% of the stuff ends up being total crap or a fraud Working on something that turns out to be total crap or a fraud is actually very demoralizing, not to mention not great for your resume. In the distributed systems space, I've interviewed a lot of burnt out engineers who thought they were getting in on the next big blockchain company that turned out to be a couple founders use blockchain as a get rich qui…

>Working on something that turns out to be total crap or a fraud is actually very demoralizing, not to mention not great for your resume.

Too bad most people here have worked on startups that failed then.

Re: Prediction Markets: Tales from the Election

#102

Post by ruuda » Fri, Feb 19, 2021, 7:15 PM UTC

hatsunearu wrote: post #2

I considered myself pretty in-the-know and knew about Predictit, all kinds of crypto, and therefore I thought I was up-to-date on the crypto news but I did not even know that there was a crypto clone of Predictit. >blockchain-based markets are highly niche Not sure if he means if the whole of blockchain is highly niche or blockchain-based prediction markets are highly niche, but if it's the latter, I definitely agree…

https://astralcodexten.substack.com/p/metaculus-monday and https://astralcodexten.substack.com/p/metaculus-monday-2821 mention a few other markets.

Re: Prediction Markets: Tales from the Election

#103

Post by rspeele » Fri, Feb 19, 2021, 7:16 PM UTC

Kranar wrote: post #89

fairity wrote: post #72

Earlier quoted context omitted.

There are cash-based markets like Predictit where you could've made a similar bet. Predictit charges 5% withdrawal fees + 10% of profits, but if you expect a 15% ROI, it's still profitable.

PredictIt didn't have this anomaly where Trump had a 15% chance of winning. After Georgia called the election the percentage went above 95%.

Oh, it definitely did. Maybe not to the same degree as the crypto markets (never looked at them), and there were certainly spikes this way and that, but you could get Trump NO cheaper than 90c well into December.

The Texas v. Pennsylvania case getting swatted down by SCOTUS was probably the last of the cheap shares where it was worth depositing money just to play, but if you already had some money in your account it was worth taking the obvious bets all the way to the end.

edit: went back and checked one of the markets to refresh my memory. Yep, check the 90-day chart. Dec 6 "NO" on a Republican win was only 84c!

https://www.predictit.org/markets/detail/2721/Which-party-wi...

edit2: here's another hilarious one.

https://www.predictit.org/markets/detail/5554/Will-Donald-Tr...

Yep, "Will Trump win the popular vote" closed on Nov 24th while still trading at 8 cents. The popular vote. Jesus Christ. For reference he lost the popular vote by 7 million.

I'd actually be curious to know if there was a crypto-market equivalent to that one, because I want to believe most of that pricing was due to PI's limits. For example, one Trump bettor maxing out his $850 limit of 7c shares, requires 14 Biden bettors maxing out $850 of 93c bets to be his counterparty. With a 5,000 trader limit that means that there might be just a handful of Trump-won-landslide bettors vs a few thousand No-he-didn't bettors with a lot more invested, all maxed out and unable to move the price further. But I don't know if that shook out differently in the crypto space with no limits.

Re: Prediction Markets: Tales from the Election

#104

Post by crazygringo » Fri, Feb 19, 2021, 7:18 PM UTC

xalava wrote: post #37

"Prediction markets" is a fancy word for gambling. It is a highly regulated activity almost everywhere, mainly has it can have terrible consequences at the individual levels and major side-effects such as corrupt games in sports. Let's not even talk about politics where it is generally forbidden for obvious reasons. The conclusion is disheartening "It shows a lot about how market efficiency actually works in practice…

> "Prediction markets" is a fancy word for gambling.

Hard disagree.

Gambling is set up with the principal aims of a) making money off the spread and b) getting participants as "gamified" as possible with exciting events and the ability to bet lots of money.

Prediction markets are set up with the principal aim of crowdsourcing intelligence from a diverse set of minds. They can be set up by academia, think tanks, research labs, etc. And while (arguably) necessarily tied to real money, they also often limit participants and the size of bets through various mechanisms for a host of reasons (one being to make corruption non-viable as you mention).

Gambling is more often related to entertaining events like sports and national politics; prediction markets are often focused more on niche or technical outcomes though they also often expand into national politics to garner participation and scale.

Obviously any market in practice can lie somewhere in the middle. But that doesn't make the distinction any less important. They're not just the same thing.

Re: Prediction Markets: Tales from the Election

#105

Post by lostlogin » Fri, Feb 19, 2021, 7:19 PM UTC

solveit wrote: post #12

ahelwer wrote: post #6

Earlier quoted context omitted.

Yep, it clearly leads into assassination markets - for example, opening a large bet that person X will die on a specific date.

Yes, just like you can short Tesla and assassinate Musk. This is ridiculous, regulate prediction markets like any other financial market (in particular, your identity should be traceable) and then all your clever plan does is get your funds frozen pending a very thorough investigation.

> assassinate Musk.

Would this cause Tesla stock to rise or fall?

Re: Prediction Markets: Tales from the Election

#106

Post by jtxxwl2 » Fri, Feb 19, 2021, 7:22 PM UTC

mvc wrote: post #91

jtxxwl2 wrote: post #88

Earlier quoted context omitted.

>Or a participant in some sort of fantasy vote-rigging conspiracy. This is even more relevant outside of the US. In the US vote rigging conspiracies are impossible for some inexplicable reason, perhaps related to magical soil, but outside of the US they are a real concern.

May I be so bold as to suggest that not all vote rigging conspiracies are considered impossible. Just the ones that have been rejected by every court that has tested them.

One theory I've heard is that the magical soil in the US would compel the riggers to confess and/or provide evidence of their guilt to the courts and to the general public, rather than lying and/or concealing that evidence. In the rest of the world, courts often are not provided with relevant evidence or confessions, and therefore rigging remains possible.

Re: Prediction Markets: Tales from the Election

#107

Post by bidirectional » Fri, Feb 19, 2021, 7:24 PM UTC

lostlogin wrote: post #105

solveit wrote: post #12

Earlier quoted context omitted.

Yes, just like you can short Tesla and assassinate Musk. This is ridiculous, regulate prediction markets like any other financial market (in particular, your identity should be traceable) and then all your clever plan does is get your funds frozen pending a very thorough investigation.

> assassinate Musk. Would this cause Tesla stock to rise or fall?

Fall massively, I would imagine. Tesla's valuation is obviously not driven by fundamentals, Musk's personality is one of the things it is based on.

Re: Prediction Markets: Tales from the Election

#108

Post by ketamine__ » Fri, Feb 19, 2021, 7:29 PM UTC

xur17 wrote: post #100

Tenoke wrote: post #97

Earlier quoted context omitted.

Poly.Market which he mentions (and where I bet on the US election) just uses a stablecoin (USDC) pegged to the US dollar. Same situation for the DAI he mentions he used. So this is an already solved issue.

I've used Poly.market a few times and been pretty happy with it - they use a second layer network, so after depositing, trades are fairly cheap (you just pay a market maker fee, no crypto miner fee as far as I can tell). Downside is that the outcome is provided by the poly.market creators, but your actual bets are non-custodial.

The fees were quite expensive before they started using Matic.

Re: Prediction Markets: Tales from the Election

#109

Post by camjohnson26 » Fri, Feb 19, 2021, 7:31 PM UTC

btilly wrote: post #30

ahelwer wrote: post #6

Earlier quoted context omitted.

Yep, it clearly leads into assassination markets - for example, opening a large bet that person X will die on a specific date.

Opening the bet that they die on a particular date is a problem because they know when to be careful. Opening a market on when they will die that goes to the person who is closest to the right date, now any would-be assassin can place their bet and try to win. And the target may know that people are hunting for them, but won't be forewarned of when.

They would need a counter party to be able to place the bet though, and those people have an equal incentive to keep the person safe. If no counter party exists then there’s no incentive.

Plus this ignores risks outside the market, like the risk the would be assassin gets caught and sent to prison.

Re: Prediction Markets: Tales from the Election

#110

Post by ahnick » Fri, Feb 19, 2021, 7:35 PM UTC

jldugger wrote: post #94

tantalor wrote: post #31

Earlier quoted context omitted.

Prediction market positions are not capital gains in the same way that lottery tickets are not capital gains. It is gambling.

But your source of funds might be. Sounds like the OP avoided this by borrowing against assets, but since his assets are volatile blockchain stuff, the interest rate was absurd.

The interest rate on the loan was 3.5%. Long term capital gains in the US are typically 15% (short term 30%), so using a CDP can save a lot of money depending on the tax laws that apply to you.