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Prediction markets have an elections problem

asteriskmag.com

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Re: Prediction markets have an elections problem

#111

Post by tshaddox »

ummonk wrote: post #109

The article briefly mentions causes for market inefficiency such as the time value of money and platform fees, but then inexplicably goes on to ignore them as potential reasons for inefficient markets. Plenty of arbitrage opportunities exist on PredictIt that can’t be taken advantage of either because the platform’s cut of any profit you make on a bet will negate the arbitrage or because resolution is so far off that…

I would expect that platform risk would be even more significant than fees and time. I haven't looked into any of the popular prediction market platforms, but by default I would be more concerned about the risk of them resolving markets in ways I fundamentally disagree with or simply ceasing to exist.

Re: Prediction markets have an elections problem

#112

Post by tshaddox »

mattmaroon wrote: post #67

I am a former professional gambler and now I don’t gamble much, because I have neither the time nor interest to find good wagers, but what I do is on predictit. Being a great gambler mostly means not gambling until you have an edge, and what he says about and market being less accurate than 538 is true in my experience. I’ve been betting on there every couple years for maybe ten or so, it’s held up well. As many ment…

> But even then, you bet 93 cents to win 7 and then pay 5% on cashout so it wasn’t exactly making people rich.

Don't forget the risk of the whole prediction market ceasing to exist or doing something blatantly fraudulent.

Re: Prediction markets have an elections problem

#113

Post by Geezus_42 »

bluedays wrote: post #110
mattmaroon wrote: post #67

I am a former professional gambler and now I don’t gamble much, because I have neither the time nor interest to find good wagers, but what I do is on predictit. Being a great gambler mostly means not gambling until you have an edge, and what he says about and market being less accurate than 538 is true in my experience. I’ve been betting on there every couple years for maybe ten or so, it’s held up well. As many ment…

How does that work? Being a professional gambler, I mean. I'd love to know more about this.

Pretty sure it's a joking way of saying they used to be a day trader.

Re: Prediction markets have an elections problem

#114

Post by aleph_minus_one »

jrm4 wrote: post #47

There's no problem here at all; except perhaps the wildly absurd fantasy of "perfectly rational (and/or intelligent) markets," which the popularity of e.g. lotteries and casinos immediately disproves. Not much to see here.

> There's no problem here at all; except perhaps the wildly absurd fantasy of "perfectly rational (and/or intelligent) markets," which the popularity of e.g. lotteries and casinos immediately disproves. Not much to see here.

The behaviour of customers of lotteries is indeed clearly not perfectly rational if you consider the monetary expected value of your wins. On the other hand, the customers' behaviour gets much more rational if you consider the customer's utility function: a huge lottery win has a disproportional benefit for the customer with respect to the customer's utility function (since the lottery win will hopefully change the customer's life). In other words: what the customer optimizes for is the expected value of his utility function.

Re: Prediction markets have an elections problem

#115

Post by paulpauper »

mattmaroon wrote: post #67

I am a former professional gambler and now I don’t gamble much, because I have neither the time nor interest to find good wagers, but what I do is on predictit. Being a great gambler mostly means not gambling until you have an edge, and what he says about and market being less accurate than 538 is true in my experience. I’ve been betting on there every couple years for maybe ten or so, it’s held up well. As many ment…

Also, there is no need to gamble when you can just park your $ in leveraged tech funds or even something like QQQ and make a >30% ROI every year, which has been the long-term return since 2009. This is best for large amounts of cash. The huge bull market in tech, like Nvidia and Meta stock, made other type of speculation unnecessary. A lot of people doing this now.

Re: Prediction markets have an elections problem

#116

Post by perrygeo »

mattmaroon wrote: post #67

I am a former professional gambler and now I don’t gamble much, because I have neither the time nor interest to find good wagers, but what I do is on predictit. Being a great gambler mostly means not gambling until you have an edge, and what he says about and market being less accurate than 538 is true in my experience. I’ve been betting on there every couple years for maybe ten or so, it’s held up well. As many ment…

> I managed to get to bet on something that had already happened

But you're not. You're betting on whether the contract will settle and when. That's quite distinct from betting on the event itself.

Re: Prediction markets have an elections problem

#117

Post by jfoutz »

bluedays wrote: post #110
mattmaroon wrote: post #67

I am a former professional gambler and now I don’t gamble much, because I have neither the time nor interest to find good wagers, but what I do is on predictit. Being a great gambler mostly means not gambling until you have an edge, and what he says about and market being less accurate than 538 is true in my experience. I’ve been betting on there every couple years for maybe ten or so, it’s held up well. As many ment…

How does that work? Being a professional gambler, I mean. I'd love to know more about this.

Can't speak from personal experience, but OP laid it out pretty clearly. You wait till you have an edge, then you bet. There are various books that try to capture it. Doyle Brunson's super system is like way outdated, but there are some funny bits about being a Texas road gambler getting run out of town. Annie Duke has a book I believe. My window into that world is pretty narrowly focused on poker.

I'll always recommend _Positively Fifth Street_ by James McManus. He doesn't really lay out how to do it step by step, but takes you along for a ride as to what the world looks like from that perspective. kinda.

Re: Prediction markets have an elections problem

#118

Post by defen »

bluedays wrote: post #110
mattmaroon wrote: post #67

I am a former professional gambler and now I don’t gamble much, because I have neither the time nor interest to find good wagers, but what I do is on predictit. Being a great gambler mostly means not gambling until you have an edge, and what he says about and market being less accurate than 538 is true in my experience. I’ve been betting on there every couple years for maybe ten or so, it’s held up well. As many ment…

How does that work? Being a professional gambler, I mean. I'd love to know more about this.

The IRS has various rules in place that determine whether gambling is your business / profession. If you qualify as a professional gambler, you can deduct losses against your winnings (just like casual gamblers can) but you can also deduct your "business expenses" (e.g. cost of travel, hotels, meals, etc that you spend in pursuit of your business).

Re: Prediction markets have an elections problem

#119

Post by fasthands9 »

I think for now they are still pretty good at assessing something like "Are the odds that Trump wins Wisconsin in 2024 closer to 2/3 or 1/2". The post-election stuff was annoying (I had several thousand dollars on the site) but the market limits + uncertainty over the platform made is understandable.

It would be nice if there was a platform that didn't have limits and had interest rates closer to savings interest rates.

Re: Prediction markets have an elections problem

#120

Post by phire »

chadash wrote: post #51

The answer is stupidly simple but only touched on briefly in the article. It is the fees and the limits bet sizes combined. Let’s take a simple example, which is Donald Trump‘s current odds of winning the Republican nomination. Predictit currently has this at $0.92. Realistically I think the odds are higher. Not 100% but higher than $0.92. The problem is that the maximum I can bet is $500, so that’s 543 “shares” that…

I think at this point, the chance of Trump not winning the Republican Nomination is basically the chance of him dying before the convention.
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