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Why Almost Everyone Loses–Except a Few Sharks–On Prediction Markets

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Re: Why Almost Everyone Loses–Except a Few Sharks–On Prediction Markets

#71

Post by tyre »

david-gpu wrote: post #31
cmiles8 wrote: post #23

This whole prediction market space seems like a 2026 version of ball and cup game betting. Most of the people participating fail to understand that they (and their pointless bets up for harvesting) are the product here.

My intuition is that it is a lot like sports betting: many laypeople bet for what they hope will happen, rather than trying to beat the market earnestly. The winners, as you point out, are the house and those with insider knowledge.

It’s extremely like sports betting, because the vast majority of their volume is sports betting.

Re: Why Almost Everyone Loses–Except a Few Sharks–On Prediction Markets

#72

Post by doctorpangloss »

chillfox wrote: post #30
hx8 wrote: post #12

I had a thesis two months ago that you could detect predictors with insider knowledge and ride their coat tails and spent some amount of time staring at the data and running some ML algos to detect them. I learned some things about the market during this time, but did not succeed in my detection algorithm. * Polymarket is a bit more transparent with who placed what bet, so it's a good place to go to study winners. *…

I used to work for a sports betting company that identified individuals who were a little too good. The key is to remember that they are addicts and will bet on events regardless of if they have insider knowledge or not, so you have to account for this and not only identify the individuals with insider knowledge, but also what events they have that knowledge about and what they don't.

Do people here and the WSJ comprehend though that they are giving Polymarket free publicity to farm addicts?

Re: Why Almost Everyone Loses–Except a Few Sharks–On Prediction Markets

#73

Post by prepend »

TheRealDunkirk wrote: post #61
yieldcrv wrote: post #51

Earlier quoted context omitted.

Finance has always been the largest sector on the planet through every economic environment you have been alive for, I don't really understand why there is a current of this community that acts so divorced from its perpetual and all encompassing existence their whole lives Despite you being an individual, you reflect an aberration of sentiment here that makes no sense For example, the larger economy hasn't failed, an…

> the larger economy hasn't failed It's only a matter of time until Social Security starts to fail, right after we've paid all the boomers their full benefits (and just in time for me to be eligible), and then they'll have to implement "austerity measures." After that, groceries, gas, housing, health "care," and higher education will have fully broken the middle class (it's already broken me, and I have a good job an…

Social security will fail slowly by reducing its payout a little at a time.

It can’t really fail all at once unless the US government dissolves. And people have been losing money on that bet for 250 years.

Luckily, if someone thinks the USG will actually fail, it’s really easy to trade on that possibility.

Re: Why Almost Everyone Loses–Except a Few Sharks–On Prediction Markets

#74

Post by prepend »

rmb177 wrote: post #57

I realize I'm an N of 1, but I've participated in prediction markets since 2019 and am just above 5 figures in profit. Not life-changing money, but it certainly doesn't hurt. I'm pretty conservative in my predictions and just think there is a lot of free money on these sites. Maybe that just supports the sentiments of this article and most of the negative comments on this post. There are certainly cases where I got r…

I think the problem with prediction markets is the ease of people changing the outcome and profiting on it from others expense.

It’s worse than insider trading as it’s betting that Kyle’s mom will bomb Gaza and then making it happen.

Any societal good from knowing is outweighed by the injustice.

If there was any regulation by government or the markets themselves then it would be better. Betting in things you can’t affect like the weather or earthquakes or elections or whatever is actually pretty useful for awareness.

Re: Why Almost Everyone Loses–Except a Few Sharks–On Prediction Markets

#76

Post by bobro »

mathgradthrow wrote: post #43

Everytime someone loses money on a bad bet in a prediction market, it's an opportunity for them to learn something about ~~counter-party risk~~ adverse selection. You could easily make the argument that the more people are losing in prediction markets, the more learning is happening.

Every time a drug addict uses, they’re actually learning about biology and the sociology of addiction.

Re: Why Almost Everyone Loses–Except a Few Sharks–On Prediction Markets

#77

Post by dist-epoch »

JumpCrisscross wrote: post #70
dist-epoch wrote: post #68

Earlier quoted context omitted.

10 year old paper on forex trading. 85% of losers here. > The average trader is in the dataset for almost exactly six months (181 days). This is the amount of time between a trader’s first and last trade. About 25% of traders leave the sample within the first 46 days, while 50% of traders exit the sample within 155 days. Of the 181 days on average between open and close, traders are actively trading on an average of…

> specifically mentioned "bettors" - day traders/speculators, not long time investors Forex is zero sum before fees and negative sum after. It’s distinct from capital markets. I wouldn’t extrapolate losses from FX.

It's the same loss percentage for stocks day trading. The loses do not come mainly from the zero sum/fees, they come from the lack of alpha.

> Depending on the source, only around 3% to 20% of day traders make money. But that 20% estimate probably has as much to do with the time period studied—the dotcom bubble. It's hard to know for sure, but it's probably fair to say that up to 95% of day traders lose money.

https://www.investopedia.com/articles/active-trading/053115/...

Re: Why Almost Everyone Loses–Except a Few Sharks–On Prediction Markets

#78

Post by aaron695 »

screamingninja wrote: post #62
rmb177 wrote: post #57

I realize I'm an N of 1, but I've participated in prediction markets since 2019 and am just above 5 figures in profit. Not life-changing money, but it certainly doesn't hurt. I'm pretty conservative in my predictions and just think there is a lot of free money on these sites. Maybe that just supports the sentiments of this article and most of the negative comments on this post. There are certainly cases where I got r…

Have you heard of the Sucker Effect? Your gains come solely from the those who made the wrong bet. There is no inherent value generation in the prediction markets unlike the stock markets. Yes, there is money to be made, but at a net loss to the society, so many would not consider these bets "opportunities" but rather "gambling".

[dead]

Re: Why Almost Everyone Loses–Except a Few Sharks–On Prediction Markets

#79

Post by AureliusMA »

doctorpangloss wrote: post #72
chillfox wrote: post #30

Earlier quoted context omitted.

I used to work for a sports betting company that identified individuals who were a little too good. The key is to remember that they are addicts and will bet on events regardless of if they have insider knowledge or not, so you have to account for this and not only identify the individuals with insider knowledge, but also what events they have that knowledge about and what they don't.

Do people here and the WSJ comprehend though that they are giving Polymarket free publicity to farm addicts?

This is like saying that "Supersize me" is free publicity for MacDonalds.

Re: Why Almost Everyone Loses–Except a Few Sharks–On Prediction Markets

#80

Post by [deleted] »

prepend wrote: post #73
TheRealDunkirk wrote: post #61

Earlier quoted context omitted.

> the larger economy hasn't failed It's only a matter of time until Social Security starts to fail, right after we've paid all the boomers their full benefits (and just in time for me to be eligible), and then they'll have to implement "austerity measures." After that, groceries, gas, housing, health "care," and higher education will have fully broken the middle class (it's already broken me, and I have a good job an…

Social security will fail slowly by reducing its payout a little at a time. It can’t really fail all at once unless the US government dissolves. And people have been losing money on that bet for 250 years. Luckily, if someone thinks the USG will actually fail, it’s really easy to trade on that possibility.

[deleted]
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