On the question of subsidization and liquidity, has anyone considered investing money locked into a prediction to create outcomes which aren’t zero-sum? I imagine prediction markets like PredictIt invest the funds sunk into their markets in some manner already, but those returns/losses aren’t accessible to bettors.
Currently, the money placed into a prediction market just idles there from the perspective of bettors.
Suppose instead of distributing earnings/losses based solely on the market outcome, in the meantime the money was placed into high yields savings. At the resolution of the market, the payout would include not only the money put in the market but also any interest earned. On the flipside investment losses could erode winnings.
Of course, this gives rise to the possibility of markets which have major market repercussions being mispriced, reflecting concerns over investment losses. But if anything that teases out more useful information from the market. It also erases the opportunity cost of storing money a betting market over other financial markets.
FWIW FTX allows you to bet on its prediction markets on margin with a tokenized version of the S&P 500 as collateral, which accomplishes exactly what you want to accomplish here
On the question of subsidization and liquidity, has anyone considered investing money locked into a prediction to create outcomes which aren’t zero-sum? I imagine prediction markets like PredictIt invest the funds sunk into their markets in some manner already, but those returns/losses aren’t accessible to bettors.
Currently, the money placed into a prediction market just idles there from the perspective of bettors.
Suppose instead of distributing earnings/losses based solely on the market outcome, in the meantime the money was placed into high yields savings. At the resolution of the market, the payout would include not only the money put in the market but also any interest earned. On the flipside investment losses could erode winnings.
Of course, this gives rise to the possibility of markets which have major market repercussions being mispriced, reflecting concerns over investment losses. But if anything that teases out more useful information from the market. It also erases the opportunity cost of storing money a betting market over other financial markets.
FWIW FTX allows you to bet on its prediction markets on margin with a tokenized version of the S&P 500 as collateral, which accomplishes exactly what you want to accomplish here