Sometimes this doesn’t even matter. Sports betting is very popular even though it’s usually negative sum.
Yes. PredictIt used to attract a lot of “dumb money”—people who just wanted to bet on their favorite candidate (or against disfavored candidates). They also used to run weekly markets on polling averages and things like the number of times Trump would tweet that tended to attract people who just wanted to do some skill-based gambling, whether they actually had the skill or not.
PredictIt charges high transaction fees with no outside subsidies, so all of the markets were extremely negative-sum. Despite this, gamblers and [Candidate X] True Believers managed to provide ample subsidy to attract some more knowledgable traders. (Based on the comments section of some of the popular markets, there were many people who lost thousands or tens of thousands. Probably some of the biggest losers were gambling addicts who destroyed their finances in the process. A pretty big negative externality of negative-sum markets where amateur participation is allowed.)
I would argue the negative effectives of losing big on prediction markets are still better then the negative effects of losing big on sports betting markets.
Yes. PredictIt used to attract a lot of “dumb money”—people who just wanted to bet on their favorite candidate (or against disfavored candidates). They also used to run weekly markets on polling averages and things like the number of times Trump would tweet that tended to attract people who just wanted to do some skill-based gambling, whether they actually had the skill or not.
PredictIt charges high transaction fees with no outside subsidies, so all of the markets were extremely negative-sum. Despite this, gamblers and [Candidate X] True Believers managed to provide ample subsidy to attract some more knowledgable traders. (Based on the comments section of some of the popular markets, there were many people who lost thousands or tens of thousands. Probably some of the biggest losers were gambling addicts who destroyed their finances in the process. A pretty big negative externality of negative-sum markets where amateur participation is allowed.)
The sports betting analogy is very apt.
I would argue the negative effectives of losing big on prediction markets are still better then the negative effects of losing big on sports betting markets.