Why don’t you consider this a bigger objection to your post? IMO it’s actually very important that a deep, liquid prediction market with millions of pounds of volume and low fees exists, and the prices are fairly similar to PredictIt. IMO this is strong evidence that, in this case, PI’s prices aren’t being distorted too much by the problems you list. I believe US-based bettors can get >1m USD on Trump or Biden at fairly close to Betfair odds with a little bit of time and patience as well through various means; I am aware of several people that have bet >$100k on the election and I think they could bet substantially more if they want to. (some examples of “various means”: crypto exchanges, finding e.g. poker players who want to bet a lot on the election, finding a friend in the UK to bet on betfair for you)
First, are any of the things you suggest in fact legal for US-based bettors?
Second, how difficult in terms of time/inconvenience/up-front capital costs without the potential for leverage are they compared to the ways in which you can bet on e.g. the price of Google stock?
If you’re telling someone in the US “you should be willing to bet your views on prediction markets, if you’re right it’s free money” when what you mean is “it’s free money provided you’re willing to dedicate hours to working your money through crypto exchanges, committing tax fraud along the way”, that feels somewhat different.
I would be willing to tell someone who thinks Google shares are underpriced “go buy some then,” because buying Google stock at low cost is legal, very easy, and even if you have limited up-front cash the real financial markets offer opportunities for leverage (options etc.)
I would not be willing to tell someone who thinks Trump Wins shares are underpriced “go buy some then” when that process is time-consuming, difficult, and likely illegal.
Yes, it’s completely legal for people in the US to bet on things; the only illegal part is being an intermediary.
I see where you’re coming from re “you should be willing to bet your views”; I just want to be clear that if you think PI prices are inefficient, it’s mostly not because of transaction fees/taxes/etc.
How about telling someone who thinks Trump Wins shares are underpriced “go search on twitter and poker forums for people betting on this, and message a few of them”? This is completely legal, doesn’t take that long, and is quite safe as long as you both agree to trustworthy escrow. There’s no guarantee you’ll find anyone willing to take your bet, but I think the chances you would are fairly high.
1. I don’t agree that the prices are fairly similar. PredictIt, poly.market, Omen, and FTX (let me know any other crypto exchanges you want considered) all have Trump ~40%. Betfair has him ~35%. I think that’s materially different. (Also, the volumes on those exchanges are all pretty limited, so I’d be impressed if you could get $1mm down that way). I agree you could potentially get some risk down via P2P betting, but I don’t think it’s fair to describe that as a “prediction market”. (Although it does nuke his point of excusing people from not putting their money where their mouth is).
2. I don’t think you can get $1mm of risk down on Betfair. (Because of the Premium Charge issue I mentioned). I think the only way I can see that being done at the moment is P2P, and I’m not sure I’d be comfortable with the counterparty risk involved.
According to Betfair you need to bet in over 250 markets to trigger the premium charge, and “Any single win that constitutes more than 50% of your gross profits over the lifetime of your account will be excluded from the calculation”. I think the hypothetical person trying to bet $1m on the presidential race is safe.
Regarding crypto, isn’t Augur v2 theoretically supposed to launch soon?
I don’t know much about crypto, but I thought FTX was fairly liquid? I guess using it is a legal grey area for US citizens though. From looking at the orderbook it looks like you could get ~500k down over time without moving the price by more than 5c. (I guess it depends on your definition of acceptable slippage; to me 5c is fine)
You were the one making the claims about crypto. FTX isn’t accessible to US or UK based bettors for the Trump election. (So not a grey area, just not an area you can use at all).
(I also refused to believe that liquidity is real. Whenever I see orders like that in an order book I am usually fairly confident that there is something subtle going on which means they have a technological way to avoid being filled.
Looking into FTX, the subtlty is that you can’t submit orders 2% thru’ the order book, which means you can safely leave gigantic orders off-market to maintain queue spot or for other technical reasons).
I know people living in the US have been able ot bet on FTX despite their ToS banning US citizens; I haven’t done this so I don’t know the process. Maybe it’s straight up illegal rather than a legal grey area! (I think you might need to supply fake KYC docs which does sound kind of illegal now that I think about it?)
Why don’t you consider this a bigger objection to your post? IMO it’s actually very important that a deep, liquid prediction market with millions of pounds of volume and low fees exists, and the prices are fairly similar to PredictIt. IMO this is strong evidence that, in this case, PI’s prices aren’t being distorted too much by the problems you list. I believe US-based bettors can get >1m USD on Trump or Biden at fairly close to Betfair odds with a little bit of time and patience as well through various means; I am aware of several people that have bet >$100k on the election and I think they could bet substantially more if they want to. (some examples of “various means”: crypto exchanges, finding e.g. poker players who want to bet a lot on the election, finding a friend in the UK to bet on betfair for you)
Two replies here, I think:
First, are any of the things you suggest in fact legal for US-based bettors?
Second, how difficult in terms of time/inconvenience/up-front capital costs without the potential for leverage are they compared to the ways in which you can bet on e.g. the price of Google stock?
If you’re telling someone in the US “you should be willing to bet your views on prediction markets, if you’re right it’s free money” when what you mean is “it’s free money provided you’re willing to dedicate hours to working your money through crypto exchanges, committing tax fraud along the way”, that feels somewhat different.
I would be willing to tell someone who thinks Google shares are underpriced “go buy some then,” because buying Google stock at low cost is legal, very easy, and even if you have limited up-front cash the real financial markets offer opportunities for leverage (options etc.)
I would not be willing to tell someone who thinks Trump Wins shares are underpriced “go buy some then” when that process is time-consuming, difficult, and likely illegal.
Yes, it’s completely legal for people in the US to bet on things; the only illegal part is being an intermediary.
I see where you’re coming from re “you should be willing to bet your views”; I just want to be clear that if you think PI prices are inefficient, it’s mostly not because of transaction fees/taxes/etc.
How about telling someone who thinks Trump Wins shares are underpriced “go search on twitter and poker forums for people betting on this, and message a few of them”? This is completely legal, doesn’t take that long, and is quite safe as long as you both agree to trustworthy escrow. There’s no guarantee you’ll find anyone willing to take your bet, but I think the chances you would are fairly high.
1. I don’t agree that the prices are fairly similar. PredictIt, poly.market, Omen, and FTX (let me know any other crypto exchanges you want considered) all have Trump ~40%. Betfair has him ~35%. I think that’s materially different. (Also, the volumes on those exchanges are all pretty limited, so I’d be impressed if you could get $1mm down that way). I agree you could potentially get some risk down via P2P betting, but I don’t think it’s fair to describe that as a “prediction market”. (Although it does nuke his point of excusing people from not putting their money where their mouth is).
2. I don’t think you can get $1mm of risk down on Betfair. (Because of the Premium Charge issue I mentioned). I think the only way I can see that being done at the moment is P2P, and I’m not sure I’d be comfortable with the counterparty risk involved.
According to Betfair you need to bet in over 250 markets to trigger the premium charge, and “Any single win that constitutes more than 50% of your gross profits over the lifetime of your account will be excluded from the calculation”. I think the hypothetical person trying to bet $1m on the presidential race is safe.
Regarding crypto, isn’t Augur v2 theoretically supposed to launch soon?
Fair enough, for a one off it might work, although that wouldn’t be the case for someone who is regularly active in prediction markets.
Theoretically on the 28th, but that doesn’t answer my question about where you can currently get serious money down down in crypto?
I don’t know much about crypto, but I thought FTX was fairly liquid? I guess using it is a legal grey area for US citizens though. From looking at the orderbook it looks like you could get ~500k down over time without moving the price by more than 5c. (I guess it depends on your definition of acceptable slippage; to me 5c is fine)
You were the one making the claims about crypto. FTX isn’t accessible to US or UK based bettors for the Trump election. (So not a grey area, just not an area you can use at all).
(I also refused to believe that liquidity is real. Whenever I see orders like that in an order book I am usually fairly confident that there is something subtle going on which means they have a technological way to avoid being filled.
Looking into FTX, the subtlty is that you can’t submit orders 2% thru’ the order book, which means you can safely leave gigantic orders off-market to maintain queue spot or for other technical reasons).
I know people living in the US have been able ot bet on FTX despite their ToS banning US citizens; I haven’t done this so I don’t know the process. Maybe it’s straight up illegal rather than a legal grey area! (I think you might need to supply fake KYC docs which does sound kind of illegal now that I think about it?)