Robinhood admits it's just a gambling app
theverge.com
theverge.com
The headline is intentionally flip and misleading from an author who just really, really hates prediction markets (and Nate Silver).
It's not gambling in the sense that you are walking into a casino and placing a bet on purely random outcome. Average people can have enough information to accurately predict risk in election outcomes. In that sense it may be more akin to something like poker or a sportsbook.
But unlike a sportsbook, I don't think you have the same risk of abuse. You are not being pressured to parlay your bets, you are betting on more limited events, you can sell your position at any time.
So on a spectrum from degenerate gambling to rational investing, I would say it errs towards the middle.
I would say that a large majority of investing, especially newer forms that occur via apps such as Robinhood, in form and outcome would be indistinguishable from gambling.
> But unlike a sportsbook, I don't think you have the same risk of abuse.
I doubt this is true.
You see the exact same behaviours between online day traders as you do online gamblers.
Both share tips, have a sense that they are in the know about performance beyond that of the average 'punter' and use apps that are gamified and have dark patterns encouraging continual use and abuse.
I would also say they are primarily used by the same demographics – male, skewing younger who are high risk, low real world experience individuals who either get fully addicted and don't learn their lesson or those that get burned early on, 'grow up' and learn not to continue to waste money on such endeavours.
Plus, y'know, the whole gambling aspect, especially when it's a zero-sum game with other gambler and the house/brokerage. The regular stock market has its warts, but it at least involves some amount of externally productive human activities.
Last election cycle I was able to handily "win" a bit of money on PredictIt by just looking at polling data and betting the line. Markets are heavily distorted, but the max I could bet is $800 so there's no way a handful of informed "investors" (gamblers) could un-distort the market.
The only way to actually get the markets efficient and predictive would be to bring in huge money from things like hedge funds. But then you obviously have a much bigger problem where there's suddenly huge financial incentives for interfering and tampering in elections.
With that sort of money you could see some sort of rig the election scheme be an issue.