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Comment by keviniam | Hacker News Reader

I don't understand why anybody without access to serious inside information is currently betting on prediction markets. It's clear that insiders are absolutely going to eat your lunch. So who are the suckers who are losing all this money?

I guess this isn't true for all things you might bet on, but it seems to be true for a lot of them.

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I did a bit for fun and felt there were areas where I did do well. However, the problems with these markets is the contracts are often such where you can win or lose on obscure technicalities. I bet on 5 things, and 4 were resolved in ways I felt were non obvious.

For example, will the Ayatollah be out by April. Lost because death apparently did not count. Bet Anthropic would advertise at the superbowl. Lost because while they did so they advertised Claude not for the company.

Once it became clear that it was an exercise in legalese, I was done.

Wow, those examples are crazy. It’s basically fraud.

I remember reading something awhile ago in regards to why people were investing in NFTs when it seemed so clear they were a scam. The gist of it was that it's easy to get into cryptocurrency, but it's hard to get out. KYC, taxes, age requirements, currency fees, etc are enough of a barrier that many people would rather just keep those assets in virtual space. Polymarket is the answer to the question "Well what else am I gonna do with this crypto I own"

That's complete nonsense for the simple reason that it is possible to pay just fine with crypto on various sites, also to buy major gift cards. No KYC applies to these actions. We are not living in 2016.

I don't know how much of an issue KYC is to your average crypto-dabbler.

I found a few K's worth of BTC down the back of the sofa recently, and was astounded by how easy it was to use it like Visa after converting to stablecoin.

I don't think prediction markets are a function of stranded crypto, because for most holders, crypto has never been more fungible.

There's no shortage of people willing to make extremely poor financial decisions on games of chance, it's why gambling was heavily regulated. Visit a casino and witness addiction in-person, it's a sad sight.

It is either not being offered in depth by anyone market-maker (part of the answer given the relatively small revenue opportunity) or it is being offered by people who aren't sophisticated enough.

Bookmakers offer markets on events where someone can know the outcome. The difference is that they have tools to prevent adverse selection.

Prediction markets offer none of those protections so the market structure is going to end up being very different (which is already happening, revenue opportunity from politics isn't huge). There are other examples of this around latency arb, market is going to be very different.

Also, I will point out that most insiders are probably going to be losing money too. All that you ever read is the final outcome, you don't read the stuff that happens before. Politics is, generally, not a good market because the actual event is driven by decisions made by people. Election markets are fine but political event markets are not good, even if you have inside information.

> So who are the suckers who are losing all this money?

Random people who saw an ad or their favorite influencer shilling it.

Like when my neighbors started asking me about NFTs.

There does seem to be a distinct class of "Serial Bagholders" though. People who thought NFTs were going to be their "Ticket" and lost a lot, and then the next thing was going to be their "Ticket", etc etc.

I genuinely don't understand how they have money to keep losing.

They don't. They're just gambling addicts.

The ads for prediction markets on TikTok are aggressive - like (paraphrasing) "this is your new source of passive income and you'd be crazy to miss it" aggressive.

So basically the standard online scam script for 20+ years but in a TikTok. I remember seeing AdWords text ads in the 2000s for "make $$$ working from home".

I guess I'm one of those suckers, except that so far I've made a 3x return on the small sum I bet, I would say it's a hedge. I’ve been betting on the Iran war since mid February, the reasoning was that if the conflict happened, my payout would offset some of the jump in my cost of living. I could have used traditional financial instruments to buy options or oil futures or gold, but there's more friction there and I already had some crypto.

Ah yes, the war futures exchange keeping us able to afford food.

Somehow 2026 took the Ancient Rome model of profit from destruction and enshitified and made it even worse and more grotesque. WTF are we even doing?

Kind of what I was thinking. If it is essentially InsidrBetz.com why bet at all? This is the kind of thing that could (should, anyway) kill the industry.

Arrogance / hubris. Some people even if they know it's rigged will believe they know which side the insiders are on

You believe you are betting on the side of the insiders.

Everyone knows the Casino has the edge, but people still play heavily anyway.

People go to casinos despite knowing the house has the edge in games. Gambling is addictive.

Yes, but you also know exactly how large that edge is. And it's relatively small.

I suspect most casual gamblers don't know that.

> So who are the suckers who are losing all this money?

Gambling is just a tax on the stupid. Is it surprising it's rampant in certain institutions?

Prediction markets are ridiculously diverse so it’s quite a stretch to say that imo.

My personal conspiracy theory is that in some cases, the "loser" is in on the graft to. It's a way to launder bribes.

Hedging is one rational reason.

The same goes for stock market too.

"But we have laws criminalizing insider trading..." the only proper response to this is: hahahaha.

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