You don't need Colossus-level compute or a genius-level IQ to evaluate the question "Will the steam machine cost more than $700 at release", or "Will 2026 be the hottest year on record".
There are no easy questions, the difficulty is set by the skill/investment level of your competition.
Let's say I am quite sure that the Steam Machine will cost more than $700 dollars, and I buy a 'yes' lot for 65 cents on the payed-out dollar, those are the odds at my buy-in time.
Where exactly now do the other participants' bets on the same market influence my chance to win/lose? How am I up against them and not the question "will my prediction come true"?
Sure, before my buy-in the odds, and thus the value fluctuate on account of the market movements, but once I'm in I'm in?
In a perfect market that everyone participates in and in which everyone has perfect information, but not down here in messy reality. Your logic would have you you seeing a dollar on the ground and without further investigation go "Oh that can't be real, if it were someone would have picked it up already!" Or refusing to play chess against anyone because Magnus Carlsen could beat you.
Prediction markets are worse, both on the surface and by the actual statistics. The house takes an enormous cut, and then you have the issue of trading against insiders. Only an absolute rube would put money into a market rife with insiders, when they don't have comparable information. And the statistics bear this out. Something like 80% of all profits are captured by the top 1% of profitable users, which are only 30% of the total user base.
Anyone who thinks they will consistently make sound bets in these platforms without actually having private knowledge is a complete fool.
Maybe only allow people to spend 1/5 their pool of cash per bet so it never reaches zero
Your strategic consideration is wise, though. 'Diversification' is one of the first things people will teach wrt investment literacy.
And regarding your comment about investment literacy yes I agree with you but just to be clear we are discussing gambling and not investing.
Where's the demarcation? The whole point of this sub-thread was "you absolutely can predict the outcome of some of these markets". If you do your due dilligence/leverage your domain knowledge to buy a thing you expect to pay dividends at a later date, how is that not investing? Are government bonds gambling in your thinking?
Your prior about people acting unwise is still sneaking in via the assertion that we are talking about gambling.
I never said that you said that, so now you are just arguing with a straw man that you just created, and your lack of ability to understand that is going to make a productive conversation impossible. Good luck with your gambling.
Your brain has just had your mental block up very obviously starting from your knee-jerk "what is wrong with you?" comment, isolating you from the scary prospect of being convinced by a consistent chain of logic, and now you're looking for a face-saving way of ejecting from the conversation.
So you could see how the face odds are irrelevant to me, only my internal yes/no intuition? Obviously this is not optimized, opportunity cost etc etc, but is there a big hole in my thinking you could point me in the direction of?
I am intentionally flattening these trades to simple win/loss affairs(not just for the sake of this argument).
You're playing the game at a higher level and "complaining" at the increased complexity(I don't mean to say you are complaining, I just couldn't think of a better word). You're talkkng about the 80% that get you the last 20%, I'm talking about the 20% that get me the 80.