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Comment by fidotron | Hacker News Reader

It strikes me as a shame that people can be addicted to gambling and we see it as a moral problem. For example, gambling data around elections seems highly likely to be more useful than opinion polls are. After all, this is simply another application of the ideas behind how we expect markets to function.

Gambling is one of the few ways you can incentivise someone to be honest with you about their opinion, and for that reason I think it's actually a mass of untapped potential.

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One reason it's problematic is that people can get addicted to it, they can spend all their (& their families money), and you won't know until it's too late. If one were an alcholic, there's physically a limit to how much you can drink in one day (because you'll eventually pass out), and people will know (since you'll be drunk all the time). But one could pop into a bookie at lunch time, and lose €10,000 on a horse in one bet, and no-one, like your family, will know until the bank comes to take your house.

I don't see it as a moral problem per se, but as with other forms of addiction it's too easy to put your personal or family's security at risk, plus there's a moral hazard in that it encourages entry to the market of people who prey on the addiction of others.

I'm not sure what to do about the latter. It's like drugs; I think drugs should generally be legal but it's a fact that many drug dealers are predatory individuals.

This is great analysis. My opposition to using drugs follows that logic: by using them, you are implicitly supporting the predatory system.

Your mention of "market" in that way makes me think of viaticals[1], where the life insurance policies of people near death are bought for a profit. In a way, the people who now own the policies have an interest in the death of the other.

1. http://en.wikipedia.org/wiki/Viatical_settlement. A great book on this subject and how the prevalence of markets has degraded norms is What Money Can't Buy by Michael Sandel (http://www.amazon.com/What-Money-Cant-Buy-Markets/dp/0374203...).

the most destructive types of gambling are the things like slot machines and casino games that offer no wisdom of crowds external benefit, and are -EV no matter what you do. the type of gambling you are talking about happens in things that are usually called prediction markets. lots of effort has been made to harvest knowledge this way, and it works well. And, fairly, I dont think prediction markets are stigmatized the same way casinos are.

This, this this, x1000. The bulk of gambling problems in the UK (where gambling is completely legal in almost all its forms) primarily centre around Fixed Odds Betting machines in shops, rather than market based betting. The latter can still cause problems, but they're not as immediate as FOB machines, which are a blight on communities, tbh. I have 8 bookies within a half mile radius of my house, and I can tell you - basically nobody is gambling on the horses.

Interestingly at the last US presidential election there was a consistent and fairly massive arbitrage opportunity between US and European gambling exchanges.

US exchanges gave Romney a much higher implied winning percentage than the European exchanges did. The gap was so high that even taking into account currency conversion fees and the like there was several percentage points of guaranteed profit with deep liquidity that was available for weeks.

Interesting if true. Do you know where I would look to find the numbers for this?

Also, do you have sense of how such an arbitrage opportunity managed to stay open.

Second question needs an answer. If there really was an arbitrage opportunity, it couldn't have lasted more than a few seconds. I doubt the "arbitrage opportunity" is taking into account all relevant factors.

If I remember correctly this was a few months before the election and since Intrade would hold the money in escrow the amount you would make off of interest was fairly close to the arbitrage opportunity

So effectively there was no arbitrage opportunity.

I you do a search for something like 'intrade betfair obama arbitrage' then you'll find plenty of site who were discussing it. The size of arb varied but it was persistently there for months varying from a couple of percentage points (that didn't make it worthwhile considering currency risk) to over 20% at one point.

I don't care if it makes people honest. If it's that easy to lose control and bet away your life savings, we shouldn't encourage it.

Eh, the same could be said about cars (easy to lose control and kill a bunch of people) but their benefit is so useful that we applied controls rather than outlawing them. Over a century or so we've applied various braking technologies, crumple zones, seat belts air bags, etc... Gambling could be treated the same way and with the advent of big data the benefits may outweigh the harms.

That's what I'm saying. The benefits won't outweigh the harm. Do we really want to encourage people to gamble their hard earned money so some advertisers can make slightly better market forecasts?

The same kind of arguments are used to argue against the Second Amendment: "I don't care if guns make people safer in their homes. If it's that easy to lose control and shoot your spouse, we shouldn't encourage it."

The fact that immoral men exist and occasionally do terrible things should not bias us against the vast majority of good men for whom such acts are unthinkable.

Comparing gambling to guns-in-USA is not a great example, because many other countries do not recognise the right of the people to guns.

Not every country loves freedom ;)

If it's that likely that you're going to shoot your spouse, then you're not safer in your home, are you? Well maybe you are, but your spouse isn't.

Also, if we apply the argument of the original commenter is "We should encourage people to gamble in the name of slightly accurate polling". Now many people have concluded that owning a gun is worth the risk of accidentally shooting your spouse. But who here wants to throw away money to make election polling slightly better.

Can't you say the same thing about stores and credit cards? I dont think gambling is really much worse.

I don't know what "much worse" is, but there's gotta be a line somewhere. That line is currently somewhere between gambling and credit cards.

The (main) problem with gambling is that it's a way to enable corruption, as the casino can act as a one-way function on the money, laundering it.

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