"Prediction Markets" Seem Like Future-Telling Machines That Use Human Souls As Batteries
Which is a bad thing, to be clear
I should note that my anger is with the creators of this system and those influential few who push it. I honestly don’t give a shit, on a moral level, about normal people who might disagree with this post: I am open to conversation here!
There exists a thing known as a “prediction market”, wherein people engage in online gambling1 over questions relating to the future — such as who will win the US Presidential Election, which country will win the most medals in the Olympics, or which gambler will gambly gamble in the most gamblerific and gamblastic way.
The mechanism is simple: on any given question about the future, gamblers may purchase shares for either outcome, and the current prices reflect the “““market”””’s current expectation of the outcome. For example, the question of “will Joe Biden be the nominee for the Democrats?” could (in the past) have had current odds of 70/30 in favor of “yes”. If you believe the odds are different (he definitely won’t in your estimation), you could purchase “no” shares for $0.30 each. When he bowed out, you would’ve received $1.00 per share you owned, netting a $0.70 profit each.
Let’s look at another example, this time stupider.
It’s Sunday. Why is this important? Hush, reader. Anyways, it’s Sunday. A beautiful Sunday, actually, if you take my word for it.
You — a 40-year old man and “recovering” gambling addict — find yourself in a rare position: the ol’ ball and chain is out of town, and has taken the little ball-lets and chainlets with her. You haven’t shaved in several days, as is the birthright of all free men. You brew a fresh cup of Joseph, crack open your Lenovo laptop (you had to sell your Macbook to pay some relevant debts), and log on to Polymarket.com.
The Donald Trump / Kamala Harris election is sitting at 50/48 in the big man’s favor.
Being in the top 1% of intellect, you immediately spot an opportunity: neither of these losers are going to win, because… wait, no. This can’t be! What is that?! My god… it’s… IT’S CORNEL WEST WITH A FOLDING CHAIR!
The independent sweep is locked in, but nobody has seen it yet. The spoils are waiting for you; all you have to do is reach out and take them.
You instantly deposit half of your life savings into purchasing “no” bets on both candidates, and laugh all the way to the bank (who are requesting you come in to confirm the transaction in person). When Cornel wins, you’ll have doubled your money, and (probably more importantly) gained the right to be a smug dickhead about politics for the entirety of the rest of your life.
Election day comes; before it has gone, your children have lost their father and their future.
Your family may have lost everything, but the world gained something far more important than your plebeian life: it gained slightly more collective data into the question of who was going to win the election, which is obviously worth the price.
Ridiculous example? Yes. Fun to write? Rather. Hotel? Trivago.
“What about the stock market?”, the strawman I have delicately constructed asks. “Is that not also gambling?”
It is! It is also gambling. In fact, it’s a far larger, far more destructive form of gambling, and the scenario I described above has played out time and time and time again, destroying the lives and livelihoods of those who gamble far beyond their means.
There are some disanalogies, of course: with a stock market, you are actually buying something! When you plonk 10 cool ones down on some shares of Nvidia, you’re purchasing an infinitesimal fraction of Nvidia itself. You are gambling, yes, on the possibility that Nvidia’s value will increase and you will gain a profit.
But it’s not binary: there’s no set date — in the quite near future — at which Nvidia will certainly disappear into the ether, rewarding some winners and leaving the many losers with naught but a receipt2. Instead, you have (I cannot stress this enough) an actual goddamn THING that confers rights and privileges, such as the ability to vote in shareholder meetings and hold the company accountable to increasing your share’s value.
I’m going to go out on a limb here and make a bold claim: gambling is bad, actually. Can it be enjoyed in moderation, without harm, on an individual level? Certainly, in the same way that one could enjoy alcohol or cigarettes or cannabis without ever getting a hangover, lung cancer, or fat.
But on a societal level, gambling is a malady. An illness. It sucks people in, destroys them, and sometimes doesn’t even have the decency to spit them out.
Should we ban gambling? I don’t know. I don’t think we should ban cigarettes, alcohol, adultery, cannabis, lying, obesity, or TikTok. I’ve lived through the war on drugs, and know something of alcohol prohibition, and I do not believe that they were in any way a net societal good. On the contrary, I believe these “solutions” have caused far more misery and destitution than that which they were fighting.
But we should not celebrate increasing rates of alcoholism. We should not celebrate record cigarette sales. We must not glorify or justify the man who sells his family’s future for a place at the blackjack table; nor make excuses for the mother who trades her child to a man who promises yet another hit, or for the system which enabled this to happen in the first place.
Ah, but the tax revenue! The job creation! The various positive externalities! Sorry, I’m not convinced. I don’t, actually, think that the jobs the casino creates outweigh those of the men and women and children it destroys. I do not believe that record profits for cigarette and fast food companies is an appropriate salve to those suffering from emphysema, blindness, or a heart attack at the age of 35. I don’t think you do, either.
Similarly, I do not believe that the ability to “predict the future” is worth this price. I am not convinced that society will net gain. I think that the inherent uncertainty (remember: this doesn’t ACTUALLY let us predict the future!) will largely prevent people from making consequential decisions3 on the backs of “what the gamblers currently think.”
Who cares what the gamblers think the outcome of the election will be? The outcome will be the outcome. Knowing what people expect it to be ahead of time may be interesting — in a candy sort of way — but doesn’t actually enable us to do anything.
Does it improve your life to know which country the gamblers think will get the most medals? Does this do anything for us?
Can anyone give me an example of something we can do with this information — this, it must be repeated, inherently flawed information — that outweighs the loss incurred to know it? Something that actually benefits us as a society? I have tried (truly!), and I cannot come up with an answer.
Proponents of these markets argue that they enable us to predict the future with greater odds than random chance, and in fact greater odds than people collectively making predictions without financial investment. The idea goes that by forcing people to put a financial stake on their estimations of odds, they engage in the question in a far more pragmatic, accurate way than if they were just shooting the shit. With cash on the line, we can collectively create an oracle.
By creating such a casino and unleashing it on the world’s gambling addicts, we can gain unique crowdsourced insight into the future, they claim.
You know what? I think they’re probably right. I think it works largely how and as well as they claim.
I just don’t fucking care.
Remember when that was illegal, by the way? Pepperidge farm remembers.
Hey, on the bright side, maybe they’ll let you mint an NFT of said receipt commemorating your terrible betting history.
Except, I suppose, whether or not to gamble