Few fads have exploded quite like betting on prediction markets, which have become multi-billion-dollar arenas for guessing about the future. Sports betting, of course, is nothing new: That’s been around since long before ancient audiences bet on chariot races at the Colosseum in Rome.
■ Nor is it really new and novel to gamble on the outcomes of future events. But what is different is the scale of access: There are literally hundreds of markets on what the President of the United States will say out loud alone, plus scores of others on economic and cultural events. The markets are global and accessible to anyone with an Internet connection.
■ In other words, the “market-making” obstacle has been removed entirely: You don’t need to convince the fan sitting next to you at a game to make a bet, because there are millions of people waiting to bet on the other side of your phone. Apart from the very sensible concerns that ought to arise over the risk that some people will find themselves addicted to gambling in disordered ways, there’s also the considerable problem that the naive will think it is an actual pathway to wealth.
■ One columnist noted that more than a quarter of young adults responding to one survey considered sports betting “a deliberate part of their long-term strategy” for future financial security. If the math hasn’t already sunk in for them, perhaps an adage from Benjamin Franklin will: “No gains without pains.”
■ But an even bigger hazard comes from another Franklinesque warning: “’Tis easy to see, hard to foresee.” If there is one completely safe bet to take, it’s that some people with inside information (those who can “see”) are betting on what they know to take advantage of those merely trying to “foresee”. And the greater the weightiness of the matters on which the wagering takes place, the more severe the moral hazard that some people will manipulate real-world events in order to enrich themselves.
■ Access to decision-making power or secret information, long regulated by ethics rules in government and insider-trading regulations, becomes a form of currency to those who can hide their tracks just well enough (or use corruption to shield themselves from prosecution). That’s not just a financial problem: It’s a civilization-threatening one.
