And isn't that just between them and their company in a case-by-case sense?
If there was some valuable-to-the-public information that the company did not care about keeping private but just hadn't bothered to make public, for whatever reason, and an insider traded on it on a prediction market, that would only benefit the public's interest in information and would not violate any duty to the company. It'd be a pure win for everyone.
It seems unfair to other traders, the way it would be in the stock market, but in prediction markets (unlike the stock market) all participants are explicitly taking on the risk that somebody else might have better access to information than they do. So it's not subverting the system in the way we have decided it does in stock markets.
A lot of commenters are getting the wrong take here by looking at this like it's a stock market where there is some society-level interest in giving participants protection from having less information than insiders. It's just a different thing.
The much more serious problem is when these insiders actually have their hands on the levers which decide the outcome. It's really no different than a mobster who bets a bunch on money on an unlikely outcome then threatens one side to throw the match.
What possible economic benefit is there to society to allow ordinary people to bet in markets like that?
Would you really like to live in a world where "Will we nuke Iran?" Is a bet you can make? Then someone in government sees how much money they could make if they bet yes & push the button?
If I were famous I could start a pool betting on whether I would post a picture of a my lunch this week. I could stake whichever side has the biggest payout and then just make it happen
These prediction markets are now giving even more people the opportunity to make a small ethical compromise in exchange for non-trivial amounts of money without any of the potential legal repercussions of traditional markets or gambling. That type of ubiquitous corrupting influence can't be good for the health of society.
[1] - https://www.cbssports.com/mlb/news/guardians-closer-emmanuel...
Yes.
Prediction markets, for corruption reasons, are regulated by the CFTC. In commodities markets, actors are assumed to be making trades based on propriety information. Hedging is the whole purpose!
> …like it's a stock market where there is some society-level interest in giving participants protection from having less information than insiders.
Ah, no!
Insider trading in the stock market is (usually) only illegal in your first case: when the person trading is violating confidentiality.
It is not about fairness.
Fairness is a poor proxy for whether specific trading is illegal.
For example:
If a company accidentally leaves a press release for a merger publicly available, I happen to guess the URL, and then I trade on it: Unfair (I have access to insider information that other market participants do not) but legal!
If I work at the company, am sent the press release to copy edit, and then trade on it: Illegal. I have a duty to the company not to trade on it.
The first case is completely fair because anybody else could have done the same thing without any special access required.
The second case is unfair because you had to work at the company to get access.
What if the bar has a cover charge, so only those who pay get in?
What if the cover charge is $10,000 and the bar is advertised as "the place where public company execs love to come talk to each other about private deals"?
Not necessarily. Just because you accidentally left your S3 bucket open and I brute force my way to the link by guessing doesn’t make it legal. It can still be insider information. Insider information is not limited to people who have a duty to the company. If I break into the companies office and steal information and trade on it then it can be insider trading.
Interestingly, the CFTC objects to a political candidate trading on their own candidacy on the grounds that it is fraudulent. So it looks like they could attempt to regulate self-trading quite strictly, at least if that theory holds up after a court challenge.
I can argue it is fair - anybody can try guessing the url, you don't have to be an insider to guess it
To the company? Or to the stock market, as a participant in it?
Allowing information asymmetry, like insider trading, undermines the regulatory argument that keeps these markets legal.
If I know my company is going to do something on March 16th, I can bet against it happening until that day, and then bet big it will happen that day. I don’t need to influence the company to change what it’s going to do to make money on it.
>Research shows prediction markets are often more accurate than experts, polls, and pundits. Traders aggregate news, polls, and expert opinions, making informed trades. Their economic incentives ensure market prices adjust to reflect true odds as more knowledgeable participants join.
>If you’re an expert on a certain topic, Polymarket is your opportunity to profit from trading based on your knowledge, while improving the market’s accuracy.
You know what's a great knowledgeable participant? An insider.
Airbnb for unlicensed hotels. Uber for unlicensed taxis. Amazon for whitewashing fraudulent products. Bitcoin for unlicensed securities and laundering money.
The pattern is upsetting.
If people thought it was wrong to be an unlicensed airbnb or uber, they wouldn't use them. In reality, those regulations are mostly protection rackets and most people don't care about violating them.
For Airbnb landlords I'm sure the thought process goes like " I'm just one person so I can't be having enough of an impact to be a problem. And besides, I need the money." But then enough people pile on and in aggregate they ruin the local housing market. But nobody thinks that they themselves are culpable
You have two parties who want to enter into a contract and a third party unrelated to the contract that doesn’t for whatever reason. Just based on contract law and common sense the unrelated party shouldn’t have standing. Now if there’s externalities to the contract that impact that unrelated party sure, but only insofar as to get those externalities addressed.
This is not the same as a robbery which involves no contract or a willing counterparty to the robbery.
There are already laws in place against the kinds of behavior that neighbors are afraid will happen.
I see a prisoner’s dilemma where people often support regulations even if on an individual basis they would personally violate them, because they prefer living in a the less chaotic society. For example anti-dumping regulations… the expected value for any given individual is +EV, but when everyone is dumping, it’s a big -EV
Nobody seems to be able to agree on what a responsible set of rules is around the speed of vehicles.
So there is "dead weight loss", where transactions that would have been mutually beneficially and socially productive are eliminated by the regulation, and restored when somebody finds a loophole, restoring the individual and social benefit.
The world is not zero sum!
Their behaviour is very rent-seeking imo and at moments like these, its best to remind us that even the father of Capitalism, Adam Smith didn't like landlords
Had to search up some quotes from adam smith right now but here's a relevant one (imo) to this discussion:
"[the landlord leaves the worker] with the smallest share with which the tenant can content himself without being a loser, and the landlord seldom means to leave him any more." - Adam smith
On a long term, I do feel like there will be a drop in producitivity, thus destruction of economic value because of lack of enforcement of policies/such companies having reckless attitude about them.
Many of the products listed above actually seem to be very rent-seeking in my opinion (IIRC Someone on HN once said that from their personal experience talking to drivers, uber takes an approximate at the very least 40% cut or more)
(This might be a little off-topic?_ but one thing I think about tech regulations is that Facebook used to see if a young girl/minor girl took a selfie and then if they don't upload it, detect that she was insecure and then try to show them face beauty recommendations.
These girls can be our sisters/daughters fwiw. Facebook profits from insecurity/rage-bait and I would say that many social medias are the same as well, its just that the facebook example to me feels so eggregious and should be a uniting front for many to agree that there's a problem indeed.
You will be right when you say economical value is generated from profiting from insecurity/bypassing regulations but at what cost?
no, they are not.
you might have been an insider working on the Apple Newton, and being enthusiastic about it you might have broken the rules and traded on your "knowledge"... and you would have lost your shirt. Same with your very knowledgeable enthusiasm about myriad other technologies. Ever wonder why Wall St doesn't show up at HN asking everybody's opinion about AI in order to leverage that info into billions?
an important element of "the wisdom of crowds" is many bits of microknowledge. How many Teslas will be sold next year is very dependent on how much the people who buy Teslas will earn next year (or how secure they will feel in their jobs) working in myriad other industries that have nothing to do with Tesla, along with the price of lithium, tires, and even ... wait for it... gasoline.
Polymarket's words you quote can just as likely refer to the wisdom of crowds. Or even, and this is the subtle part: Polymarket's insiders may believe, like you, that they are creating a market to trade on inside information, and yet they, like you, could be made wrong by the superior sum knowledge of the crowd exerting its invisible hands all together to tank your Apple Newtons.
Yes they are. Polymarket has an ad glorifying a "fictional" scenario where someone gets a job as a janitor in a video game company to bet on related events in polymarket