Prediction markets legality as gambling or derivative trading platforms, & rules

[Charles-Tim]

I don't know why Polymarket and others want to hide behind the name "prediction market" to offer gambling services without receiving licenses. They will keep facing these regulatory challenges until they decide to abide by countries' laws.

They make it similar to trading is the reason. Did you noticed that almost all well known exchanges are having prediction market now while most gambling sites do not have it?

It is a way they bring gambling to exchanges which can be defended as trading. The events make it be like betting, but the way it is makes it look more like trading.

[Nwada001]

the ban does nothing but fuel the desire to transgress.
a huge discussion was about the word nigger, if it is banned that word takes on power, negative power
banning, censoring, always creates problems... banning alcohol makes drinking alcohol more exciting.

Ben, without proper awareness, is treated in most places like something the government is stealing from them; they no longer use it the normal way they should, but even using illegal ways to access it, they will appear to be gambling more aggressively than before, but we still have law-abiding citizens, who, if something is banned, the fear of being punished by the law restricts them from using it, and issuing ban also gives the government right to take action both against the platform and those who patronized it.

[MRY]

I don't know why Polymarket and others want to hide behind the name "prediction market" to offer gambling services without receiving licenses. They will keep facing these regulatory challenges until they decide to abide by countries' laws.

They make it similar to trading is the reason. Did you noticed that almost all well known exchanges are having prediction market now while most gambling sites do not have it?

It is a way they bring gambling to exchanges which can be defended as trading. The events make it be like betting, but the way it is makes it look more like trading.

Indeed, when packaging prediction markets using stock exchange terms, the intention is to confuse the distinction between gambling activities and standard financial activities. It is an illusion of technical analysis pegged on professionalism that the novice market participants in this market are used to with the help of price charts, order books, and auction liquidity.

Such a visual change is helpful in attracting players who are unwilling to be confronted with traditional casino tables. Gambling has been legitimized by the organized exchanges and continued to circulate capital without arousing the negative connotation of the rest of the world that the activity is an organized trade as a structured trading instrument.

[Hispo]

I don't know why Polymarket and others want to hide behind the name "prediction market" to offer gambling services without receiving licenses. They will keep facing these regulatory challenges until they decide to abide by countries' laws.

They make it similar to trading is the reason. Did you noticed that almost all well known exchanges are having prediction market now while most gambling sites do not have it?

It is a way they bring gambling to exchanges which can be defended as trading. The events make it be like betting, but the way it is makes it look more like trading.

I have also noticed there are a lot of exchanges which have allowed their clients to partake on prediction markets, particularly clients outside of the United States.

I have always thought it was always possible to gamble on exchanges, either in their future market and using extremely high leverage.

I also suspect there is much lobbying going on by bookies in the USA, so lawmakers are pushed by those lobbies not to give lax regulations for prediction markets.

[Dogedegen]

Connecticut just sued Kalshi. According to the article(link below), the Connecticut Attorney General said that the platform's sports wagering violates the state's consumer protection law prohibiting sports gambling. The Attorney General also said that the way Kalshi's sports event contracts function resembles sports betting, and said that "this is gambling".

As far as I know, Connecticut is the newest state in the US that sued Kalshi for its sports event contracts(I'm sure more will eventually do the same).

soruce: https://abcnews.com/Business/connecticut-sues-kalshi-block-alleged-unlicensed-sports-gambling/story?id=136000170

That is just an update for the continued list of running cases, but it is nothing new. It is more of the same and in the same direction, it depends all on the case that will land before the supreme court. If that court rules in favor of Kalshi and prediction markets then all of these states will have to retreat. For now I am thinking Kalshi and others will win but will receive some restrictions in return maybe for sports events and similar things.

I have also noticed there are a lot of exchanges which have allowed their clients to partake on prediction markets, particularly clients outside of the United States.

When there is something in high demand then healthy markets will provide solutions for it. Prediction markets have been used a lot in recent times, but we will see if the trend will remain. Over the years we have seen many trends come and go, but never one that is related this directly to gambling and that is a thing that humans fall for. It is probable that it will persist unless lawmakers make it go away, but let's observe what continues to happen with these cases.

I also suspect there is much lobbying going on by bookies in the USA, so lawmakers are pushed by those lobbies not to give lax regulations for prediction markets.

The correct thing to say would be that there is more of this kind of lobbying going on in other parts of the world, and not in the USA. Many countries have outright banned prediction markets already and they have limited gambling or casino licenses in their own countries which they present as consumer protection but it is a corrupt system that does not allow competition. If we can say anything about this situation is that the lobbying is the weakest for this kind of thing in the USA because USA allows for innovation more than any other country.

[Julien_Olynpic]

Various countries and states within countries periodically block prediction markets, especially highly liquid ones like Calshi or Polymarket, citing a variety of reasons. These include ethical requirements, dissatisfaction with insiders, and a desire to view prediction markets as unregulated gambling. In some countries, death predictions can be considered an indirect form of contract killing. Also, in many countries with strict totalitarian regimes, prediction markets can be considered a source of illegal freedom of speech. It sounds strange, but in many countries, freedom of speech is illegal.

[o48o]

I don't know why Polymarket and others want to hide behind the name "prediction market" to offer gambling services without receiving licenses. They will keep facing these regulatory challenges until they decide to abide by countries' laws.

They make it similar to trading is the reason. Did you noticed that almost all well known exchanges are having prediction market now while most gambling sites do not have it?

It is a way they bring gambling to exchanges which can be defended as trading. The events make it be like betting, but the way it is makes it look more like trading.

Nope. Reason for that is they are evading gambling regulations and prediction markets don't need to follow them. If they wanted to mimic trading, they would risk to deal with trading regulations which are even harder to deal with. This is why casinos don't offer any sort of trading anymore (outside of third party swaps).
 
Reasons for some exchanges offering them is that prediction markets bring volume and that they don't need separate licence for it (not yet anyway), so it wont bring extra paper work.

[Charles-Tim]

Nope. Reason for that is they are evading gambling regulations and prediction markets don't need to follow them. If they wanted to mimic trading, they would risk to deal with trading regulations which are even harder to deal with. This is why casinos don't offer any sort of trading anymore (outside of third party swaps).
 
Reasons for some exchanges offering them is that prediction markets bring volume and that they don't need separate licence for it (not yet anyway), so it wont bring extra paper work.

Prediction markets are similar to trading is the reason. Why did CFTC accepted the prediction markets and licensed them? They are not similar to how gambling sites are operating.

On prediction markets, you trade contracts, rather than place traditional bets.

What makes people even think forex, stocks and crypto trading are not gambling? I am not implying that trading is gambling, but I can argue that it is gambling and gambling regulators should be the one that is also regulating it.

[Dogedegen]

Various countries and states within countries periodically block prediction markets, especially highly liquid ones like Calshi or Polymarket, citing a variety of reasons. These include ethical requirements, dissatisfaction with insiders, and a desire to view prediction markets as unregulated gambling. In some countries, death predictions can be considered an indirect form of contract killing. Also, in many countries with strict totalitarian regimes, prediction markets can be considered a source of illegal freedom of speech. It sounds strange, but in many countries, freedom of speech is illegal.

In a way you have summarized the whole situation here. It isn't that these markets are intentionally trying to do something against the laws any more than any kind of new company is trying to get good treatment. The big issue comes from the situation where in many countries the laws are different and specific about gambling and things that relate to gambling. The example of contract killing is great for this because it highlights a category of predictions that should not be made available in any kind of country. People need to understand these things wider than simply placing bets or trades and winning and losing. If you allow contract killing then this creates very dangerous incentives depending on the market bets. If enough money is placed on someone not dying before some kind of age, then bad people have the incentive to bet in the opposite way and kill the person to win the money. Society does not need this kind of trouble because we already have all inds of problems.

The solution to prediction markets is not to outlaw them completely but to instead create reasonable rules that make sense. Death predictions are definitely not to be allowed, but other things like sports predictions probably should not be allowed because they are just basic sports betting. I hope that law makers create some good rules and don't ban or fully allow this because those two options are the worst solutions.

[Johnlomape]

I don't know why Polymarket and others want to hide behind the name "prediction market" to offer gambling services without receiving licenses. They will keep facing these regulatory challenges until they decide to abide by countries' laws.

They make it similar to trading is the reason. Did you noticed that almost all well known exchanges are having prediction market now while most gambling sites do not have it?

It is a way they bring gambling to exchanges which can be defended as trading. The events make it be like betting, but the way it is makes it look more like trading.

I have seen option of the prediction market on trust wallet and some centralized exchanges and it's funny to see how all these exchanges want to make money from different angles when they are not meant to offer this kind of service.
In the space of few years we could see exchanges fully offering prediction market game options to their users without getting additional license to offer such a service. The government need to stop exchanges from offering gambling services like the prediction market.

[xenomorfo]

In a way you have summarized the whole situation here. It isn't that these markets are intentionally trying to do something against the laws any more than any kind of new company is trying to get good treatment. The big issue comes from the situation where in many countries the laws are different and specific about gambling and things that relate to gambling. The example of contract killing is great for this because it highlights a category of predictions that should not be made available in any kind of country. People need to understand these things wider than simply placing bets or trades and winning and losing. If you allow contract killing then this creates very dangerous incentives depending on the market bets. If enough money is placed on someone not dying before some kind of age, then bad people have the incentive to bet in the opposite way and kill the person to win the money. Society does not need this kind of trouble because we already have all inds of problems.

The solution to prediction markets is not to outlaw them completely but to instead create reasonable rules that make sense. Death predictions are definitely not to be allowed, but other things like sports predictions probably should not be allowed because they are just basic sports betting. I hope that law makers create some good rules and don't ban or fully allow this because those two options are the worst solutions.

yes i remember when hostfat explained, what was the name of augur can it be? he had explained that a fugitive criminal could bet on being caught, putting in a lot of money and therefore a corrupt policeman could bet the opposite, not catching him to pocket the prize.

[Dogedegen]

yes i remember when hostfat explained, what was the name of augur can it be? he had explained that a fugitive criminal could bet on being caught, putting in a lot of money and therefore a corrupt policeman could bet the opposite, not catching him to pocket the prize.

Those are good examples for what I was trying to talk about. Most people are not bad, but if the incentives are aligned then they might act in ways that they otherwise wouldn't. If we allow all kinds of predictions in these markets, then many more people will start to behave in unpredictable and bad ways. Just imagine if people also started to bet on things like medical outcomes of big surgeries. If enough money is provided on the side of the outcome of being alive, then this would provide an incentive for the surgeon and everyone on the staff to do the surgery badly so that the patient dies. Even it could create an incentive for strangers to come and try to sabotage the surgery in some way. Some would try to do it in subtle ways, others in more obvious ways but the point is the same. Many examples we could bring forth of things that should never be allowed in prediction markets or otherwise the world will turn into chaos with many of its incentives messed up.

[Ishicryptic]

I don't know why Polymarket and others want to hide behind the name "prediction market" to offer gambling services without receiving licenses. They will keep facing these regulatory challenges until they decide to abide by countries' laws.

They make it similar to trading is the reason. Did you noticed that almost all well known exchanges are having prediction market now while most gambling sites do not have it?

It is a way they bring gambling to exchanges which can be defended as trading. The events make it be like betting, but the way it is makes it look more like trading.

I have seen option of the prediction market on trust wallet and some centralized exchanges and it's funny to see how all these exchanges want to make money from different angles when they are not meant to offer this kind of service.
In the space of few years we could see exchanges fully offering prediction market game options to their users without getting additional license to offer such a service. The government need to stop exchanges from offering gambling services like the prediction market.

Clearly exchanges are also authenticating the prediction market as trading instead of gambling that it should be because people actually place bets on future events that have nothing to do with currencies, I'm wondering if these countries that banned prediction sites would also ban these exchanges that are offering prediction trades. Exchanges should have just focused on exchange of cryptocurrency and leave gambling matters including prediction of none financial matters to gambling sites which is where it is supposed to belong. While governments are still figuring out where to place prediction market and some exchanges have already taken a center stage to define prediction as trading, I think that we should just accept it for what it is for now, if you're into prediction games you should go ahead regardless of what it is called.

[Supreme Donvic]

Prediction or gambling are just two different words but they are mostly used to describe a particular action like the predictable market, where people predict and gambling same here, people still gamble on a particular thing or action to win something or make a profit in return so they are both serving the same purpose when it is being used in this exact context which is the common place they are being used, if a person predict something and it turns out the exact way, gambling can also be done on that same thing and if luck shines it turns out the exactly as guessed. So to me both words actually sounds the same in this context.

Yes, prediction markets and gambling are pretty much the same. Prediction markets are a part of gambling. When you are in the gambling business, you have to make predictions, like which team will win the sports you are betting on, you have to predict it. Or you have to guess which slot will win next time. On the other hand, when you make price predictions, you still have to make predictions based on assumptions. So it seems to be completely the same.

If you actually look at it this way then it is the same, however we have people that argue that gambling prediction is actually different from price prediction, according to them they say gambling prediction is by luck while the price position is by knowledge.
But it actually get me confuse sometimes, for me I see it as the same because in gambling you need knowledge of the sports for you to predict a very good game, we still have people that are winning from gambling because of experience and their knowledge in that particular sports they are focused on gambling on.

[Bluedrem]

Gambling is completely prohibited in my country and is a punishable offense. According to government law, if someone is involved in gambling, he can be jailed for various terms and fined. But the worrying thing is that after the introduction of online gambling, the number of gamblers who are involved in gambling has increased much more than before. Since it is not possible for the law enforcement agencies to check everyone's device, people are gambling very easily using the smartphones they have in their hands.
And what about many people who keep the device they use to gamble in a secret place and never bring it in front of people, only thinking about security

[Smartprofit]

An interesting story happened with George Santos ... It may lead to changes in the legislation governing prediction platforms. What happened, in my opinion, isn't even classic insider trading. 🙋

In a typical insider trade, an insider bets on an event known in advance. George Santos bet on an event whose outcome depended entirely on his (Santos's) decision. We won't consider scenarios where a brick unexpectedly falls on Santos's head.

What will happen next? Insiders will become more cautious, striving to maintain their anonymity. Players will specifically seek out such bets. Players will expect to profit, confident that insiders will take action to ensure the event occurs.

Half the time, the insider won't be involved at all. These will be traps (devised by cunning players). Everyone will think there is an interested party – an insider betting through intermediaries.  However, in reality, this would be a trap (no George Santos would ever attend a meeting with Donald Trump).

All of this, in my opinion, will make betting on prediction platforms even more like classic gambling. 🧖 The question is whether this will lead to stricter legislation or not...

[L E G E N D A R Y]

If you actually look at it this way then it is the same, however we have people that argue that gambling prediction is actually different from price prediction, according to them they say gambling prediction is by luck while the price position is by knowledge.
But it actually get me confuse sometimes, for me I see it as the same because in gambling you need knowledge of the sports for you to predict a very good game, we still have people that are winning from gambling because of experience and their knowledge in that particular sports they are focused on gambling on.

One major point in all this is that, inasmuch as knowledge can be helpful to gamblers, what it actually does is to improve prediction, but it can never remove uncertainty.  And this is applicable to both gambling and the prediction market, what you’re still doing is making a decision based on some incomplete information, and so outcomes are never guaranteed as it may go against you at any point in time. I believe the real difference here borders more on the actual nature of the market as well as how risk is being calculated and managed rather than simply luck vs knowledge.

[ruykeri]

Gambling is completely prohibited in my country and is a punishable offense. According to government law, if someone is involved in gambling, he can be jailed for various terms and fined. But the worrying thing is that after the introduction of online gambling, the number of gamblers who are involved in gambling has increased much more than before. Since it is not possible for the law enforcement agencies to check everyone's device, people are gambling very easily using the smartphones they have in their hands.
And what about many people who keep the device they use to gamble in a secret place and never bring it in front of people, only thinking about security

Many countries may have decided to ban gambling, many countries have passed laws, but it is so easy to bet online that it will not be possible to completely stop it. If some popular sites are closed, then there are many trusted casino sites where people can easily bet. And crypto casinos provide more personal security to the players. Where there is no problem of KYC. So anyone can bet from any part of the world. Through suspicious transactions, the government may suspect whether a person is actually betting. But if you use crypto casinos, there is no such problem. Because if you bet with crypto, then no one can be traced. So if the government wants to control gambling in a country, then public awareness should be increased, legal enforcement should be made stricter and the negative aspects of gambling should be highlighted in families, society and educational institutions, as a result of which people will be demotivated from betting.

[Dogedegen]

An interesting story happened with George Santos ... It may lead to changes in the legislation governing prediction platforms. What happened, in my opinion, isn't even classic insider trading. 🙋

In a typical insider trade, an insider bets on an event known in advance. George Santos bet on an event whose outcome depended entirely on his (Santos's) decision. We won't consider scenarios where a brick unexpectedly falls on Santos's head.

What will happen next? Insiders will become more cautious, striving to maintain their anonymity. Players will specifically seek out such bets. Players will expect to profit, confident that insiders will take action to ensure the event occurs.

Half the time, the insider won't be involved at all. These will be traps (devised by cunning players). Everyone will think there is an interested party – an insider betting through intermediaries.  However, in reality, this would be a trap (no George Santos would ever attend a meeting with Donald Trump).

If you just read the posts a few before yours, we actually discussed something that is directly related to this. Predictions that are based on the individual decision making, even more where the individual has complete autonomy over the decision should not be allowed at all. If we start allowing this kind of thing, then there is no place where we can stop and it will mess up all the incentives that we have for people to behave the normal way. This kind of case is very different from a prediction on the FED interest rate hike, which involves many different officials who are having long discussions and don't often agree on what to do. This kind of event can also be corrupted, but it is so much harder to corrupt than when the decision comes alone from a single individual. And even if someone manages to corrupt it with enough money, since it involves so many people someone will speak somewhere and the whole thing will blow up fast.

All of this, in my opinion, will make betting on prediction platforms even more like classic gambling. 🧖 The question is whether this will lead to stricter legislation or not...

In terms of the chances to win? Yeah sure we can consider it like classic gambling, but overall we can't. The issue that you raised makes it even less like classical gambling, which has predictable RNG with house edge or probabilities relating to skill-based games such as those with cards. Prediction makes with bets that relate to the individual create very complicated incentives, and there is nothing at all predictable about it.

[AmaGold70]

From the several news read here about the prediction market or the polymarket, is never something very encouraging, the reason is because the prediction market is really seen to be so corrupt because of the kind of activities that is going on there, such as the insider's information. The prediction market being band by this countries must be for some food reasons, and that is the reason these countries mentioned here are making sure it is band. But nevertheless, what is happening in the prediction market is also happening in the forms of sports. On this note every country should ensure good maintenance of the welfare of the country.