Prediction Markets Now
I’ve been asked: what do I think of Kalshi and Polymarket, the suddenly big prediction markets.
These are still very early days. My vision, which I started to articulate ~1990, is of a world very different from both the world of then, and the world of today. A world where such markets are accepted as offering more accurate estimates on far more useful topics. So I’m mostly interested in the potential of stuff today to enable and cause that future vision.
The politics/policy questions on Polymarket and Kalshi trending now seem plausibly like topics where some people might find their estimate useful in making personal or collective choices. But I don’t have great confidence in that, or know who those people are.
However, if these systems continue to grow in size, and to attract users and competitors, they could lower the many costs of creating and managing such markets, allowing a lot more experimentation with markets like those I find more promising re my long term vision.
Or course if these systems induce a backlash that gets them outlawed or drastically shrunk, that may plausibly block or at least long delay my vision. I don’t personally mind people having fun knowingly betting on sports, on actions that celebrities can influence, or on topics where insiders have big info advantages. But I see many people complaining about these things, and I fear a new prudish temperance movement may shut them down, and as a side effect shut down the more promising markets that I’ve envisioned.
As a source of information to advise decision-makers, prediction markets have a new competitor: AI. It's plausible that in the next decade or two, machine learning models will become better than prediction markets at predicting elections and sports games and so on. The ML models will also be cheaper, a few seconds of GPU time vs thousands of humans betting. Though it will then be a while after that before the ML models are trusted as much as the humans.