We all know prediction markets are bad, baad baaaaaaaad haram stuff.
...Which is why Den is writing about them (#1556891), "playing" with them (#1606098), and now even creating them! (#1608324)
I have been totally co-opted by the dark side
But, I mean... they have cookies!
Here's David Booth in the FT some weeks ago, issuing some very stern, disciplinary warnings
Ironically, this disclaimer pretty much invalidates his subsequent opinion about rival savings vehicles
The writer is founder and chair of Dimensional Fund Advisors and author of the book ‘Stay Calm: Learn to Embrace Uncertainty in Investing and Life’
(also, ironically, a character in this post... #1608349)
... the tirade over bad baaaad things coming from prediction markets is quite astonishing:
can be addictive, especially for young people chasing an instant rush. It’s the latest version of the well-known “lottery effect.” Gamblers play the what if game, trading short-term thrills at the expense of long-term consequences. Everyday people are likely to lose out. Betting on outcomes through prediction markets and the novel — and opaque — investment products linked to them is worse than a zero-sum game; your expected return is negative. It’s akin to going to Las Vegas and betting against the house.
WORSE than that, there are also... pearl-clutching!... INSIDERS betting. Can you believe it?!
There are insiders tilting the scales. You’re also often up against professionals with vast research resources, and there’s little transparency to ensure a level playing field. This system really is rigged. And the people most likely to lose out are the ones who would benefit from a genuine, long-term investing mindset.
Yes, precisely. Go buy some bitcoin (#1604905). OR NOOOO, actually: too risky. Bonds are better (#1605547), index funds the best (#1608349)
A recent Betterment investor survey found that more than a quarter of Gen Z respondents treat sports betting as a deliberate part of their long-term strategy, while more than half have at least once redirected money to sports betting that they otherwise would have invested.
Probabilistically speaking, I don't see what's so odd about that? Every investment spend is a gamble... you take a portion and buy SpaceX shares or Google before a bad report, or underperfoming index funds and there's some non-zero chance these "investments" lose value or go to zero.
And if instead you go buy some conservative Kelly-blessed contracts on Predyx (#1606098)... surely harvesting the ~16% yield (to end of the year) on the 30y yield contract, or the 6% free money on Trump/Samourai Wallet pardon contract is
a) less risky than buying the tech-heavy stock market indices at the top of their "bubble" (#1606952), and/or b) better than the ~2% real return available on an Icelandic bank account?
I dunno, man. That Upton Sinclair line comes to mind:
"It is difficult to get a man to understand something when his salary depends on his not understanding it"
The combined monthly global trading volume on the largest providers of these markets jumped from less than $5bn in September 2025 to $23.8bn in April 2026, according to the Pew Research Center. That’s about $10bn more a month than was wagered through legal sportsbooks in the US last year.
...and a great deal cheaper/simplier I'm sure.
OK, that's cool... now ask your daughter about her hopes for that future, career wise or financially/monetarily?
at least this point -- rising tide helps all boats, stuff -- is worth considering in detail. What's the equivalent mechanism for (widespread use of) prediction markets? We all make better chocies/have better understanding of immediate future events...?
This advancement in financial knowledge gave people the confidence that if they adopted the right perspective — that true investing is a long-term endeavour supported by discipline and tuning out the day-to-day noise — they could reach their financial goals. The rise of gambling masquerading as investing undercuts those lessons.
"You don’t need to predict the future to benefit from it."
OK, boomer.
My regurgitated rebuttals:
I'm also wondering just how negative the expected returns would have to be for a bitcoin-only prediction market, before it became a worse deal than tradfi. I'm in year four of bitcoin and we're sitting at about 4x from when I started. Had I plowed everything into a bitcoin prediction market, I'd still expect to be up about 3.9x. Is that worse than bonds or index funds? (I get that it's worse than HODLing, but these schmucks aren't doing that either)
oh man, these are some WELL-FORMULATED ARGUMENTS RIGHT THERE.
Where's the Undisc serious material on this??
I agree with David Booth and disagree with @denlillaapan!
I agree with this, but it raises the question of whether "investing" should be synonymous with financial management and whether it's the right approach for everyone. Being highly aware of day-to-day details, combined with a reasonable model of how the world works, grants an advantage in prediction markets. Maybe this is the right financial management tool for people who would otherwise just be Cassandras shouting into the void.
no, they should shut up and buy Mr. Booth's index fund products (or at least be fish for his sharp traders in the market).
I suspect this is a non-trivial portion of why they care that investment funds are going towards fun things that people are interested in.
un-be-lie-vable.
...to the Gulag, etc?
BAAAAD BAD RUBY BOI. Imma put you in your place!