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Comment by jawiggins | Hacker News Reader

As much as I am a fan of being able to see the current probability of a future event by checking prediction markets - the argument that there is a meaningful difference between predicting the outcome of a sports game and betting on the outcome of a sports game strains credulity.

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That’s not what prediction markets give you though. They give you capital-adjusted, human perception-based odds of future events. You aren’t “seeing the probably of future events”.

> An event predicted to happen p% of the time happens about p% of the time. Can’t beat that.

https://marginalrevolution.com/marginalrevolution/2026/10/pr...

You can link me studies that are paid and bought for by these companies all day long. Find me one where the guy is not a consultant to the companies themselves.

Huh, I hadn't considered that. Have you seen research from other sources that demonstrate they are not accurate?

This is the only one I’m personally aware of, keying off of a commonly known bias humans suffer from: https://arxiv.org/abs/2609.12878

Obviously not compelling on its own though.

> longshots lose 6.3 cents per dollar when each contract is weighted equally but gain 4.1 cents when related contracts are first grouped by parent event; the two-sided pattern is robust in Crypto and Politics but surprisingly absent in Sports.

This seems like a relatively small inefficiency in the markets, no? If the margin of error notable in a prediction markets is <10 cents per dollar, that implies that they are pricing events pretty accurately. Especially post publication of this paper, when sophisticated traders could trade away this inefficiency.

Cowen was talking up prediction markets before they existed. Both kalshi and polymarket were founded because they listened to cowens thoughts on them. He is absolutely a true believer in prediction markets. Whether that makes him trustworthy is a different issue, but he’s not bought and paid for.

The whole “we provide the most accurate way to predict the future” upside-as-a-counterweight-to-the-downside-of-gambling has always seemed like a hollow benefit to me. I mean, like, okay, let’s say they actually do provide that. Who’s to say that’s a beneficial result? Are we really better off having more accurate forecasting of election results? Or does that just improve boogeyman MBA-types’ abilities to affect election results?

Especially since what Kalshi is doing has existed for 25 years in Europe (we call it betting exchange) and been licenced as sports betting. It is nothing new other than them doing it without licence and that they are more generous in accepting weird market types.

So, if there's a difference between the probability that an event happen versus the odds offered on the prediction market, one could simply arbitrage off that and make money without taking risk. Every first year trader at Jane Street or Citadel would learn that. Am I missing something?

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