Furthermore the institutions that allow you to trade mostly aren't taking positions on the stock price and in theory there are jail-time consequences if they cheat. In practice that isn't always the case but at least there is some limit to what they can do to screw over their customers.
These contract markets have absolutely none of that. If they decide to take up positions to stuff their own pockets you probably wouldn't even know it and it wouldn't be illegal either. They can make up contracts for anything and everything without limit. If they aren't front-running their own customers then they're idiots because that's free money. And they can just lie about the odds as they like so if bets aren't going the way they want just tip the scales.
Oh and they have absolute control over whether any event counts as success or not and how to handle edge cases. There's no one you can appeal to.
Maybe they operate above-board in all aspects. Maybe they don't. No one really knows.
Almost anything can be gambling if you make it gambling. Effectively all the assets in the securities world that can be bought and sold as derivatives exist to facilitate and existing industry by offsetting risk.
There is a world of difference between someone treating corn futures as a roulette wheel, and an entire industry existing whose sole purpose is pure gambling with all of the negative externalities that fall out of that:
>I reported an Iranian missile strike... then gamblers who had wagered millions on a deranged bet threatened to kill me
https://www.dailymail.com/yourmoney/article-15651989/polymar...
If you're holding Florida grapefruit futures, hedging against an early freeze is an economic trade on the future value of a real thing.
[0] https://www.businessinsider.com/polymarket-paris-weather-bet...
Cordially, this is kind of like saying in a discussion about mathematics, "numbers are backed by something real." And hand waving over a whole suite of objects that have no real backing at all.
Options and futures contracts have existed in some form for pretty much the entire history of commerce. The heart of the problem is that people need to be able to take risk for some endeavours, and want to have financial instruments to mitigate that risk.
In blunt terms: if it's ok for the farmer and the baker to agree on a forward futures contract for the price of wheat so they can run their business, then it should be ok for both parties to sell their contracts on the secondary market to get liquidity (e.g. a farmer is fully leveraged in seeds, has the promise to sell wheat for price x at time y, but needs cash now to fix whatever). The bank should then be able to monetize it's exposure and sell calls on the open market. At this point we're not trading on anything "real" anymore than betting whether the harvest season will be good (or bad)
That secondary market is as real as anything on kalshi. So how would you propose to craft laws to mark one as gambling and the other as investing?
Why wouldn't they be regulated any differently?
It doesn't really seem like Kalshi and Polymarket have nearly the same regulation. There are plenty of cases where people are purposefully betting on the market when they can easily manipulate the results, with little/no consequences.
I guess the thin veneer of deniability here is that the whistleblower isn’t shown actively trading on the information lol.
In part, in part not. Insurance and gambling are inherently similar—they’re both negative-sum games taken alone. (Insurance can become positive sum when one considers what one is protecting.) Investing and gambling are fundamentally different—the former is a positive-sum game.
That doesn’t mean you can’t gamble in the stock-market. Options are, for a non-hedging buyer, negative sum. Someone day trading meme stocks, similarly, would be expected to lose their money in the long run. On the other side, a professional poker player may be able to play a gambling game as a non-gambler.
So no, differences aren’t blurring. But awareness is, and companies like Kalshi are predating on that.
Yes, their value fluctuates on the market from lots of different factors. But the thing you're buying is very real and very well regulated compared to a prediction bet.
In practice, they don't work like that anymore and you get the majority of the value by buying/selling the stock to another party.
Stocks have effectively degraded into gambling style instruments.
That's an overbroad generalization. They can be degraded into effectively being gambling style instruments if you want, but that's NOT what they fundamentally are. Stock and commodity trading markets drive positive-sum capital formation, whereas prediction markets and sportsbooks are zero-sum synthetic side-bets.
As someone who once printed original stock certificates for the startup I co-founded in my apartment back bedroom after nervously scribbling a $10,000 personal check to open a company bank account, then years later surrendered those same sheets to an investment banker on the eve of our IPO, the distinction between investing in something I own and gambling on something I don't feels rather concrete.
Note that commercial companies are obliged by law to maximize shareholders value, government can punish them if they don't.
Gambling, on the other hand, only redistributes capital around, without creating any value, which would be at least benign, if it didn't _attract_ all kinds of crime: drug abuse, human trafficking, fraud and violence.
And the price you pay then already accounts for your future ability to resell your stock to anyone else later, stocks would valued way less if you could only sell it back to the company.
But also don't forget that public trading is only one market, there's also a huge market for private companies stocks. Those go directly to the company for its operations.
And I also haven't touched dividends.
From the days of "My six sheep for your two cows" to modern derivatives, asset trading markets are useful and necessary for economic exchange, price setting and market clearing in a way that self-referential 'poker chips' are not.
That may just mean you don’t understand the regulations and legal definitions involved. Shares of stock are portions of a company entitling the owner to dividends and possibly influence over company direction. Do shares on Kalshi represent a portion of a company and entitle you to a dividend?
No. So the line remains clear: You are allowed to trade stock as long as you follow the stock trading rules. You are not allowed to trade “Kalshi market shares” unless the rules change. You can say that they should change, but there’s no confusion about what is stock and what is illegal gambling.
Kalshi could perhaps try to list their company on the stock exhange and have the market shares become actual stock somehow, but they’d quickly run afoul of the stock trading rules if they tried to give larger dividends to some shareholders than others based on which markets they’d invested in. It would become an impossible headache, which is why they won’t do it.
Easy. Financial instruments are used to tune the resource allocation in capitalism. Gambling however is used to have fun with an idea of getting free money. As such, one is at odds with the religious beliefs based on not having fun for no good reason.
The ancient issue with gambling is that neither the gambler nor any operator is producing anything of value. With nothing to show from any party, medieval scholars would declare gambling undeserving of any financial flow. Most Christians are still (at least unconsciously) working from these principles, even if the operations of the economy has changed since then.
Vibes and experiences are bigger part of the economy, this is true, but gambling is rightfully in the same cathegory as alcohol, (other) drugs, porn, algorithmic social media feeds etc. Some constrains are needed for all of the above, as they all create ill effects either on a person engaging in it and often on a society at large.
I think that constrains on what kind of fun you can have is big part of what religion is useful for.
Like, at least try to put effort to the comment to show you thought about it beyond the obvious propaganda of gambling companies. What, specifically, is the same? Why arent the differences important?
The apps know who the whales are. They make up 90% of their revenue. Ban them from taking money from whales, and the problem evaporates back to harmless $20 fun.
How to do this? Demand proof of income or assets and rent above $2000 in bets made in one year. Then audit these companies to ensure they are banning problem gamblers. If they are gambling or losing more than 5% of their net worth/income, that is a whale and they need to be play within their limits or get banned.
This is trivial to do, including at casinos. No one wants to do this because those companies have interests and that means their $100B+ scam industry is gone.
I actually had a colleague who was a whale. Spent about $30k/yr on mobile games. He was staff level and made like $350k, single guy, so while it was hard for me to understand, it's also hard to say he was being duped or something. He just really liked the games, liked cosmetics, and liked to "support the devs".
These whales will be pissed if you ban them. Why should they be banned from their hobby because someone else can't be personally responsible?
The GP said "Demand proof of income or assets", so a 'whale' for whom $3000 a week is pocket change would still be free to squander it. There are already laws which require individual investors in private startups to show $1M in assets but online sports books and casinos are largely free to prey on gambling addicts.
These companies post little notices like "Addicted to Gambling? Click here for help" but then relentlessly optimize dark patterns in their apps to target and trigger addicts. Search and you'll find lots of documented evidence of shockingly abusive tactics.
1. Purpose: derivatives serve primarily as risk management instruments. Gambling serves pure profit and entertainment.
2. Topics: derivatives focus financial assets, commodities and economic risk. Gambling focuses on micro, generally sports, events.
Obviously you could make an argument that both instruments can be used for both purposes.
If I'm a worker at a football team who's job depends on my team qualifying to the Uefa Champions League, betting on my team not making it can be considered risk management.
In the same fashion futures on oil prices can be equally used for pure profit and entertainment purposes.
In the large US professional sports leagues (NFL, NBA, MLB), it's not uncommon for some of the most long-term losing teams to be the most financially profitable.
In the case of the NFL, the league itself is owned equally by each of the 32 teams. They each get a 1/32nd share of league revenue regardless of win/loss. While many costs like player contracts are capped, other costs (like coach contracts) aren't. Since the majority of income is equally split, one way to max profits is to spend less than other teams where they can.
This is the ideal, yes. But I'd bet about 99% do the opposite and double their risk by betting on their preferred outcome.
Also, betting on something you have control over introduces perverse incentives. It's easier to sabotage an effort than make it succeed.
That should be plain illegal, in the same way sportsmen are barred and punished for being anywhere near betting.
But we have politicians, their staff and administrations openly trading and betting on outcomes they can influence.
With stocks if I try to do insider trading I run the risk of Jail time. Or if I try to do a Pump and Dump scheme, I go to jail. If I am an person and I "place a bet on polymarket/kalshi" and then go and influence that outcome. It may not be illegal. Since these markets commodify literally any event, its impossible to control the items themselves. So the markets need to be controlled.
You could buy a stock expecting asset appreciation, but the stock itself is a certificate of ownership in a business. Even a derivative of this, like options trading, is a contract to buy or sell or deliver said certificate of ownership in a business. Ultimately it is backed by something of tangible value.
"Predictions markets" are all of the mechanics of trading, but without any underlying value. It is literally gambling wearing Groucho glasses. The bet is simply for the sake of the bet.
There is now effectively little to no difference.