Internet gambling is good for consumers. Too bad America wants to ban it

The spread of the internet has made the online gambler king. The emergence of large online gambling companies has slashed gaming operators’ margins and driven up payout ratios for gamblers. And the punters have embraced it in their millions, especially in America, where illegal gambling has long flourished. Last year 12m Americans placed about $6b in online bets, 50% the world’s total. You might have hoped politicians would greet such a demonstration of popularity with moderation—welcoming online gambling’s benefits and curbing its inevitable excesses. Instead they have put all their chips on red. Last weekend Congress passed a bill that will stop banks making payments to online gambling sites, adding to an already formidable legislative arsenal that outlaws most online gaming.

congress just killed a golden goose.
2006-12-03: uh crap i would have LOVED to attend this one. prediction markets is one of my permathreads.
2007-01-30: performance matters for betting markets too. to get even faster you’d have to factor out the humans clicking the buttons, but i guess that would require betting to grow up from being entertainment.
2007-04-24:

The key drivers in both filtering and consensus making in such systems is often positive feedback. For Digg, good stories get “dug” which makes them more likely to be seen and dug further. Poor stories do not get dug, rank lower, are less likely to be dug and slowly disappear. In ant trails, pheromone deposition stimulates further deposition if the food source really is good. Perhaps software developers should be given a cache of tokens. They can give the manager of a project 2 tokens each day if they think the project worth continuing. The manager can hire a programmer for the day [for 1 token] if he has enough tokens. Thus, crappy projects soon get filtered out by consensus. [The 2 vs 1 token prevents too much fluidity in the project and damps some random fluctuations].

2007-12-06:

In a new book, “Imperfect Knowledge Economics”, Mr Frydman sets out an alternative approach to prediction, in which the forecaster recognizes that his model will inevitably be less than perfect. Their work has received glowing praise from Nobel-prize-winning economists such as Kenneth Arrow and Edmund Phelps, who wrote the introduction to the book—though it is unlikely to have gone down so well with Robert Lucas, who won the Nobel for his work on rational expectations.

2008-01-07:

Despite the markets’ strong forecasting abilities, there is a slight optimistic bias driven mainly by new employees. On average, outcomes that were good for Google were overpriced by 20%. This bias was strongest on days after appreciations in Google stock and, ironically, for outcomes under our own control! We also find biases against extreme outcomes and short selling. Given a range of 5 outcomes, the middle ones were typically overpriced and unprofitable by comparison with the outliers.

hmm, i must have slept through that one.
2021-04-21:

are prediction markets doomed to repeat errors as grave as giving Trump a 15% chance of overturning the election in early December, and a 12% chance of overturning it even after the Supreme Court including 3 judges whom he appointed telling him to screw off? My answer is, surprisingly, an emphatic yes, and I see a few reasons for optimism.

2022-02-09:

In 2010, Philip Tetlock (one of the signatories on the pro-prediction market letter) did some pretty basic forecasting work, not even prediction market level, and proved that he could significantly outperform top analysts at the CIA with access to classified information. The government refused to hire him or use any of his methods, and continued shutting down new prediction markets as they arose. Polymarket is probably the biggest prediction market currently available. US law considers unlicensed prediction markets to be somewhere between illegal gambling and illegal futures trading, ie definitely illegal. The US is becoming the North Korea of forecasting. Every other civilized country allows prediction markets. In a perfect world, they could ignore our constant own goals and move on without us. But because America has a disproportionate share of money, users, coders, and entrepreneurs, a US-less prediction market ecosystem won’t be living up to its potential. That means decreased ability to gather and process information and worse decision-making worldwide.