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Prediction markets are suboptimal betting vehicles — LessWrong

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The literature in this piece assumes the reader has a fundamental understanding of the structure of prediction markets (and their associated strengths/weaknesses). If you don’t, check the explanation article and then this piece to see if they work. First and foremost - how are these products legal? Sports betting is heavily regulated and not available in every U.S. state. Kalshi bypasses this by not being a ‘sportsbook’, but rather an independent provider offering a resolution system for two counterparties to bet against each other. They are classified by the CFTC as a contracts market, meaning they can offer events with binary resolutions (e.g. did X team win?). Additionally, because Kalshi is a third-party provider that does not have stake in the event outcome, they are recognized as a peer-to-peer platform and not a bookmaker. While definitely not the same scope, it does resemble Silk Road. The platform operator (DPR, Ross Ulbricht) was never charged for selling drugs, just providin

x Prediction markets are suboptimal betting vehicles — LessWrong Prediction Markets World Modeling Frontpage 5 Prediction markets are suboptimal betting vehicles by Benjamin_Sturisky 3rd Sep 2025 4 min read 3 5 Prediction markets are being touted as the future of sports betting. I disagree. The literature in this piece assumes the reader has a fundamental understanding of the structure of prediction markets (and their associated strengths/weaknesses). If you don’t, check the explanation article and then this piece to see if they work . The loophole First and foremost - how are these products l

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