And it is getting worse.
Does anyone remember the days where professionals were accused of placing bets on their games and it being a national scandal? Well, unfortunately it is not as rare or as frowned upon. Today it is almost encouraged.
Recently, the MLB just brokered a deal with Polymarket that opened an opportunity for bookies and Vegas to be nearly obsolete with “prediction markets” in your pocket, allowing you to place bets on your favorite baseball teams. Now it is nothing new, baseball has been a betting cash cow for decades. The rise of gambling across the US has been anything but anticipated. From DraftKings to Kalshi, gambling has become the monster that America cannot get enough of. But prediction markets are not the same as sports books, and the epidemic may get worse before it gets better. The problem is that there are two big issues that rise up with these “prediction markets.”
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“It isn’t gambling” – this is something you will hear from people who use it, but it is true. Prediction markets like Kalshi and Polymarket are seen by the general public as trades based on current events. These “stocks” are not based on a currency or a company, but on the likelihood of an event occurring.
This may be known to many, but like Vegas, the house always wins. Let me explain this in more detail.
When someone “trades” on a prediction market, you place a bet on something winning or losing. The more people place bets on it, the more the odds move toward a 50/50 split. The issue is that when you place a bet, you pay a fee regardless of whether you win or lose. It is a small one, but nonetheless this fee goes straight to the prediction markets as a service to the bettors. The losers payout goes to the winners, but there is no way for these prediction markets to lose. If anything, this method is better than Vegas.
This is why you are seeing stock holding apps like Robinhood take an interest in including prediction markets in their “all inclusive” portfolio. This leads directly into our second problem.
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Prediction markets are not regulated… yet – With something as profitable and low stakes as this, you would think the government would want a slice themselves. Which is why there is no current legislation to regulate prediction markets on the federal level that has been discussed in either chamber. This is not to say that no one is for regulation, but this rise in predictive trades is a recipe for disaster, with major concerns of insider trading and inflating the market with gambling money rather than something with actual monetary backing.
With such lack of regulation, we are seeing an increase of insider trading among professional athletes, and it is coming for the MLB next. This deal with Polymarket will absolutely have an overall effect on games this upcoming season, just do not put money on it.
What can we do about this?
With an industry as large as gambling or “prediction markets,” the biggest danger in all of this is misinformation. We are seeing this rise because a whole generation has been led to believe that betting on anything that could happen in everyday life or on TV is a profitable strategy. Research says otherwise, that prediction markets will cause people to lose money quicker than gambling with cards or slots.
Above all, it is important to talk with those you know who use these betting sites and warn them of the evident consequences. We all know someone who has lost something or someone because of this addiction, and it is coming quicker and larger for the next generation. A casino in our pockets is not something that is just coming, it is already here and we have to prepare ourselves to pick up the pieces.
