The Takeaway: So You Can Bet On The California Fires At Polymarket
The one sign that prediction markets are hot right now is that they are making people mad online.
I am not sure I am really one of them. But some of what’s out there in the nascent industry, I think we could do without.
The best example today is Polymarket, which is allowing users to trade on outcomes related to the ongoing California fires. (It’s important to note that Polymarket isn’t serving the US, and it’s not an operator that is overseen by the Commodity Futures Trading Commission, like Kalshi.)
But right now you can bet on whether the Palisades wildfire will spread to Santa Monica. That’s kind of icky.
Polymarket puts this note on the market to justify it:
Note on Palisades Wildfire Markets: The promise of prediction markets is to harness the wisdom of the crowd to create accurate, unbiased forecasts for the most important events impacting society. The devastating Pacific Palisades fire is one such event, for which Polymarket can yield invaluable real-time answers to those directly impacted in ways traditional media cannot.
Note: There are no fees on this market.
Even if you believe that prediction markets can be a source of truth for something like this, is that something we really need in this specific case, or cases like it? Here, users are trying to profit from the outcome of fires that are devastating people’s lives. It feels to me like something we can do without. It’s probably telling that Kalshi isn’t offering similar markets.
As I write this, there’s $60,000 total wagered on the market, which is certainly not getting us anywhere near any kind of truth. (Here’s a better way to spin the note on the Palisades fire market, for what it’s worth.)
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The flipside is that the platforms may be interested in trying to become a source of truth, but at the end of the day they are just businesses trying to make money. A lot of the markets at Polymarket, Kalshi etc. are fun novelty bets that aren’t making the world better…they exist to create engagement and make money. (I don’t think the world benefits a whole lot from markets about whether Taylor Swift will announce a new album at the Grammys or how many times Elon Musk tweets, for instance.) Trying to become a “source of truth” is a means to an end, not something the platforms are doing for the good of humanity.
This is not the only example out in the real world for prediction markets of questionable taste.
Kalshi offered markets on the outcome of the case centered around the murder of United Healthcare’s CEO before pulling them.
There are a variety of markets around how many cases of the bird flu there will be and its impact on the world, again with very low trading volumes.
Do we need to get mad about this stuff? I heave a heavy sigh and just wish we could have some common sense about what markets need to be traded. If the prediction markets industry wants to grow, I think it should stay away from stuff that involves gambling on outcomes where the real-world impact is the death of people. Is that too much to ask?
One unrelated addendum on the prediction markets front:
Much was made of Crypto.com getting into sports betting; they have since expanded their number of markets. But Kalshi does have some markets available for future NFL coaches; it will be interesting to see if and when they head down the path of trying to emulate some parts of a sportsbook.
Gambling news roundup for Jan. 9
We still don’t know a whole lot about the partnership between DraftKings and Delta, but here’s a little context from me on LinkedIn. If you don’t click through, here’s some top-notch Photoshop work I did:
The latest on sports betting legalization efforts in Georgia and Alabama. Meanwhile, Oklahoma sports betting remains a longshot.
Sportradar released its annual report on match-fixing.
A negative story for legal sports betting, but at least it humanizes the toll of addiction in a meaningful and less sensational way.
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Companies do stuff as a means to make money, not because they inherently care about public welfare?? 😱😱😱 gee golly, what is this world coming to!
“Do we really need markets telling us the probabilities of events that would have significant impacts on people’s lives and safety?” Yes. It’s hard to think of a more justifiable use case for these markets existing, not to mention the ability to “purchase insurance” the other commenter brought up.
“These markets have only $60k, this isn’t getting us near any kind of truth” so now your issue is that not enough people are betting on these markets you don’t like, and they’d be more acceptable if there was MORE money in them? (Not to mention $60k probably IS revealing of some truth)
“Have some common sense about what markets need to be traded” = when I don’t like how a certain market makes me feel viscerally, it shouldn’t exist. No I don’t use the platform. No it’s not causing any harm, and yes it might actually help people. And no, polymarket doesn’t make any money on this market specifically, but their broader goal is probably making money😡! Also it’s telling that kalshi doesn’t have these markets!! (goes on to describe another questionable market that kalshi DID have 🤔🤔🤔)”
“what markets NEED to be traded”
If people want to trade something, then a priori the market should exist. Markets shouldn’t require some “need” or “bar of usefulness” to exist. You can have principled objections to certain markets existing, sure. But then it’s a case of “all markets can exist as long as they aren’t xyz” not “only markets that satisfy abc should exist”. I’m sure you agree with this since you work in sports gambling markets, which definitely don’t “need” to exist.
I understand the general ickiness of betting on natural disasters. But as someone who lives in a very hurricane-ravaged area near New Orleans, one of the huge promises of prediction markets is the ability to use them as a form of reinsurance. If I know that my business might close for weeks, or God forbid I lose my home, I can reassess my risk and buy more "coverage" in these markets. I think this "betting" on natural disaster striking was always meant to be more of a feature than a bug, though it has not matured to the point where I would use it for that yet.