Robin Hanson on Prediction Markets, Gambling, and the Future of Forecasting

Well, so start at the beginning. The basic vision is that speculative markets are shown to be a unmatched mechanism for aggregating information and telling us about stuff. And initially, people who come to this area think about, let's have markets on the big topics in public conversation, in the news, in politicians' speeches, in policy wonk, you know, reports. And that's what you're seeing initially here with Kochi and Polymarket as well. But I think most of the value is actually advising decisions for individuals and organizations, not in the big public conversation topics. We could advise b

For decades, Robin Hanson has argued that prediction markets are one of the most effective tools humans have for aggregating information and forecasting outcomes. Not just for elections or sports betting, but for helping companies, governments, and individuals make better decisions. That vision is becoming more relevant as platforms like Polymarket and Calsheet bring prediction markets into mainstream culture. But it's also triggering backlash, including new efforts to criminalize or restrict these systems. At the center of the debate is a deeper question. Are prediction markets just gambling,

So today, we wanted to talk about the new law in Minnesota, makes it a felony to operate a prediction market in the state. Specifically, it is a felony to create, operate, or advertise a prediction market, and violators are facing up to five years in prison for this. Minnesota is the first state to pass such a law. The CFTC, part of the federal government, recently sued to block the law's passage, but as far as I know, it remains in force now. So how could this have happened under our political system?

Well so as you may know, for a long time, many key political questions in our country and elsewhere have been about at what level do we make decisions? Most people often want them to be a national level or local level depending on where they have more support. And recently, we had a, you know, regulatory ruling at the national level that allowed a lot more of these things. And that was a problem for, say, many people who did sports betting regulated by the states. This regulation was displaced, and now they allowed these national competitors, and they didn't like that. So, you know, there's ec

How do you start to convince the public more broadly that this technology is actually useful? Because there seems to be this very persistent conception of prediction markets as something between wasteful gambling nonsense or, immorally making money off of tragedy. Those are sort of the two attacking

The those I history of all financial markets is that they were pretty much all once illegal as gambling or usury or something, and then we carved out exceptions over the period. And the main reason people came to accept exceptions is just that, you know, the world seemed to keep going, and somebody wanted them and saw them as valuable. So, you know, the the usual proof is just somebody somewhere sees something as valuable. Other people accept the legitimacy of that, saying, okay. You seem to find value in it, so I guess you should be able to continue. But that requires that somebody find value

Right. So you wrote an article a few months ago called Prediction Markets Now. What do I think of Calci and Poly markets specifically? And you said you're mostly interested in the potential of stuff today to enable and cause that future vision and said, interesting at the end, of course, if these systems induce a backlash that gets them outlawed or drastically shrunk, that may plausibly blo