Are Prediction Markets Better Than Sportsbooks?
People are Mad About the Polymarket MLB Partnership
When I read that Major League Baseball was partnering with Polymarket, I did not expect much controversy. Sports gambling is everywhere now. Theoretically everyone is numb and inured at this juncture. Instead, the announcement kicked off intense criticism from sports content creators. Or, to quote a headline from NJ.com on the partnership:
I asked around the sports media industry to get some insight on why the rise of Prediction Markets drives reactions this intense. I first noticed the acute aversion in some quarters when Giannis Antetokounmpo announced his partnership with Kalshi shortly after surprising many by staying with the Milwaukee Bucks through the trade deadline.
The question of whether Antetokounmpo would be dealt was a $23 million market on Kalshi. Did people close to Giannis profit off insider knowledge? How would anybody police that sort of activity? We certainly don’t want players shaving points, but do we even care about, um…free agency shaving? It seems like the new questions that come with Prediction Markets wig people out more than the more banal depravations brought by sportsbooks. Even if critics can’t quite articulate their exact issue with Prediction Markets, there’s a Chesterton’s Fence sense that we’re opening up unforeseen vulnerabilities in the system. And I’m not even getting into the “wag the dog” situation where such markets might inspire an illegal or immoral activity like, say, throwing dildos on the court of a WNBA game.
Joon Lee made a video about the peril of Prediction Markets in sports. He promoted the piece with:
Prediction Markets claim you’re betting against other users, but you’re really betting against Wall Street investors. Prediction markets are sports gambling with a better PR strategy.
It’s hard for me to disagree with that framing, and I suppose I’m part of that “better PR strategy.” Following Substack’s partnership with Polymarket, I did an embed ad for Polymarket during the Winter Olympics. I might do more, seeing as I like having ad revenue and only so many options plausibly fall within the House of Strauss niche. I don’t think I’d partner with DraftKings or FanDuel or other Daily Fantasy Sports sites, though.
I’m not proclaiming my relative sense of comfort as the standard others should mirror or making any grand moral pronouncement. I just happen to like Prediction Markets and actually use them. While I don’t necessarily hate the DFS sites, I dislike how they’re effectively rigged. Top HoS guest Ryan Glasspiegel bets in these places, gets locked out due to his victories, and somehow I feel like I’m more offended by that outcome than he is.
Obviously the sportsbooks don’t have it out for Glasspiegel specifically. Anyone who gambles successfully with the online sportsbooks is guaranteed to get locked out of future action with algorithmic efficiency. If you win a lot with Prediction Markets though, nobody stops you from winning more. That matters to me, and I’m not even sure why but it does. While it’s so that Prediction Markets hardly qualify as some “clean” version of gambling, free from addictive and destructive components, they’re at least not guaranteed fails for longterm bettors. Perhaps Joon is right that I’m “betting against Wall Street investors,” but I’ll take that action over a scenario where the house never ever lets me win over the long haul.
Professional gambler Isaac Rose-Berman, featured in Joon’s video, might call me naive. In the clip he says:
I would much rather go up against a DraftKings trader making 60 grand a year than Susquehanna on Kalshi. They’re much better at their job. And their job to set accurate prices and make sure they’re on the other side of your trade.
So market makers use capital and knowledge to ensure themselves a great price, one that retail bettors lose out on. A perhaps suboptimal price still sounds better to me than an alternative where, again, the retail bettor never wins.
To my mind, the moral questions surrounding this practice have less to do with the retail bettor and more to do with the event. Does the Prediction Market potential for insider trading undermine the integrity of certain entertainment forms? Will insiders disrupt their craft by manipulating choices? And for MLB, given its recent betting scandals: Will the embrace of a new betting form lead to unforeseen integrity breaches from players?
I’m curious what you subscribers think. Are Prediction Markets better for bettors? And if they are, then are they worse for sports?
I think you’re a bit myopically focused on the experience of individual users, and on that front I agree that prediction markets are “better” than sportsbooks.
The unease others, myself included, feel regarding prediction markets has little to do with the user experience, though. I mean sure, it’s bad that we sprung up another way for people, disproportionately young men, to piss their money away. But in the “everything is gambling, gambling is everywhere” era I’m numb to that, for better or worse (it’s the latter).
What disturbs people profoundly about prediction markets is their potential to influence events much more consequential than, say, a basketball game. I’d much rather have to worry about whether Terry Rozier is dogging it than about whether Pete Hegseth has a fortune on “YES, WAR WITH IRAN” contracts.
The obvious potential for insider trading, defined here as “profiting off information that comes to you before the general public,” is not what worries me most, though it’s very bad. Prediction markets allow for influential people to bet on events *and then use their influence to make those events happen.*
So in my hypothetical example, we have Pete Hegseth putting all his whiskey money on “YES” and then pounding the table in the situation room for war regardless of what the facts and evidence say is the best course of action.
I’m nearly certain this kind of thing has already happened, albeit likely at a smaller scale for now, and would prioritize putting a stop to it over taxing Draftkings into oblivion.
Though if we have time, let’s do that too.
If the government really wanted to regulate this stuff they could.
- Max wager is $1000
- Max losses for any individual person at any site is $3000 per month
- Any individual can only make 2 deposits per month
- All deposits must come from bank accounts
The ultra degenerates would get around it, but it would cause enough friction that a lot of the people in the gray area would slow down. They market their services as a fun add on to sports. And it is. You dont need to bet more than $1000 to have fun. And nobody is having fun if they lose $3000 in a month.
But I dont think the government has the stones to do it. And I dont think the leagues or the media ecosystem would like it much either