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 where. 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 un 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?
That Rose-Berman quote you embedded makes no sense to me. You can’t go up against a DraftKings trader, they just cut you off. Beyond that, the worst thing the books do is create same-game parlays with way worse odds than they should have because people are bad at multiplying out probabilities in their heads. That doesn’t work on Polymarket because someone can take the other side and arbitrage the bad odds away.
Prediction markets are strictly better than sports books, and it’s mostly just generalized Tech Bad that makes it hard for sports media people to see that.
They're all part of the same machine.. taking advantage of people who are looking to turn their $10 into $100, siphoning money from those that don't know better to those that are in the know.
The only real question to me comes down to "what role does society play in banning clearly harmful activities?", some would say it's a free country we should let people pursue their vices to their own desire, others would say that the role of laws is to protect people from themselves.
I personally could never take money from any of these companies though, yuck.