A big part of the appeal of prediction markets is simple: people are tired of the mainstream media’s 24/7 narrative machine. It’s loud, it’s constant, and a lot of it feels manufactured for the cycle rather than grounded in reality.
Historically, your only real option was to roll your eyes, maybe debunk it privately, and cancel your subscription. That was the extent of your “vote.” Now there’s a different outlet.
Prediction markets let you express a view with consequences. If you think the consensus narrative is wrong, you don’t just complain, you take the other side of the trade. In a way, it’s the first time people can actually price their disagreement with the The New York Times editorial board instead of just arguing about it.
Your line about money becoming the final virtue and divorced from any moral consideration is depressingly true. I'm a vet, and there was recently a report about shady online pharmacies selling counterfeit pet medications that made many dogs sick, and at least one went into organ failure and had to be euthanized. "Getting rich selling tainted drugs to puppies" sounds too evil for a comic book villain, yet here we are in 2026. If we can't find our way back to some higher purpose, whether secular or religious, our collective worship of money above all else is going to destroy our society.
I think a reason gambling has such free reign is because traditionally, controlling these sorts of vices was a project of the right. But the Trump-era right has totally abandoned those issues (in the process securing the "cad vote", as Yglesias puts it). And the left--I think probably just due to cognitive dissonance--has been slow to pick up on it as an important issue.
I think you see a similar pattern with pornography, marijuana, and even the use of profanity in public/civic contexts. (It's hard to make younger people understand how insane the idea of a sitting president using the f-word in public would be to Americans in the 90s...)
After 2024, pretty much every politician is scared of getting on the wrong side of the same demographic of voters that is most heavily in online gambling debt, so we have to wait for the electoral cycle to lag heavily behind our need for regulation.
Another underreported byproduct of gambling is the degradation of the sports experience for an average fan. I used to watch halftime shows or pre-game shows for the personalities or game previews. For the most part, these shows have devolved into discussions of prop bets or game lines. Instead of talking to me about the sport, they talk to me about some obscure over-under and why I should care about that. The Yahoo Sports app has done away with short game previews altogether and replaced them with popular bets.
That's just before the game. During the games, I am now subjected to constant live bets on the screen! It's one thing to push these things in the apps; it's another to force me to watch them live. I think we are understating how much this influences "non-bettors" or just the average sports viewing experience. Gambling IS the experience now.
It was already bad enough how much modern sports discussion is about salary caps, restructuring contracts, etc. Is talking about the money involved fun for fans? Adding in all of the gambling garbage into the viewing experience, it just makes sports less fun to watch. We watch sports to have fun.
I have read all these stories of the massive wins betting on Trump's policies clearly executed by someone with insider knowledge. But how much visibility do we have as to WHO the actual bettor was? We seem to just throw up our hands and say how corrupt it seems. But can't congress or a regulating agency actually investigate?
You can see where your state ranks. Essentially no states with legal gambling have any policies to prevent addiction. They only offer help after you've already lost everything -- hotlines and counseling.
Derek, I was the audio engineer for your session at the Sloan Conference. The day before, on the same stage, Polymarket CEO Shayne Coplan had a session with Nate Silver and a couple other folks. When asked about the insider trading on bombings, Coplan responded by talking about how he’s hearing from Iranians how great it is that they have this resource so that they know when they should take shelter, because the bombing location intel tends to be so accurate. It was very insane and prompted no pushback from anyone on the panel or in the audience.
I’m not much of an academic groupthink conspiracy guy, but there does seem to be some groupthink about the virtue of using market dynamics for these types of things. It reminds me of some of the out of touch talks I heard about Web3 and NFTs at the MIT Media Lab during the height of that hype cycle.
I really enjoyed this discussion, especially after listening to Michael Lewis' exploration of sports gambling on the last season of his podcast. One of the things that struck me (especially in light of your ongoing examination of AI *and* last week's deep dive into our broken tax system), is the gambling/prediction markets feel like an informal tax and AI feels like an informal subsidy layered on top of our existing system.
While participation in gambling is broad, it feels like voluntary regressive tax, because lower-income users lose a higher percentage of their income. Meanwhile, the benefits of AI disproportionately accrue to those already ahead, so it feels like a progressive subsidy.
And because the scale of these industries is so vast and growing, it's like we’ve unintentionally created this parallel economic system without any policy oversight.
I would love to hear about the intersection of this digital inequality of AI + behavioral economics of gambling Venn diagram in a future podcast. In the meantime, I will go ask Claude.
I wonder how prediction markets will evolve if the general public believes that the events are manipulated by insiders. I don't gamble, so I don't know, but my guess is that it's more fun to bet on something where the deciding factors are public -- the players involved, the strategy, and a few bits of random chance -- than one where privileged parties decided yesterday that the coin would come up heads today. The former at least has some plausible element of skill and insight. But is it fun to bet about what unknown insiders have chosen?
How come this does not meaningfully engage with the argument for why prediction markets can be so valuable, e.g. there's no mention of https://en.wikipedia.org/wiki/Futarchy ?
Paging Ross Douthat … we have dismantled the legacy societal architecture for good reason, but replaced it with nothing. So while the rich and powerful have their own societal architecture most of us are struggling to build meaning in this new void. Not going so well. And the rich and powerful are mostly utterly confused by all this struggle - they are so embedded in their own societal architecture they don’t even realize it exists as a thing, let alone that others (majority) may not have it. Oye. At least in the past the elites were honestly extractive. Our elites are perpetuating an abusive system while mostly genuinely caring and thus completely befuddled.
A big part of the appeal of prediction markets is simple: people are tired of the mainstream media’s 24/7 narrative machine. It’s loud, it’s constant, and a lot of it feels manufactured for the cycle rather than grounded in reality.
Historically, your only real option was to roll your eyes, maybe debunk it privately, and cancel your subscription. That was the extent of your “vote.” Now there’s a different outlet.
Prediction markets let you express a view with consequences. If you think the consensus narrative is wrong, you don’t just complain, you take the other side of the trade. In a way, it’s the first time people can actually price their disagreement with the The New York Times editorial board instead of just arguing about it.
From outrage… to position-taking.
Great way to put it.
Your line about money becoming the final virtue and divorced from any moral consideration is depressingly true. I'm a vet, and there was recently a report about shady online pharmacies selling counterfeit pet medications that made many dogs sick, and at least one went into organ failure and had to be euthanized. "Getting rich selling tainted drugs to puppies" sounds too evil for a comic book villain, yet here we are in 2026. If we can't find our way back to some higher purpose, whether secular or religious, our collective worship of money above all else is going to destroy our society.
News story: https://news.vin.com/default.aspx?pid=210&catId=619&Id=13170290
Good piece.
I think a reason gambling has such free reign is because traditionally, controlling these sorts of vices was a project of the right. But the Trump-era right has totally abandoned those issues (in the process securing the "cad vote", as Yglesias puts it). And the left--I think probably just due to cognitive dissonance--has been slow to pick up on it as an important issue.
I think you see a similar pattern with pornography, marijuana, and even the use of profanity in public/civic contexts. (It's hard to make younger people understand how insane the idea of a sitting president using the f-word in public would be to Americans in the 90s...)
After 2024, pretty much every politician is scared of getting on the wrong side of the same demographic of voters that is most heavily in online gambling debt, so we have to wait for the electoral cycle to lag heavily behind our need for regulation.
Another underreported byproduct of gambling is the degradation of the sports experience for an average fan. I used to watch halftime shows or pre-game shows for the personalities or game previews. For the most part, these shows have devolved into discussions of prop bets or game lines. Instead of talking to me about the sport, they talk to me about some obscure over-under and why I should care about that. The Yahoo Sports app has done away with short game previews altogether and replaced them with popular bets.
That's just before the game. During the games, I am now subjected to constant live bets on the screen! It's one thing to push these things in the apps; it's another to force me to watch them live. I think we are understating how much this influences "non-bettors" or just the average sports viewing experience. Gambling IS the experience now.
It was already bad enough how much modern sports discussion is about salary caps, restructuring contracts, etc. Is talking about the money involved fun for fans? Adding in all of the gambling garbage into the viewing experience, it just makes sports less fun to watch. We watch sports to have fun.
I have read all these stories of the massive wins betting on Trump's policies clearly executed by someone with insider knowledge. But how much visibility do we have as to WHO the actual bettor was? We seem to just throw up our hands and say how corrupt it seems. But can't congress or a regulating agency actually investigate?
Our organization has published 50-state report cards on gambling safety:
https://caspr.org/state-gambling-scorecard/
You can see where your state ranks. Essentially no states with legal gambling have any policies to prevent addiction. They only offer help after you've already lost everything -- hotlines and counseling.
Derek, I was the audio engineer for your session at the Sloan Conference. The day before, on the same stage, Polymarket CEO Shayne Coplan had a session with Nate Silver and a couple other folks. When asked about the insider trading on bombings, Coplan responded by talking about how he’s hearing from Iranians how great it is that they have this resource so that they know when they should take shelter, because the bombing location intel tends to be so accurate. It was very insane and prompted no pushback from anyone on the panel or in the audience.
I’m not much of an academic groupthink conspiracy guy, but there does seem to be some groupthink about the virtue of using market dynamics for these types of things. It reminds me of some of the out of touch talks I heard about Web3 and NFTs at the MIT Media Lab during the height of that hype cycle.
I really enjoyed this discussion, especially after listening to Michael Lewis' exploration of sports gambling on the last season of his podcast. One of the things that struck me (especially in light of your ongoing examination of AI *and* last week's deep dive into our broken tax system), is the gambling/prediction markets feel like an informal tax and AI feels like an informal subsidy layered on top of our existing system.
While participation in gambling is broad, it feels like voluntary regressive tax, because lower-income users lose a higher percentage of their income. Meanwhile, the benefits of AI disproportionately accrue to those already ahead, so it feels like a progressive subsidy.
And because the scale of these industries is so vast and growing, it's like we’ve unintentionally created this parallel economic system without any policy oversight.
I would love to hear about the intersection of this digital inequality of AI + behavioral economics of gambling Venn diagram in a future podcast. In the meantime, I will go ask Claude.
Hi Sean - there’s a lot of wrangling on the policy front from federal and state agencies
https://tsimagine-predictive-markets-events.netlify.app/
This is a well written piece on a subject that few are paying attention to— but should be.
I just wish I could be an early riser like everyone else (Derek Thompson included) to make comments early, but alas, I’m not.
Thanks for this piece.
Regulation idea: gambling is only allowed in-person at licensed places. Like hooters for betting! Bring IRL back 🥲
I wonder how prediction markets will evolve if the general public believes that the events are manipulated by insiders. I don't gamble, so I don't know, but my guess is that it's more fun to bet on something where the deciding factors are public -- the players involved, the strategy, and a few bits of random chance -- than one where privileged parties decided yesterday that the coin would come up heads today. The former at least has some plausible element of skill and insight. But is it fun to bet about what unknown insiders have chosen?
Great article! I really liked the connection between the rise of gambling and the decline of trust, morality, and civic institutions.
How come this does not meaningfully engage with the argument for why prediction markets can be so valuable, e.g. there's no mention of https://en.wikipedia.org/wiki/Futarchy ?
Paging Ross Douthat … we have dismantled the legacy societal architecture for good reason, but replaced it with nothing. So while the rich and powerful have their own societal architecture most of us are struggling to build meaning in this new void. Not going so well. And the rich and powerful are mostly utterly confused by all this struggle - they are so embedded in their own societal architecture they don’t even realize it exists as a thing, let alone that others (majority) may not have it. Oye. At least in the past the elites were honestly extractive. Our elites are perpetuating an abusive system while mostly genuinely caring and thus completely befuddled.