Actually existing prediction markets?

by Douglas_Knight 4y2nd Sep 20152 min read20 comments

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What public prediction markets exist in the world today? Have you used one recently?

What attributes do they have that should make us trust them or not, such as liquidity and transaction costs? Do they distort the tails? Which are usable by Americans?

This post is just a request for information. I don’t have much to say.

Intrade used to be the dominant market, but it is gone, opening up this question. The most popular question on prediction markets has been the US Presidential election. If a prediction market wants to get off the ground, it should start with this question. Since the campaign is gearing up, markets that hope to fill the vacuum should exist right now, hence this post.

Many sports bookies give odds on the election. Bookmakers are not technically prediction markets, but they are awfully close and I think the difference is not so important, though maybe they are less likely to provide historical data. They may well be the most liquid and accurate sources of odds. But the fact that they concentrate on sports is important. It means that they are less likely to expand into other forms of prediction and less likely to be available to Americans. I suspect that there are too many covering the election for an exhaustive list to be interesting, but feel free point to point out interesting ones, such as the most liquid, most accessible to Americans, or with the most extensive coverage of non-sports events.

Betting is illegal in America. This is rarely enforced directly against individuals, but often creates difficulty depositing money or using the sites. I don’t think that they usually run into problems if they avoid sports and finance. In particular, Intrade was spun off of a sports bookie specifically to reach Americans.

Here are a few comments on Wikipedia’s list. It seems to be using a strict market criterion, so it includes two sports sites just because they are structured as markets. Worse, it might exclude bookies that I would like to know about. Not counting cryptocurrency markets (which I would like to hear about), it appears that there are no serious money prediction markets. The closest is New Zealand-based iPredict, which is limited to a total deposit of US$6000, and it takes a 18 months to build up to that. The venerable Iowa Electronic Markets (restricted to federal elections) and the young NZ PredictIt have even smaller limits, in return for explicit legality in America. It includes two play money markets: Microsoft and Hypermind. Finally, it mentions the defunct play-money Scicast, most notable for its different topic: science and technology. Hypermind and Scicast came out of the IARPA contest. Not on the list, I should mention PredictionBook, which is close to being a play-money prediction market, but tuned in different directions, both in terms of the feedback it provides to participants and the way it encourages a proliferation of questions.

Update: In the previous paragraph, I discarded two sports bookies from Wikipedia's list. I did so because I thought that they had very little non-sports offerings, but in both cases I did a poor job of navigating them and underestimated the numbers. Smarkets still seems too small to be interesting, but Betfair does have solid political offerings and is rightfully at the top of the list.

As of March 2016 my recommendations are:

  • Betfair (see also) is the best real market.
  • PredictIt is open to Americans
  • Metaculus is a play money market
  • Good Judgment Project (Tetlock) is another
  • PredictionBook is useful for complementary purposes, such as recording one's predictions, especially ones that do not correspond to questions on other sites. It is not so useful for integrating other people's predictions or scoring accuracy.

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