Forecasting the Future of Election Prediction Markets

“It was about arms control,” he told me in an interview. “I showed that a bomb could be built, and that we needed more controls.”

Aristotle does the day-to-day work running PredictIt, and the university has been playing a passive role. While the data from the prediction market at the University of Iowa is regularly used in classrooms and in research there, that is not the case for Victoria University.

“We are not aware of any scholars at Victoria University of Wellington using the data, but, as they don’t need to come through us to access it, that would be a question better directed to PredictIt,” Katherine Edmond, the university’s director of communications, said in an email.

PredictIt is used extensively by scholars around the world, but mainly by Americans, who are listed on its site, and have relied on it for years, as have journalists like me. In addition to filing suit, Aristotle has applied for permission to become a commercial exchange, like Kalshi, a move that would end the restrictions on its size and scope.

From the standpoint of many economists, the prediction markets, for all their flaws, have been spectacularly successful.

“There’s tremendous social utility to having these markets operate, and having this information available,” said Eric Zitzewitz, a Dartmouth professor who has studied prediction markets extensively. “There’s a lot of demand for them — people enjoy participating in them and consuming the information they provide.”

Betting on elections won’t go away, no matter what the regulators decide. Such betting could migrate to overseas markets or to unregulated markets in cyberspace that are outside U.S. regulatory control.


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