Robin Hanson on Prediction Markets, Gambling, and the Future of Forecasting

Well, so start at the beginning. The basic vision is that speculative markets are shown to be a unmatched mechanism for aggregating information and telling us about stuff. And initially, most people who come to this area think about let's have markets on the big topics in public conversation in the news and politicians speeches and policy wonk, you know, reports. And that's what you're seeing initially here with Kalshi and Pali market as well. But I think most of the value is actually advising decisions for individuals and organizations, not in the big public conversation topics. We could advise business ventures like that with conditional stock markets. So for example, we could have a stock market in the company that says, what's the price of this company if the CEO stays in power past the end of the quarter? And another, what happens if the CEO leaves by the end the quarter? Those would give you two different stock prices. The higher one would be the advice about what to do. But there aren't any decisions companies make much bigger than that. For decades, Robin Hanson has argued that prediction markets are one of the most effective tools humans have for aggregating information and forecasting outcomes. Not just for elections or sports betting, but for helping companies, governments, and individuals make better decisions. That vision is becoming more relevant as platforms like Polymarket and CalSheet Sheen bring prediction markets into mainstream culture. But it's also triggering backlash, including new efforts to criminalize or restrict these systems. At the center of the debate is a deeper question. Are prediction markets just gambling or are they a new form of social coordination and knowledge discovery? Theo Jaffe and Sofia Puccini speak with Robin Hanson about prediction markets, futurism, games, and the future of forecasting. So today, we wanted to talk about the new law in Minnesota, which makes it a felony to operate a prediction market in the state. Specifically, it is a felony to create, operate, or advertise a prediction market, and violators are facing up to five years in prison for this. Minnesota is the first state to pass such a law. The CFTC, part of the federal government recently sued to block the law's passage, but as far as I know, it remains enforced now. So how could this have happened under our political system? Well, so as you may know, for a long time, many key political questions in our country and elsewhere have been about at what level do we make decisions. Most people often want them to be national level or local level depending on where they have more support. And recently we had a, you know, regulatory ruling at the national level that allowed a lot more of these things. And that was a problem for, say, many people who did sports betting regulated by the states. This regulation was displaced, and now they allowed these national competitors, and they didn't like that. So, …