The new Minnesota law making prediction markets a felony was not just a moral panic. It was a strategic move by state-regulated sports betting interests to block new, nationally-regulated competitors that threatened their local monopolies.
Modern society often discourages direct competition and hostility. Robin Hanson suggests that games, finance, and betting markets are popular because they create a bounded 'sub-world' where people can safely express their innate competitive and aggressive drives.
To overcome internal politics, companies can create two parallel stock markets: one pricing the company if the CEO stays, and one if they leave. The higher-priced outcome provides objective, hard-to-manipulate advice on the best course of action for the organization.
Referencing the failure of a dating prediction market, Robin Hanson argues this doesn't invalidate the concept. True innovation comes from testing many specific implementations of an abstract idea, as most early precursors will fail before the right combination of features and context is found.
While platforms like Polymarket focus on public events, Robin Hanson argues their greatest potential lies in helping organizations and individuals make specific, high-stakes choices, such as corporate strategy or personal career moves, which he terms 'decision markets'.
The current backlash against prediction markets is not new. Robin Hanson notes that nearly all established financial instruments were once considered immoral or illegal forms of gambling or usury before their economic utility led to carved-out legal exceptions over time.