Scott Alexander

Since we last spoke, prediction markets have gone to the moon, rising from millions to billions in monthly volume.

Here's a graph, polymarket and kaoshi volume monthly.

It starts in 2020, and the line is so low that you just can't see it.

It's down on zero.

It starts to stir in early 2024.

goes up a bit, comes down in early 2025, and then absolutely skyrockets, going from close to zero and then being at around $2.5 billion, then suddenly shooting up within the space of a few months to $7.5 billion and above.

Scott writes, For a few weeks in October, Polymarket founder Shane Coplin was the world's youngest self-made billionaire.

Now it's some AI people.

Kaoshi is so accurate that it's getting called a national security threat.

The catch is, of course, that it's mostly degenerate gambling, especially sports betting.

Cauchy is 81% sports by monthly volume.

Polymarket does better, only 37%, but some of the remainder is things like this $686,000 market on how often Elon Musk will tweet this week, currently dominated by the 140-164 times category.

Ironically, this seems to be a regulatory difference.

US regulators don't mind sports betting, but look unfavourably on potentially insensitive markets, in quotes, like bets about wars.

Polymarket has historically been offshore and so able to concentrate on geopolitics.

Cauchy has been in the US and so stuck mostly to sports.

But Polymarket is in the process of moving onshore.

I don't know if this will affect their ability to offer geopolitical markets.

Degenerate gambling is bad, link in post.

Insofar as prediction markets have acted as a Trojan horse to enable it, this is bad.