Werner Antweiler

And people are much more attracted to these leveraged markets than to the markets that trade in continuous outcomes.

The appeal then is like now you invest maybe $30, $40, and you get $100 in return if you actually win the big prize, which is the outcome comes true that you're predicting.

Like, you know, say one party forms the next government.

So this attraction to these really leveraged options is also part of the problem.

It really looks in the end like gambling because you're not really trading in this continuous outcome like a commodity price for oil or gas or something like that, but you're trading in this very leveraged position.

You either win all or you lose everything.

Well, of course, you have the uncertainty of the prices.

With stocks, you invest in a company, you actually get a dividend, and this company is actually producing something.

When you're actually hedging commodities, there's value in that too, because actually you will receive these commodities at some point in the future.

So people invest in futures markets because it allows you to hedge against the uncertainty of the future.

You're taking a position now, and then you are basically receiving delivery of a commodity at a fixed price sometime in the future.

With a prediction market, you may actually buy an emotional hedge.

Like, say, you want to have one party win, but you think it's the other party that's going to win.

So you buy a contract in the futures market, like a prediction market, and you emotionally hedge against the outcome.

That would be something where you can see the rationale here.

But still, in the end, because it's such a leveraged position, it really looks a lot like betting in the end.

No, not quite.

Now, we have securities regulators in Canada who put a lot on that in Ontario.

Other provinces haven't followed because our securities regulator system is kind of fractured.

Every province actually has its own little thing.