Why prediction markets aren’t popular - Works in Progress

Prediction markets remain scarce even where they are legal, and the article's authors attribute this mainly to weak demand rather than to regulation. Kalshi, a CFTC-regulated market, lists contracts on topics such as Oscars winners and monthly tornado counts, and the UK permits prediction markets, yet Betfair offers only a few dozen markets, with about twelve million pounds in play on the US presidential election. The authors argue that savers, gamblers and sharps are each largely uninterested because prediction markets are zero-sum, negative-sum after fees, and lack long-run returns, so the price-correcting pressure that makes markets efficient never builds.