Comment Gambling? Partially!! (Score 1) 72
There are legitimate uses for futures markets to hedge bets. Lets say you want to guarantee your price of oil next week, you buy that oil with a contract with a set price now because you are expecting it to go down. You are predicting that by executing a contract now that the future price of oil will drop and make you money but will lose money if it actually went up. These prediction markets are doing the exact same thing. Lets say your business is a hot dog stand outside of a stadium and if the team wins you get tons of business but if they lose, you get little business. You can choose to bet on a loss to hedge the risk that they lose, meaning: if the team wins, you lose your bet but make money selling, but if they lose you make money on the bet and miss out. Either outcome you are able to normalize your profit, exactly like the oil bet. Or instead of hedging you can also multiply your profits. These markets allow this to happen, it is a legal form of gambling already as many have said similar to a stock market, the only difference is that it operates on sports team performance (companies) rather than company performance.