This week on #3Question, we hear from Will Jennings, Head of Public Engagement at PredictIt.
PredictIt is a New Zealand-based prediction market startup where anyone can earn money on the news of the day.
Here’s what Will had to say:
Question 1: What do you think the future of Prediction Markets looks like?
Will: ‘I believe prediction markets will continue to grow in popularity, particularly in the sports industry, where startups are using similar market models to break into the booming sports betting industry.
As we teach more people about probabilistic forecasting, how to do it successfully, and the benefits (e.g., more accurate than other forecasting methods; making predictions also improves decision-making skills, helps depolarize politic debates, and is a tool for civic engagement) I believe interest will continue to grow and it will become less taboo to wager on political events.
Ultimately, for us, the more informed voters are, the better. If having skin in the game, or even just seeing what the odds are, makes folks more inclined to follow the actions their government is taking, or think more about the repercussions of an upcoming election, that’s a great benefit, too.’
Question 2: If or when mass-adopted, what do you think will be their main use-case?
Will: ‘Whether it’s in finance, sports or politics the market model is one of the most efficient ways to aggregate disparate information and assign a value to a particular asset or potential outcome (in PredictIt’s case, political events).
For politics, where we’ve hit peak news (i.e., information overload), we need better, real-time indicators to sift through the noise and provide some signal as to the potential risks that lay ahead, and what narratives are most important in driving news cycles. Assigning an actual probability to a specific event is a form of accountability that should be welcome in this post-truth media environment.’
Question 3: What are the current challenges that need to be solved?
Will: ‘The challenges to scaling political prediction markets (like any market) is a matter of generating enough trading volume (i.e. liquidity) to make it engaging for participants. Making probabilistic forecasts about uncertain events is not an everyday activity yet, so our focus has been to find the diehard audience that enjoys the intellectual exercise of predicting and crunching the numbers and cares enough about politics to buoy the forecasting community. We now have thousands of daily users making predictions and a much broader audience (including mainstream news outlets) who are paying attention to the predictions now, too.
Another challenge is that it [is] still taboo to put money on political events (though there’s a long history of doing so). Nearly all financial instruments were maligned as evil at one point or another before being widely adopted. e.g., life insurance used to be evil because you were gambling with human life.’