Prediction markets are regarded as experimental tools to improve forecasting accuracy, but they still face structural issues. In 2008, scholars such as Arrow, Milgrom, Schelling, Shiller, and Vernon Smith claimed in Science that they are powerful research tools and advocated for deregulation. Currently, there is a lack of clear institutional boundaries; if regulation is unclear, their function may shift from information discovery tools to gambling-like products. The future direction depends on balancing the definition of informational tools and gambling characteristics.

MeNews

2026-05-22 20:47:22

Abstract generation in progress

ME News Report, May 15 (UTC+8), Bloomberg reported that prediction markets, as a market-based forecasting tool, have long been regarded as an experimental financial instrument with the potential to improve forecasting accuracy, but their development still faces key structural issues.
The article recalls that as early as 2008, 22 economists including Kenneth Arrow, Paul Milgrom, Thomas Schelling, Robert Shiller, and Vernon Smith published a statement in the journal Science, stating that prediction markets are a "powerful research tool" and advocating for reducing unnecessary regulatory restrictions.
These scholars believed at the time that the prediction mechanism based on market price formation could be more accurate than traditional expert forecasts or statistical models in certain scenarios.
However, Authers pointed out that current prediction markets still lack clear institutional boundaries, and if the regulatory framework is unclear, their function could gradually shift from an "information discovery tool" to a "gambling product."
Prediction markets are still in an "unfinished experimental stage," and their future direction will depend on how regulators define the boundaries between their informational and gambling attributes. (Source: BlockBeats)

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GaslightPoet

· 1h ago

The fundamental issue with structural problems is that no one dares to make a definitive judgment; the longer it drags on, the more arbitrage opportunities there are each day.

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StakingDaydreamer

· 4h ago

Predicting markets is indeed a double-edged sword; the line between information discovery and gambling is too blurry.

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RetroRadioSignal

· 4h ago

When Arrow wrote that Science paper back then, they probably didn't expect that regulation would be so difficult now.

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BluePeonyObserver

· 4h ago

The premise of reducing regulation is that the self-regulation mechanism is in place first; clearly, it has not been achieved yet.

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Bloomberg: Prediction markets still have the potential to become more useful, but blurred boundaries could turn them into gambling tools

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