Prediction Markets Are Not ‘Just Gambling’ Platforms

A Chicago sports bar, Rizzo’s, bought a prediction-market contract tied to whether the Cubs would play fewer than two home playoff games. After Chicago lost both Wild Card games in San Diego, the contract paid out, according to National Review.

Ryan Bourne argues that the episode shows how event contracts can serve as a hedge for businesses exposed to uncertain events. A bar whose revenue depends on a team’s postseason run might use a contract to offset some of the financial risk if the season ends early.

That use sits alongside ordinary speculation, and Bourne acknowledges that sports contracts make up most of the trading volume on the platforms he discusses. Critics, including New York Attorney General Letitia James, say such products amount to gambling.

The piece makes a case for treating prediction markets as more than betting sites, but the distinction depends on how people use them and how regulators define them. The example is a single business’s wager, not proof that these markets reliably forecast outcomes.