Who Is Winning in Prediction Markets?

On the first day of NEXTPredict Summit New York, speakers looked for an answer to the question of who will benefit most from prediction markets as they grow. Many players were put on the table, from retail investors to sports betting companies, and from market makers to institutional investors.

In the day's final session, two well-known economists got into a heated debate. Tobias Moskowitz of AQR rejected the claim that the market is skewed against losers, arguing that the stock market has a similar structure. Robin Hanson of George Mason University said winners can only exist alongside losers, so the many losers are financing the winners.

For retail investors, the picture depends on the market being traded. David Rothschild, an economist at Microsoft Research, said that in sports markets the data is concentrated in the hands of institutions with strong computing power, making it hard for individual investors to generate new and meaningful information. On the other hand, he noted that in markets such as real-time inflation, the scattered knowledge of individuals can be valuable.

A shift in interest also stands out. Robinhood disclosed that in September its most popular event contract was about the Federal Reserve's interest rate decision, not sports. Neil McDonald, U.S. CEO of Moomoo, said AI agents give individual investors the ability to develop and test strategies at a professional level.