[NO LONGER ENDORSED] Everything is Gambling

Whether You Like it or Not

You have a gambling addiction.

I don’t mean to be assertive, but for what it’s worth, I also am addicted.

By clicking on this blog post, you’re expecting that it will be of high quality and at least somewhat worth your time to read. That’s a gamble; Substack is a slot machine.

The fact of the matter is that every decision you’ve ever made has been a gamble. The simple definition of the term is, at first principles, risking something for a potential gain. I challenge you to make a decision that has no potential adverse effects. It’s statistically impossible.

Classifying Polymarket as gambling is just as ambiguous as saying talking to AI is. We have no system to differentiate what I call common gambling, which would be a regular decision not backed by any asset whatsoever, from contract gambling, or a decision where the result is backed by a specific financial, physical, or digital asset.

I could spend a long time arguing about why what I call common gambling should be classified as such, but I want to focus on contract gambling, because my goal is to show prediction markets in perspective with other types of gambles.

Within this category, we have:

• stocks/equity in corporations

• event contracts (i.e. Kalshi/Polymarket)

• common household items

• property

• a bet in a casino

• a bet in a sportsbook

• playing the lottery

• many, many more

Based on the simple definition I described above, the acquisition of any of these assets could easily be classified as gambling. The question that actually should be asked by people now is “how are event contracts gambling relative to any other assets?”

In my last post, I explained how sportsbooks are (almost) always negative expected value. This is a common misconception by uninformed people in this debate who assume that the trading counterparty is the house (who takes a vig, like in a sportsbook or casino) rather than fellow traders. An outstanding question in this debate is whether the expected value of a trade should be factored into how much we consider it to be gambling.

I personally believe it should, considering “gambling” tends to colloquially be a weighted term, or even accusation. If we’re going to criticize people for wasting (yes, wasting) their money on -EV bets, we should be more accepting of other exchanges where skill determines your profit.

We can agree that even though prediction markets are still gambling by definition, they’re on the lower end of the spectrum in comparison to sportsbooks or casino games. But even if a certain exchange/type of contract is less gambling-like than its counterparts, that doesn’t mean each individual contract on that platform is equal in terms of how much it is classified as gambling.

For example, signing up for Kalshi thinking it’s the same thing as Fanduel and putting $100 on the Seahawks would be more like gambling than, say, a bot doing Bayesian modeling on mention markets.

I would also argue that even if some individual traders are trading in more stereotypically gambling-like ways than others, the individual event being traded on the market is irrelevant. As long as it is possible to “win” by simply being a superforecaster means that it’s less gambling-like. Doesn’t matter if you’re trading the shutdown or Leavitt.

To put this in perspective, whether we as a culture classify it as gambling or not has no effect whatsoever, let alone public opinion. The fact of the matter is that as long as there are smart bots watching the markets, we don’t need random sports bettors coming on to the platforms or else they’ll simply turn into a Venmo for the permanent underclass to pay Bay Area rationalists. Regulation won’t change no matter what the people call it, it’s always going to be regulated as an event contract exchange. So we can argue about the nomenclature, but the real challenge is whether PMs are going to be a useful, oracle-like financial instrument, or just an artifact of the pre-AGI world.