Are prediction markets and event-based contracts the latest example of gamblification?

In 1906 Francis Galton wrote about the “trustworthiness of a democratic judgment”, as attendees of a livestock fair collectively estimated the weight of an ox to within 1% of its true weight. Since then, economists have produced evidence for a similar “wisdom of crowds” from market-based predictions, shown across financial markets, professional sports, and horse racing outcomes. Prediction markets even forecasted the winner of the 2024 US presidential election hours before pollsters did. This last prediction was especially notable, as a US Federal court had only weeks earlier made a judgment effectively legalizing prediction markets, where event-based contracts can be used to profit from accurate predictions of in principle any future event. Consequently, between 2023 and 2024, two leading prediction markets saw over 1000% increase in trading volume and revenue, reflecting a significant surge in growth. This rapid pace of legal and technological change poses fundamental questions. Are novel prediction markets still a conduit to wise democratic judgments, or could they be spreading gambling-like products and potential consequent harms as a new example of the “gamblification” noted recently in video games, cryptocurrencies, and in financial-trading apps?