Prediction Markets Redux

For those very long-time readers this blog extensively covered prediction markets from 2006 to 2008. In a prediction market, you have a future event, such as the winner of an election, and a market that pays off one dollar if that event happens and nothing if it doesn't. The price of this market corresponds to a predicted probability that the event will happen. I worked with David Pennock and Yiling Chen to create an interactive map that colored every state based on how likely it was to go Democratic or Republican for both the presidential, gubernatorial and Senate races.This all ended when Intrade, the source of the data that we used, went out of business after its CEO died climbing Mount Everest and may have embezzled money from the company.In 2016 prediction markets went out of favor after badly predicting against Brexit once and Trump twice. But what's old becomes new again. Prediction markets are back with a bang, with Kalshi and Polymarket providing real money markets open to…