Hands holding a crystal ball. Pixabay image AI generated.
Don Heider is executive director of the Markkula Center for Applied Ethics, Santa Clara University. Views are his own.
There's an old idea that goes back thousands of years: a society is only as good as how it treats everyone in it—not just the people at the top. Philosophers, religious leaders, and ethicists have all wrestled with this idea, which they call the "common good," i.e., a good which we share or enjoy in common. For Aristotle and Thomas Aquinas, the good or flourishing of society was realized in the flourishing of its members. When we build institutions and systems, we thus have to ask whether they work for everybody, or just for some people. That's a question worth asking about prediction markets.
So, What Are Prediction Markets?
Prediction markets are places—usually websites or apps—where people bet money on whether something will happen. Will this candidate win the election? Will this company go bankrupt? Will there be a recession next year? The idea is that when lots of people put real money on the line, the collective result gives us a pretty accurate picture of what's likely to happen. Supporters say these markets are often better at predicting the future than polls or experts.
That might be true. But the common good tradition asks a harder question: better for whom? And that's where things get interesting.
Who Actually Gets to Participate?
Think about who can really take part in these markets. You need money to invest. You need to understand how financial markets work. You need time to research and follow along. You probably need a decent computer and internet connection. And in many cases, the people who do best have access to data and tools that most ordinary people will never have.
That means prediction markets are mostly aggregating the views of people who are already educated, already wealthy, and already connected. Then they present the results as if it represents what everyone thinks. It doesn't. We've seen this mistake before. For a long time, newsrooms were staffed almost entirely by people from similar backgrounds, and they called their coverage objective. It wasn't. The wisdom of crowds only works if the crowd actually represents everyone.
What Happens When Knowledge Becomes a Product?
Here's another concern. There's a long tradition of thinking that some things belong to all of us; knowledge being one of the most important. Public libraries exist because we decided, as a society, that access to information shouldn't depend on how much money you have. Public universities, public schools, publicly funded research are all built on the same idea. Knowledge is something we share.
Prediction markets flip that logic. In a prediction market, information is something you profit from. If you know something other people don't, you use that edge to make money. Instead of people coming together to figure out what's true, you have traders trying to beat each other. The person with the best data wins. That's a real shift in how we think about knowledge and who it belongs to—and it's worth paying attention to. It also invites people with inside information to have an unfair advantage.
When Betting on the Future Stops Being Abstract
Here's the part that should make all of us a little uncomfortable. Prediction markets don't just cover abstract economic questions. They cover elections. Natural disasters. Wars. Disease outbreaks. Real events that affect real people's lives.
When someone places a bet on whether a city will be hit by a hurricane, or whether a country will fall into political chaos, their relationship to that event changes. They're not just a concerned citizen anymore. They have a financial interest in the outcome. Other people's fear and suffering has become, in a very real sense, a way to make money. That doesn't mean the trader caused the hurricane or the political crisis. But it does change something about how they relate to it. And when we build systems that reward that kind of detached, calculating attitude toward human suffering, we're shaping the kind of people and the kind of society we become. That matters.
To Be Fair
None of this means prediction markets are entirely bad. If they really do produce more accurate information about what's likely to happen, that's genuinely useful. A community that makes big decisions based on bad information is going to make a lot of mistakes. Better forecasts can mean better decisions—about public health, about economic policy, about preparing for disasters. That's a real benefit, and it's worth acknowledging.
There's also something to be said for the idea that letting information come from many different sources, rather than relying on a small group of official experts, can give us a more honest picture of reality. Experts get things wrong. Polls get things wrong. Markets aren't perfect either, but they have a real track record of getting certain things right.
But Who Really Wins Here?
Pope Francis said that the common good means "prioritizing the lives of all over the appropriation of goods by a few." That's a simple standard. And when you hold prediction markets up to it, the picture isn't pretty.
The people who benefit most from prediction markets are already doing well. They're professional traders with lots of money to invest. They're the companies that run the platforms and take a cut of every transaction. They're insiders with access to better information than everyone else. The system is set up in a way that rewards people who already have advantages.
Now think about who pays the price. Often, it's the people whose lives are the subject of the bets. Imagine living in a neighborhood where your community's future is being traded on by people who will never set foot there. Imagine being a worker in a factory that traders are betting will close. Imagine being a citizen of a country whose stability is somebody else's investment opportunity. Those people bear real costs—psychological, social, even financial—while seeing none of the benefits.
This isn't a new story. Powerful institutions have always had a tendency to benefit the people who designed them while passing the costs on to people who had no say in the matter. Prediction markets are just the latest example.
What Would Actually Make This Better
Fixing this isn't just about making it easier for more people to sign up and start betting. That would help at the margins, but it wouldn't change the fundamental problem. Real change means asking deeper questions. Who owns these platforms? Who writes the rules? Who gets to decide what can and can't be bet on? When the system fails or behaves badly, who has any real recourse?
Until those questions get serious answers, prediction markets will keep doing what they do now: dressing up a private benefit in the language of the public good. And the people most affected by the events being traded on will keep being the last ones anyone asks.