Rahm Emanuel proposes banning all federal employees from betting on prediction markets

Ill give you three guesses… the first two are because our politicians are making money from it. The third is because dear leaders family owns one.

When I was a kid gambling was illegal in the vast majority of the US

So they existed back in the day because they were small scale and niche enough that the only people using them were political junkies and people with insider info. It wasn't a problem because it was small and there wasn't any evidence of the markets existing causing people to change how they were going to act anyway. On top of that for other political and economic analysts it was a good source of information because it consolidated both the political junkies and insiders into a simple statistic. Since laws are generally retroactive (they don't get passed until something becomes a problem) this was allowed to fly.

Because the people at the top are making money with insider knowledge of what's going to happen like someone made bank off of knowledge exactly when we were going to attack. This is insider trading except it's not stocks it's just gambling.

I just wish we lived in a world where lawmakers were competent and not corrupt so they could regulate these things in a timely manner

Regulation.

Stock market produces value. Companies are able to raise money and build a factory that then produces a product which then translates into money for the investors. This is different from Guy bets on whether a person pees on video at a sporting event.

The difference is that with stocks your effectively buying shares of control over other people's livelihoods/the resources they need to be able to work so that you can profit off of their labor without doing anything yourself, but also get a payoff if they do well, and you can fleece fellow investors who don't have the same information you do (but you might have gotten in trouble for that in the past). With prediction markets, it's just straight betting on who has the best information to fleece others. Prediction markets are more ethical but still bad. Stocks inherently exploit others' need for resources you control in order to live, but the process is less easily corruptible and easier to regulate because there are known stakeholders who can be held accountable for insider trading.

Stock market is selling ownership in a company. You are giving them capital and thus have a share of ownership and are entitled to the benefits that come with it such as voting rights on the board or dividends. If the company is successful the value of being an owner and getting those benefits can go up and people may buy your ownership share for more than you initially spent or the opposite and it’s less than it was worth before. To paraphrase Dan Olson ‘A long time ago you and your buddies could get together, pool all your money to open a mine, and split the profit 4 ways. And now you’ve created stocks. And then a year later you decide I don’t really want to run a mine anymore, I’m trading my responsibility and my share of the profits to this guy for a goat farm. And now you’ve created an equities market.’ Stock markets are essentially the same thing but with several centuries of wealth consolidation, growth, and regulation so buying a share is much more regular and gives you much less ownership as well as recent gamification and faster trading have made it more resemble gambling and some people do engage with it as gambling instead of investing. Instead of investing in a new oil venture because you think it will succeed and make a lot of profit, people are betting an earnings report will make the share be worth more so they can sell it in a week. Prediction markets are just gambling. You are not investing in Nope winning an Oscar. You do not gain ownership or voting or dividends. Your money doesn’t even reach the thing you’re placing it on, it goes to the gambling company. Because you’re just placing a bet something will happen. No different from horse racing. Your prediction has no effect on the outcome, the odds only change as people make predictions to adjust the payout because the company is just a bookie taking bets and the house must always have an edge.

Honestly that's an argument against day trading more than it is one for prediction markets. Stocks in the hands of gamblers are an instrument of gambling. Futures, forwards, swaps and options were all instruments that serious professionals used to de-risk their balance sheet. Now they're being used by morons on brokerage apps to turbo-leverage their gambling.

The stock market is a form of gambling that exists despite the public policy reasons to regulate and prohibit gambling because of the massive benefits society extracts from having active capital markets where excess capital and promising investment opportunities in need of capital can be paired. Unfortunately, algorithmic, high frequency trading, and other sophisticated approaches have somewhat chipped away at the effectiveness of the markets at achieving these goals, but that benefit is what sets equity investing apart from speculative gambling. Of course a company CAN go under, and a financial position can be constructed that will sky to the moon or bust, with no in between, but that is effectively the default with sports gambling or predictive markets, which also don't result in investing in anything productive besides the profits of the gambling industry, who will grow in a vicious cycle sucking in more and more of the population.  We tolerate markets for financial instruments for debt and equity, despite any downside, because they enable large scale potentially beneficial activity to take place.  Gambling / predictive markets don't offer the same externality and so should not be as shielded from regulation. 

I work for a prediction markets company, and it’s always interesting to see the outrage on these. There’s obviously some things that need to get cleaned up (the markets that are ripe for fraud and abuse) but outside of those they’re not adding anything novel to the world outside of offering an existing product in a different way.

Stocks serve a real purpose in corporate governance, raising capital, and providing exit liquidity to early investors. Prediction markets ostensibly exist to incentivize disclosure of information by allowing insiders to leverage that asymmetry, but it's zero sum. Every dollar insiders make comes from lower information traders losing money. Companies with publicly traded stocks can actually generate wealth. That's not to say the stock market is perfect. There's a real parallel to be made between prediction markets and HFT or shorting. But at least there's more to the stock market than that.

I believe the word you are looking for is euphemism.

Uh huh. We also already have the STOCK Act, which is what you are describing for Congress critters. Unfortunately, Congress decided that Congress should not have a penalty associated with violating that Act. So, sternly worded letter it is.

The day Republicans get behind a good idea is the day they start voting Democrats.

There's a big difference between how a mail carrier, air traffic controller, or national park ranger plays the market then how our f****** insider-trading politicians do so.  Block judges, lawmakers, and execs  from insider trading but not all fed employees. BIG f****** difference between them (just ask the orange idiot or pelosi if it's the same thing). 

It, shouldn’t. At least to this extent.