PGRI AI Lab
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An exploration of the forces shaping the games-of-chance industry. Integrating real-world observation, human judgment, and AI-assisted modeling to expand perspective, stress-test hypotheses, and examine long-term consequences. Predictive Markets and the Future of Games of Chance
How a new way of monetizing uncertainty is quietly reshaping gaming — and what it means for lotteries
The rapid emergence of predictive markets has introduced a new and potentially disruptive force into the broader games-of-chance ecosystem. At first glance, these markets look like a niche cousin of sports betting: users take positions on future outcomes and profit if they are correct. And the majority of the “positions” taken in these markets are in fact on the outcome of sporting events. But that surface similarity masks a more consequential shift. Predictive markets do not merely offer another wagering option; they propose an entirely different way of relating to uncertainty, and of monetizing the human impulse to place a wager, or take a “position”, on the outcome of an event.
Rather than presenting participation as entertainment, chance, or “play,” predictive markets position themselves as instruments of insight. In doing so, they challenge not only existing gaming products but the cultural definition of what betting itself means.
If a wager is traditionally understood as speculation on an uncertain outcome, how is investing in a stock with the expectation that its price will rise fundamentally different from placing a bet on a sporting event with the expectation that your team will win? In both cases, capital is committed based on judgment, information, and probability—yet one is culturally framed as an “investment”, the other as gambling.
Let’s explore how predictive markets blur that boundary.
What predictive markets really are — and why that matters
Predictive markets (PM’s from now on) allow participants to buy and sell positions on the likelihood of future events. These events can range from economic indicators and public policy outcomes to election results or corporate milestones. Platforms such as Kalshi and Polymarket are often cited as leading examples, though the model itself has been studied and tested for decades in academic and institutional contexts.
What distinguishes predictive markets from traditional gambling is not simply the subject matter, but the framing. Participants are encouraged to see themselves not as gamblers, but as contributors to a collective forecasting mechanism. Prices are not set by a house, but by the aggregation of beliefs (what PM’s call “positions” and the rest of us call wagers) across many participants. The implied message is subtle but powerful: this is not a game of luck, but a market that rewards knowledge, judgment, and information.
That reframing is the source of both their appeal, the regulatory confusion, and their disruptive potential.
A fundamentally different relationship to uncertainty
Traditional games of chance — lotteries, casino games, and even sports betting — are built around uncertainty as entertainment. Odds are established by operators, outcomes are unknowable in advance, and the experience is driven by emotion: hope, suspense, excitement, and, on occasion, disappointment.
PM’s invert that relationship. Uncertainty is not something to be enjoyed passively, but something to be analyzed, priced, and traded. Participation feels cognitive rather than emotional, creating the feeling that it is based on “skill”. The appeal lies not in dreaming about a win, but in forming an opinion, taking a “position”, and being right.
This difference attracts a distinct audience. PM’s tend to resonate with users who are analytically inclined, more highly educated, and skeptical of traditional gambling. Many do not see themselves as gamblers at all. They see participation as a form of informed expression — a way to translate beliefs about the future into “positions” based on calculated risk-taking.
That self-image matters. It lowers cultural and psychological barriers that have historically limited gambling participation, particularly among people who associate betting with impulse rather than intellect.
The real disruption: reframing risk as insight
The most disruptive aspect of PM’s is not economic; it is psychological. They change how participants perceive what they are doing, changing their self-image as relates to taking a position (i.e. placing a bet) on the outcome of a future event.
Instead of saying, “I’m betting on an outcome,” participants think of it as, “I’m expressing a belief about the future.” That distinction allows PM’s to position themselves closer to finance, investing, forecasting, or even journalism than to gaming.
As a result, their aim is to compete less with casinos or lotteries for entertainment dollars and more with how people consume information. Headlines become tradable assets that inform their decisions, their PM play. News cycles turn into market opportunities. The act of following current events becomes intertwined with speculation about outcomes.
This reframing has disruptive implications. It blurs the boundary between media, finance, and gambling, embedding wagering behavior into daily intellectual life rather than relegating it to leisure time. In that sense, PM’s do not simply compete with games-of-chance; or even with financial markets and forecasting. They compete with anything vying for attention itself.
Regulatory asymmetry and the early advantage
Another source of disruption lies in regulation. PM’s operate under financial or commodities frameworks (specifically, the Commodity Futures Trading Commission, the “CFTC”) rather than gaming statutes. They emphasize educational, hedging, or informational value, and frequently occupy regulatory gray zones where oversight is still evolving.
By contrast, lotteries, casinos, and sportsbooks are among the most heavily regulated consumer industries. They face strict controls on advertising, product design, payments, and responsible gaming measures. And their tax obligations are way higher than those imposed in the CFTC sector.
This asymmetry gives PM’s room to experiment more quickly and message themselves as something other than gambling. That advantage may not last as it is being intensely litigated in numerous states as we speak. But, the longer they operate within the current regulatory structure, the more likely it is to establish habits, platforms, and cultural legitimacy before regulators catch up.
What this means — and does not mean — for lotteries
Despite their disruptive qualities, PM’s are not a direct substitute for lottery play. The core appeal of lottery remains fundamentally different. Lottery is mass-market, low-cognitive-effort, and emotionally aspirational. It invites participation without requiring expertise, attention, or constant engagement. It is woven into everyday retail environments and cultural rituals, from jackpot headlines to office pools.
PM’s, by contrast, appeal to narrower segments. They require attention, interpretation, and ongoing involvement. They reward being right, not dreaming big.
That distinction protects lotteries from immediate displacement. However, PM’s do exert indirect pressure, particularly among younger adults who prefer participation to feel purposeful, informed, and relevant to real-world events. For these audiences, traditional games of chance can appear abstract or disconnected from lived experience.
In that sense, PM’s sharpen the contrast between lotteries and other games of chance rather than erase it. They clarify what lottery is — and what it is not.
Competing philosophies of uncertainty
At a deeper level, the difference between lotteries and PM’s is philosophical.
Lottery treats uncertainty as a shared human condition. The future is unknowable, so participation is about hope, fun, and collective benefit. Outcomes are random, and that randomness is part of the appeal.
Predictive markets treat uncertainty as a problem to be solved. The future may be unknown, but it can be projected, priced, traded, and the uncertainty exploited. The goal is not to experience uncertainty, but to master it.
Both models monetize uncertainty, but they do so in opposite emotional registers. One emphasizes aspiration without pretense. The other emphasizes insight, with an implicit appeal to ego and cleverness.
The strategic takeaway for lotteries
The rise of PM’s does not require lotteries to become more complex, more “skill-based,” or more financial in tone. Attempting to imitate PM’s would risk undermining lottery’s core strengths and cultural legitimacy.
Instead, Predictive Markets serve as a reminder of what lottery does uniquely well. In a world where more aspects of life become tradable, optimized, and financialized, the value of simple, bounded, random play increases. Lottery offers participation without the burden of being right. It offers entertainment without the pretense of mastery. It offers public benefit without requiring constant attention or sacrifice.
For lotteries, the correct response is not to chase intellectualization, but to modernize access, distribution, and communication while reaffirming their identity as civic entertainment.
One final thought
Predictive markets may reshape how society thinks about forecasting, belief, and risk. They hopefully will force regulators to rethink the boundaries between gambling and finance. But they do not replace the role lotteries play.
If anything, they make that role clearer.
In a future where uncertainty is increasingly treated as a commodity, lottery’s quiet power lies in offering something else entirely: participation without performance, hope without illusion, and chance without pretense.