Scott reviews the state of prediction markets after explosive growth, finding that most volume is degenerate sports gambling rather than useful forecasting, and proposes both technical solutions and two potential futures for the field. Longer summary

Scott Alexander examines the current state of prediction markets after their recent explosion in popularity, noting that while volume has grown from millions to billions per month, most of it comes from sports betting rather than the epistemic improvement he'd hoped for. He explores several problems: markets aren't asking the most important questions society needs answered; resolution criteria disputes ("rulescucking") create controversy; and there are concerns about insider trading and manipulation. He proposes solutions including a novel approach to conditional markets and suggests two paths forward: either creating user-generated, subjectively-resolved real-money markets (the "Siskind Cube"), or accepting that prediction markets' main value may be as training data for AI forecasters that could make the markets themselves obsolete by late 2026. Shorter summary