Prediction Markets Make Owning a Business Less of a Gamble

Utah’s political class is mistaking prediction markets for gambling. Worse, in criminalizing prediction markets, the state of Utah is depriving its citizenry not just of the remunerative fruits of their knowledge, but also protection from the vagaries of business, weather, and so much else. Which is a very real gamble in the state of Utah.

If you’re doubtful, just consider the obvious. The amount of snowfall each year in Utah is very much the stuff of good returns for businesses in the state, or the opposite. Think winter 2025-26, and the oh-so-light snow conditions.

Which is where prediction markets could and will be incredibly useful to business owners in a state substantively reliant on abundant snow and its attendant tourism. Business owners can buy contracts on snowfall outcomes as a form of protection against not enough.

While their businesses could suffer in a bad snow year, they could buy contracts that would only pay out if snow is insufficient, and that would cushion their losses. Said another way, if prediction markets are disallowed in Utah, its business owners will be reduced to gambling on weather’s vagaries. Which means they’ll be reduced to hoping for good luck.

Gambling is luck, and that’s by design. If skill rendered you a good “gambler,” there wouldn’t be casinos; that, or “good” gamblers wouldn’t be allowed in them.

“Good” is put in quotes next to gambling because really there’s no such thing as “good.” Since the proverbial House must win so that casinos can remain upright, a “good” gambler is someone whose losses exceed wins. Excitement born of luck must by its very description not be very exciting most of the time.

With gambling, skill is decidedly not rewarded, by design. Better yet, skill is discouraged by design. And it’s the opposite of protection simply because with gambling you must lose more than you win.

Not so with prediction markets. The most knowledgeable individual invariably earns the most based on that knowledge, with that same knowledge enhancing the quality of the prediction markets themselves.

Applied to Utah, it’s not just that business owners can hedge uncertainty about snowfall in prediction markets, it’s that they can freely use knowledge compiled about the state for years and decades to improve their hedge. Yes, the opposite of gambling.

Apply that kind of local knowledge and skill in a casino, and you’ll be kindly walked off its premises. Conversely, prediction markets will encourage your participation. The more contracts you purchase, and that pay out based on your knowledge, the better.

Which brings us to Utah attorney general, Derek Brown. He’s brought felony criminal charges against prediction market platform Kalshi for allegedly promoting gambling in the state. In Brown’s words, “Gambling is illegal in Utah, whether you place the bet, run the game, or promote it. Calling it a ‘prediction market’ doesn’t change what it is, and being federally registered doesn’t put a company above the law.”

Except that prediction markets aren’t gambling, or casinos. Think about it, or see above. Gambling is about luck, prediction markets an aggregation of information. Information and knowledge are the only path to success in prediction markets, while the only requisite with gambling is a willingness to lose money.

Here’s hoping AG Brown can be convinced of the very real differences between prediction markets and gambling. If not, and if the criminalization of prediction markets continues in the state of Utah, watch the state’s businesses and people lose a crucial form of information-driven protection. Call Brown’s actions a tax on business formation and growth exactly because they’ll increase the risk of being in business in the state of Utah.

Originally published on Real Clear Markets.