What is the difference between gambling and futures or prediction markets?
In futures markets investors make investments based upon their beliefs about the future, and they may profit or lose depending upon the outcomes of their investments. Unlike gambling, however, futures markets provide some “social good,” the most common of which is to allow investors to “hedge risk” or to protect themselves against future price increases. For example, agricultural futures markets have caused a net stabilization of commodity prices, which greatly benefited the industry by reducing uncertainty about future prices. The prediction markets run by the University of Iowa provide a social good through thier uses in education and academic research and through the information they generate. Since 1988, the Iowa Electronic Markets (IEM), run by University of Iowa’s Tippie College of Business, has run markets to teach students at the University of Iowa and over 100 other colleges and universities throughout the world how markets work. Also, several peer-reviewed research articles h
