I am interested in the potential for charitable prediction markets. I don’t mean prediction markets that give winnings to charities (like Bet2Give). I mean charities which use donations to finance subsidies for prediction markets about important topics.

For example, a charity interested in better decision making in politics might sponsor a conditional prediction market contract about the size of the national debt given that a specific presidential cadidate won. This would let the candidate which the market predicted would keep the debt lower, could say “Experts agree, I will reduce the national debt more than my opponent.”

Another example, a charity interested in making it easier for small businesses to compete might sponsor a conditional prediction market contract about future input and output prices like lumber, fuel, housing, wages in specific sectors etc. This would help small companies be on more equal ground with large companies in terms of forcasting.

Such charities might not be very glamorous, but it seems like they could do a lot of good. If and when the CFTC clarifies the regulatory status of prediction markets, this type of charity will probably be my charity of choice.

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