The Regulation and Value of Prediction Markets

Prediction markets are important information-aggregation tools for researchers, businesses, individuals, and governments. This paper provides an overview of why prediction markets matter, how they are regulated, and how the regulation can be improved. The value of prediction markets is illustrated with discussions of their forecasting ability and the characteristics these markets possess which give them advantages over other means of forecasting and information aggregation. The past, current, and future regulatory environments are surveyed.