The forecasting community often promotes prediction markets as information aggregation tools, but sports betting provides a real-world test case for their claimed benefits vs. actual risks. As a concrete example of what can go wrong: NBA player Jontay Porter was banned for life after deliberately underperforming in games where he and associates had bet on his poor performance. He'd grab a few rebounds then fake an injury to stay under betting thresholds, profiting from markets on his own stats. This isn't isolated - similar manipulation scandals now exist across tennis, football, rugby, cricket, and other sports. The incentive structure is clear: participants don't just predict outcomes, they can influence them. Beyond direct manipulation, prediction markets also incentivize misinformation campaigns. Buy contracts cheap, spread convincing rumors to move market prices, then sell at profit.

What makes them fundamentally different from the stock market?