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Well, it’s the aggregated opinion of people who use the site. Kalshi doesn’t set the price; people making the bets set the price based on the odds others are willing to accept.
There’s a sampling bias for sure, but since the odds given for this bet are based on how much people are willing to pay for that bet, this gives a very good approximation for how people actually feel about something.
It actually ends up being more reliable than most opinion polls in that way.
Besides the fact they nobody knows what is being done behind the scenes to ensure results are (or aren’t) fair, using a sample of individuals that are all attempting to play the system against each other deeply and irreparably biases the data.
On top of that, jokes like the one I responded to and comments like yours only serve to legitimize a “service” thats sole purpose is to squeeze every penny from its users. It doesn’t provide anything beneficial to anyone but its owners.
If the contract isn’t something that meets the criteria for an efficient market, then yeah, it’s not something that can be used to give reasonable probabilities.
But for something like, winner of the democratic presidential primary, or the proce of gold in a month… the it’s genuinely a better predictive model than what a statistician would be able to come up with.
For statistics purposes, it gives me something incredibly beneficial. Simply by knowing the price of a contract, I can know with decent accuracy how likely something is to happen.
If you’re not in the field, you wouldn’t necessarily appreciate how valuable that is.
OK, let’s see the evidence for that assertion.
A retrospective analysis of the contract prices versus actual outcomes would also be needed. Otherwise, all you’re seeing is an opinion poll conducted on a self-selected sample of people unusually prone to being greedheads. And you have no idea of the mechanisms that shape that market.