Prediction Markets Imperil the Public

To the Editor:
In “Prediction Markets Will Make the Stock Market Obsolete. Yes or No?” (Cover Story, Dec. 18), we are cautioned that some platforms are introducing gambling, i.e., “prediction markets,” to their list of investment services. In announcing a sports partnership with Kalshi, one of Robinhood’s merry men posted in a blog, “Adding…football to our prediction markets hub is a no-brainer for us.” What’s next? Shall we link our home-equity line of credit to the local casino? Is anyone in government working to protect the public from this nonsense?

Tom Ward
Cumberland, R.I.

To the Editor:
I think that an important distinction between investing and gambling is wealth creation. The gambler creates no wealth. The investor gives up the immediate use of a resource so that someone else can create wealth with it, and, when successful, the investor then gets a cut. The gambler puts a resource at risk, but no wealth is created.

William Camp
On Barrons.com

Inspired to Invest

To the Editor:
Regarding “What $1,000 at Birth Will Get You. (Not Much)” (Sloan’s View, Dec. 17), Michael and Susan Dell’s and the federal government’s $250-to-$1,000 grants to kids can have a very important long-term effect. It can inspire them to invest in mutual funds and the stock market. When I invested my teenagers’ coffee-business profits in Fidelity Magellan decades ago, they saw the huge increase in that fund. They both wanted to do more of that. And they have. Our teenagers need to be taught the benefits of being financially independent. By saving their gifts. And learning to invest.

Bob Sfire
Grosse Pointe Farms, Mich.

Kindling for a Crisis

To the Editor:
Karen Petrou’s Dec. 19 Other Voices essay, “Stop Obsessing About Risks and Let the Banks Compete,” misses the mark. She argues that burdensome regulations are hobbling U.S. bank competitiveness. But U.S. banks have significantly outperformed, with returns on equity consistently as much as double those of their global peers. If Promethean shackles truly hobble banks (for which there is scant evidence), loosening them would be fine, so long as they’re safe and sound, don’t threaten financial stability, aren’t conduits for financial crime, and the markets in which they operate are fair and effective. Innovation offers significant benefits, as long as it is responsible.

As director of the Office of Financial Research from 2013 to 2017, my staff and I tried to understand the factors affecting that balance. We made progress, but that work is unfinished, partly because innovation brings both new opportunities and new risks. Petrou’s argument that the balance involves obsessing needlessly about risks is kindling for the next financial crisis.

Richard Berner
Rye Brook, N.Y.

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