The Original Prediction Market Was Betting on the Pope - Odd Lots

Introduction

• Hosted by Tracy Alloway and Joe Wisenthal.
• Discussion on prediction markets, which are platforms for betting on various outcomes, from politics to social events.

Concept of Prediction Markets

• Serve as an interesting news filter and gauge of public opinion.
• Not always about being right or wrong but understanding differing opinions.
• Question of social value: Do financial incentives improve prediction accuracy?

Historical Context: Papal Prediction Markets

• Early example in Renaissance Rome: betting on the next pope.
• Renaissance Rome had a significant market around papal elections.
• Papal bulls like "Colgetos" banned betting on papal elections in 1591 with excommunication as a punishment.

Participants in Early Papal Betting

1. Gentlemen's Bets
   • Aristocrats and cardinals made side bets.
2. Brokers (Sinsally)
   • Took bets from all social classes.
   • Often connected to the Florentine financial industry.
   • Popular bets included outcomes of papal elections and sports.
3. Financial Institutions
   • Engaged in risk hedging and political risk coverage.
   • Papal elections impacted taxation and political changes in the Papal states.

Gambling Culture in Renaissance Rome

• Longstanding tradition of gambling on various events.
• Driven by politics and foreign interests.
• Rumors and insider information influenced odds.
• Attempts at market manipulation, e.g., false rumors affecting odds.

Impact and Regulation by the Church

• The Catholic Church perceived betting as a threat.
• Enforcement of bans was inconsistent due to internal Vatican links.
• Crackdowns in late 1500s; severe penalties introduced.
• Papal bull "Colgetos" aimed to nullify all bets and excommunicate offenders.
• Gambling seen as undermining church's authority and leading to unethical practices.

Evolution of Papal Betting Markets

• Markets declined post "Colgetos" but resurged in the 19th and 20th centuries.
• Modern betting on popes began in UK in 1978.
• Recent papal elections saw substantial amounts bet, though prediction market accuracy was mixed.

Modern Implications and Discussion

• Current prediction markets exist for many topics, including potential new popes.
• Discussion on societal acceptance of gambling and its limits.
• Legalization increased ease of access, impacting betting culture.
• Debate over the societal utility of prediction markets remains.

Conclusion

• Prediction markets provide a lens into public opinion but have complex social, ethical, and financial implications.
• The future of prediction markets in society is uncertain, with ongoing debates about their role and regulation.

Hosts and Contributors

• Tracy Alloway and Joe Wisenthal host the podcast.
• Guest: Ryan Izako, author of the "No Dumb Ideas" substack.
• Discusses history and impact of papal prediction markets.