I got interested in business models involving prediction markets and I am wondering at which point such a thing is considered gambling.
Here are the cornerstones:
- it's a prediction market, i.e. people buy/sell shares (at a certain market price) based on their assessment of a future event (e.g. "will X be popular in two weeks?")
- if this event occurs there is a certain payout in virtual cash, people can decide to sell their shares at any point before the occurrence of the event
- no real cash involved only virtual, the profits gained from the prediction market are all virtual (i.e. you receive some credits that you can spend on other shares)
- people don't need to spend real cash to "buy" virtual cash in the first place
- however, people can use the virtual cash as vouchers with some local businesses (e.g. they can spend 10 credits and get a free X)
Is this gambling? Which aspect makes it so, if yes?
Do you know about how this topic is dealt with in the US compared to the European Union?