Morgan Stanley: Finance Interns Embracing Betting, Prediction Markets

Aspiring financiers are, perhaps not surprisingly, fans of betting and prediction markets, though the percentages of adoption are mostly in line with those found with broader groups of young people.

Morgan Stanley’s annual survey of summer interns, which polls the investment bank’s more than 500 North American summer interns – many of whom are 21 years old or younger – reveals that more than a quarter used a betting or prediction market mobile application over the past year.

When it comes to prediction markets, the data indicate that the Morgan Stanley interns lean heavily into the two market leaders, including Polymarket, with 55% of the surveyed interns using multiple betting or prediction market apps. This year’s edition of the annual Morgan Stanley intern poll is the first to include questions about betting patterns and prediction market usage.

Some major Wall Street banks are implementing policies around employee participation in prediction markets. Last month, it was reported that Goldman Sachs and Morgan Stanley are restricting staffers’ trading of event contracts with the former prohibiting trading of financial and political event contracts offered by yes/no exchanges. Morgan Stanley is said to have updated its employee code of conduct to include language pertaining to prediction market trading.

Percentages Aren’t Unusual

Amid increasing concerns about the effects sports wagering and prediction markets are having on young people, particularly young men, the 25% of Morgan Stanley interns saying they’ve bet or traded on an all-or-nothing exchange over the past 12 months isn’t unusual.

Recent data from the National Council on Problem Gambling (NCPG) indicates that 37% of those in the 18 to 34 age cohort have used a prediction market. The council has expressed concerns about some yes/no exchanges having more relaxed age requirements than their sports betting counterparts. In the U.S., 21 is the minimum age to be eligible to wager on sports, but some prediction markets permit accountholders as young as 18.

Novig, the operator of a sports-only peer-to-peer exchange, recently became one of the first event contract platforms to implement a 21+ age policy.

How Much Wisdom Is There in the Crowd?

Another Morgan Stanley study examined the “wisdom of the crowd” – one of the purported bedrocks of prediction markets. In simple terms, there’s a belief that collective wisdom can deliver accurate signals, but in the evolving, fast-paced world of yes/no exchanges, that accuracy is tested and may be limited in some segments more than others.

Morgan Stanley highlights the emerging rivalry between prediction markets and traditional political polling as an example of a popular prediction market segment where accuracy is not a foregone conclusion.

“However, the case for the superiority of prediction markets over polls or pundits is not totally clear-cut,” observes the bank. “Adjustments to raw polls, such as sophisticated aggregation methods, can match or exceed the predictions of markets. How questions are asked can also affect accuracy. Further, ‘superforecasters,’ individuals who demonstrate the ability to consistently make accurate predictions, outperformed prediction markets when working in teams and when their forecasts were aggregated using statistical algorithms.”