The money brought in by stupid gamblers creates additional incentive for smart players to clear it out with correct predictions. The crazier the prediction market, the more reason for rational players to make it rational.

Right. Maybe I shouldn't have said that a prediction market would be "predictably inefficient". I can see that rational players can swoop in and profit from irrational players.

But that's not what I was trying to get at with "predictably inefficient". What I meant was this:

Suppose that you know next to nothing about the construction of roulette wheels. You have no "expert knowledge" about whether a particular roulette ball will land in a particular spot. However, for some reason, you want to make an accurate prediction. So you decide to treat the casino (or, better, all casinos taken together) as a prediction market, and to use the odds at which people buy roulette bets to determine your prediction about whether the ball will land in that spot.

Won't you be consistently wrong if you try that strategy? If so, how Is this consistent wrongness accounted for in futarchy theory?

I understand that, in a casino, players are making bets with the house, not with each other. But no casino has a monopoly on roulette. Players can go to the casino that they think is offering the best odds. Wouldn't this make the gambling market enough like a prediction market for the issue I raise to be a problem?

I may just have a very basic misunderstanding of how futarchy would work. I figured that it worked like this: The market settles on a certain probability that something will happen by settling on an equilibrium for the odds at which people are willing to buy bets. Then policy makers look at the market's settled probability and craft their policy accordingly.