I'm confused by how you're modeling these markets.

Let's say I am quite sure that the Steam Machine will cost more than $700 dollars, and I buy a 'yes' lot for 65 cents on the payed-out dollar, those are the odds at my buy-in time.

Where exactly now do the other participants' bets on the same market influence my chance to win/lose? How am I up against them and not the question "will my prediction come true"?

Sure, before my buy-in the odds, and thus the value fluctuate on account of the market movements, but once I'm in I'm in?

You're sneaking in a prior assumption that people will act stupidly, and then make the argument "Well since they act stupidly they will have bad outcomes". That's like me claiming "Your startup is gonna fail, I can tell, because you'd need to be able to read and write to make it in business!"(sneaking in the prior assumption that the person in question is not in fact able to read or write)

Your strategic consideration is wise, though. 'Diversification' is one of the first things people will teach wrt investment literacy.

I don't know much about gambling but is it not common to set for yourself max bets so your pool of cash doesn't deplete like you do when buying stocks or trading options so you can leverage up or down. I know it's a little different, but there is a similar principle.

Maybe only allow people to spend 1/5 their pool of cash per bet so it never reaches zero

Can you help me better grasp this? My intuition is thus: Sure, if I'm going at it like a proper rationalist, I'd have to do things like calculate expected value or whatever(I fully admit my lack of foundational knowledge when it comes to statistics), but at the surface the questions I feel I'm being asked is: "Is this a winning ticket?" and then "How much would you pay for a ticket set to win $1?" The latter question being obviously meaningless except for the obvious: It does not matter in the slightest, as long as I don't pay 1$ or more.

So you could see how the face odds are irrelevant to me, only my internal yes/no intuition? Obviously this is not optimized, opportunity cost etc etc, but is there a big hole in my thinking you could point me in the direction of?

But that's about juicing the maximum amount out of each bet, not about the matter of simply winning or losing(which was what I was originally responding to). If any situation one doesn't take for all its worth is a loss then I agree that it's damn near impossible to win, but this would be true everywhere.

I am intentionally flattening these trades to simple win/loss affairs(not just for the sake of this argument).

You're playing the game at a higher level and "complaining" at the increased complexity(I don't mean to say you are complaining, I just couldn't think of a better word). You're talkkng about the 80% that get you the last 20%, I'm talking about the 20% that get me the 80.

Not true, polymarket and kalshi have a lot of system bets, basically bets where the other side is the market, and further they take a cut from the money gambled.

There are other things as well, like they control which side wins, so they can leverage trade or even swing trade internally with a few bot accounts, not saying that they do but I don't see a ToC that says they can't.

Of course there is a house. You have a spread and probably a ton of other not so obvious fees. The house always wins by design, especially on polymarket.

In general, so is sports betting at a casino. It seems many people don’t understand this. You aren’t betting against the casino, you are betting against the other gamblers. The house “wins” because of the juice, eg. even odds past out -110. A smart book is going to try to keep the money balanced, but that’s not always the case in practice

They take cuts.