Bankless: The Bull Case For Prediction Markets

Hosts: Ryan & David
Date: October 9, 2025

Overview

In this episode, Ryan and David make a comprehensive case for why prediction markets—powered by crypto—are poised to become one of the largest sectors in both betting and financial information. Covering the core mechanics, recent explosive growth, regulatory breakthroughs, comparison to sports betting, and both societal promise and concerns, the hosts explore what makes crypto-native prediction markets fundamentally different and, in their view, much more important than gambling. They also consider if this trend is "good" for society, the evolving regulatory landscape, and the entanglement of entertainment and financial infrastructure.

Key Discussion Points & Insights

1. What Are Prediction Markets? [02:46]

• Definition: A marketplace where people trade on the binary outcome of future events—anything from elections to sports, pop culture, or economics.
• Crucially, these are peer-to-peer markets: “There are sports betting platforms that are like the house... That’s not how prediction markets work. Prediction markets have two people on opposing sides of the market that come together and create a price between them.” – David [03:27]
• Spectrum of seriousness: Events can range from the U.S. presidential election to “Will Jerome Powell open his speech with ‘good afternoon’?” or even “Brian Johnson’s average nighttime erection, 2 hours and 12 minutes.” [06:00–06:15]

2. Major Players: Polymarket & Kalshi [06:15–15:44]

Polymarket

• Founded 2020, crypto-native (on-chain order matching, stablecoin deposits, Layer 2).
• Breakout moment: 2024 Trump/Biden U.S. election—volume and event odds tracked hours ahead of mainstream media’s call.
  • “Poly market showed Donald Trump had a 99% chance of winning the election two hours, three hours before mainstream media was able to call... It was like living in the future.” – Ryan [08:11]

Kalshi

• Founded 2018, more fintech/traditional (bank transfers, KYC), now includes stablecoin deposits.
• Legally accepts U.S. users due to CFTC victory; partnered with Robinhood.
• Major turning point: Court battle with the CFTC in 2024 opened the door for election/event contracts in the U.S.
• Donald Trump Jr. is an advisor to both. Other upstarts: Limitless (on Base), Myriad Markets.

Regulatory Journey

• Polymarket previously accessible to U.S. users, then geo-blocked after CFTC fine, with plans to reenter the market legally via acquisition.
• “They’ve had to grow up in the gray area... It was ironic that election night, US citizens weren’t actually able to use Polymarket. They were able to view it in View Only mode.” – Ryan [14:13]

3. Prediction Markets as Media [16:31–19:52]

• These platforms are used not just for speculation but as real-time information and probabilistic “truth signals.”
  • “It is a far better opinion and truth signal to me than reading what a bunch of analysts say about it.” – Ryan [17:10]
  • “It’s a kind of pure ideologically free zone… as a result... truth emerges.” – David [18:59]
• They provide a “marketplace for informed guesses,” distinct from noisy, ideologically-driven mainstream or social media.
  • “You want to make a bet on it?” – Ryan [19:25]
  • “The opinion doesn’t matter, then.” – David [19:31]

4. Market Size: Where Are We, Where Could We Go? [20:28–26:18]

Current Volumes

• 2024 U.S. Presidential Election set a record: $3.7 billion traded on a single market (Polymarket).
• NYC Mayoral race: $131 million (as of 2025), World Series: $69 million.
• Aggregated weekly volume across Kalshi and Polymarket: $1.2–$1.5 billion (and accelerating rapidly).
• FanDuel and DraftKings (top sports betting platforms): ~$1.5 billion each, per week.

Why They’ll Eclipse Sports Betting

• Prediction markets cover everything (politics, finance, pop culture, sports) vs. sports betting’s narrow focus.
• “Sports betting platforms are for sports and prediction markets are for everything. There’s no constraint...” – David [24:32]
• Fun events (e.g., Taylor Swift’s engagement) drive attention and growth, not possible in classical bookmaking.

5. Sports Betting vs. Prediction Markets: The Structural Argument [27:32–38:00]

Sports Betting (FanDuel, DraftKings)

• Centralized “house” model sets odds—platform is adversarial, limiting “sharp” betters, favoring losing betters.
  • “Market designed not for fairness or merit, but for extracting profit by selectively excluding skill.” [35:34]
• Strict regulation (state-by-state licenses, high taxes); only gambling as a vice.
• “So, you are just servicing gamblers. You are not servicing sophisticated people who are making informed decisions.” – David [35:57]

Prediction Markets (Kalshi, Polymarket)

• Peer-to-peer, open market, free price discovery.
• Meritocratic: quant hedge funds and professionals can participate with no house-imposed limits.
• Federal regulatory path (CFTC), single license, scalable, lower costs.
  • “Quantitative hedge funds could use the tools they have developed... which is completely fair, completely meritocratic.” — Ryan [36:00]
• Positive feedback loop: More liquidity, better odds, larger markets, global participation.

6. Regulatory Shift: “Why Now?” [38:00–42:55]

• Kalshi’s legal victory in 2024: Federal court ruled in favor of political event contracts (distinct from gambling regulation).
• CFTC as a single, scalable authority vs. fractured state-by-state approach.
  • “A big reason for this is because the regulatory regime has shifted… a regulatory loophole or something that has opened up for prediction markets...” – Ryan [38:00]
• “Traditional sport books are built for where gambling is a vice... Prediction markets are a marketplace, an asset, something that fits inside of Wall Street, not inside of Las Vegas.” – David [42:19]

7. The 100x Thesis: A New Asset Class [43:38–48:15]

• Sports betting is just an entry point—real growth is in any event-based speculation (politics, business, culture, even long tail “micro events”).
  • “Start with the $42 billion of FanDuel and 10x that, 100x that—something much more massive...” – David [44:46]
• The market could reach $500B+ as all speculative, hedging, and information markets merge.
• “Professional, global, super deep liquidity... then after that, it’s all of the other markets.” – Ryan [45:18]
• Barriers that once restricted derivatives/contracts to the ultra-wealthy now fall away ("making markets out of everything").
• Both consumer fun (“Will Trump say ‘illegal alien’ in his speech?”) and serious finance (“Will the Fed raise rates?”) coexist.

8. Societal Impact: Are Prediction Markets Good for the World? [48:15–55:27]

• The “marketization of everything”—some events should clearly not have markets (e.g., assassination markets, to avoid perverse incentives).
• Crypto enhances accessibility (global, noncustodial, anonymous participation), democratizing an historically restricted toolset.
• Free market of truth: Prediction markets as “the integration of speech and markets,” with the potential to combat censorship and propaganda by aligning incentives for accurate foresight.
  • “The reason why the freedom of speech is so sacred is because that’s how we get to the truth of things.” – David [51:24]
  • “These are truth platforms and they just leverage the market to get truth out.” – David [55:11]
• “I think that is a very powerful tool and why it’s good for humanity. These are again free speech platforms… collective opinions about the truth of things.” – David [55:18]

9. Notable Quotes & Memorable Moments

• On Polymarket's 2024 Election Coverage:
  “It felt like you were living in the future. It felt like you were able to predict something that the rest of the world just didn’t really have a pulse on yet.” — Ryan [08:11]
• On Peer-to-Peer Markets:
  “When two people trade against each other on Polymarket, that’s the whole competition. It’s a free market, free competition.” — David [36:59]
• On Market Integrity:
  “It’s a kind of pure ideologically free zone...truth emerges. Which is refreshing.” — David [18:59]
• On Information as Power:
  “It’s the emergence of a market for truth—something that can’t be propagandized, that’s motivated by profit, not ideology.” — Ryan [19:33]
• On Market Size Potential:
  “Sports are just going to get absolutely eaten by prediction markets. But there’s five, six, seven other categories that are just as valuable as sports that haven’t even been built yet.” — David [44:55]
• On Societal Tradeoffs:
  “Certain markets, I think both you and I agree, should be illegal. But we probably have a wider aperture of that than say someone like Elizabeth Warren who probably thinks that election markets should be illegal... I personally think assassination markets should be illegal.” — Ryan [48:15]

10. Tom Lee’s View & Closing Thoughts [55:38–56:31]

• “It’s not just for entertainment. It’s really serious wisdom of the crowd knowledge... that’s going to cause the financial system to actually be a lot more liquid and for capital to be raised more easily.” — Tom Lee [55:40]
• Hosts recap: TradFi is doubling down—Polymarket’s $2B raise at $9B valuation, ICE (NYSE’s owner) involved. All lines between gambling, investing, and information are blurring—prediction markets are merging these paradigms.

Timestamps of Key Segments

• Definition & Peer-to-Peer Model: [02:46–04:27]
• Polymarket & Election Night: [06:15–09:29]
• Market Mechanics (Order Book, Odds): [09:29–11:25]
• Kalshi Regulatory Breakthrough: [11:46–15:44], [38:00–42:55]
• Media/Information Aspect: [16:31–19:52]
• Market Size, Volume, and Growth: [20:28–26:18]
• Sports Betting Comparison: [27:32–38:00]
• Big Picture & 100x Market Thesis: [43:38–48:15]
• Polymarket, Crypto & Societal Good: [48:15–55:27]
• Tom Lee's Perspective: [55:38–56:31]

Conclusion

Ryan and David ultimately argue that prediction markets are at the intersection of entertainment, information, and finance—a new asset class and societal tool with the potential to reshape public discourse, risk transfer, and market access. With regulatory floodgates now opening and crypto infrastructure enabling borderless, trust-minimized trading, prediction markets could “100x from here”—but with that scale come questions about unintended consequences and the need for responsible guardrails.

For further exploration:

• Watch for the forthcoming episode on “futarchy”—when markets don’t just predict, but decide outcomes.
• Episode linked Domer’s Twitter thread (on peer-to-peer market superiority).
• Notable coverage of regulatory issues, assassination market ethics, and integration of traditional and crypto finance.

If you want to go bankless, prediction markets are a primer on where truth and finance will intersect next.

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