← Channels with Peter Kafka
Loading summary
Transcript140 lines
- [00:00]
Peter Kafka
Once upon a Monday morning, Barb's day got busy without warning. A realtor in need of an open house sign. No 50 of them and designed before nine. My head hurts. Any mighty tools to help with this plight? Aha. Barb made her move. She opened Canva and got in the groove while creating canva sheets. Create 50 signs fit for suburban streets. Done in a click. All complete Sweet. Now imagine what your dreams can become when you put imagination to work@canva.com when everything's happening at once, teams need clarity help move work forward with Loom, the AI first video platform from Atlassian. With Loom, you can quickly record your screen, camera and voice to explain what matters. AI instantly adds a title summary and edits to your video. So clarity travels with the work. Fewer unnecessary meetings, more effective ones. It's a team changer. Try loom today@loom.com hey there, it's me, John Stamos, in partnership with Cologuard. And a little birdie told me you're over 45. Listen, that's not old. It's really not. But it's an important age.
- [01:08]
Kate Nibs
If you're at average risk, that's when
- [01:10]
Peter Kafka
you start screening for colon cancer. And look, it's okay to be nervous, but it's not okay to ignore your own health. It's time to see if the Cologuard test can be an option for you to get screened. All right, I'm glad we had this little chat. From the Vox Media podcast network. This is channel so Peter Kafka, that is me. I'm also chief correspondent at Business Insider and today we are talking about the gambling industry. Except it's not called the gambling industry. Instead, it's called the boom business. For prediction markets, which have gone from super niche to super mainstream in the last couple years, there are many signs that prediction markets are a big deal, or potentially a big deal, including inescapable marketing campaigns and sky high valuations for companies like Kalshi and Polymarket. Another indicator. Kate Nibs, the excellent reporter at Wired, has started covering prediction markets full time after proposing the idea to her editors. So this is one of those. Peter has a lot of questions for an expert episodes and I do have a lot of questions about prediction markets, starting with why now? And are these things going to stick around and who's going to regulate this stuff? And is this good for society? And wait, isn't this just sports betting dressed up as something else? Kate patiently walks me through all the stuff and I'm glad she did. I think you will be, too. So here's me talking to Wired's Kate Nibs. I'm here with Kate Nibs. She is the excellent technology reporter at Wired. Welcome, Kate.
- [02:46]
Kate Nibs
Thank you so much for having me.
- [02:48]
Peter Kafka
I was going to describe what your beat is, but it's a new beat. So you tell me, what is your beat and how did you decide this was a beat worth covering?
- [02:55]
Kate Nibs
I see it as related to some of my old beats. Like, prior to this, I was covering a lot of the AI copyright battles because I love anything that involves, like, a regulatory gray area, like get me on Pacer, and I'm happy.
- [03:09]
Peter Kafka
And so you like a tech mess?
- [03:11]
Kate Nibs
Yes, I love a tech mess. And I was watching prediction markets explode in popularity while I was on maternity leave at the end of last year, thinking to myself, somebody needs to cover this. And then thinking to myself, I should cover it. So I came back to work with a memo for my editors, basically saying, like, please put me on this. I really think it's a wild moment. That is so Wired in so many ways. We got to get covering it.
- [03:38]
Peter Kafka
Summarize the memo, because there's lots of things that are weird in tech and some things come and go, right. Like you could have in 2021 said, I'm being all in on NFT coverage, right? And maybe that would have been great. And then, you know, nine months later, who cares? Why is this worth something? That is. You think is going to. Presumably you think prediction markets are going to stick around, are going to be meaningful in some way. Why is that?
- [04:00]
Kate Nibs
I think that they're part of this larger story about casino fication of everything and risk becoming a bigger part of regular people's lives there. You know, this is a story about gambling in a lot of ways. I also think that it's a story about changes that are happening to the global financial system that are troubling. I don't know if prediction markets will be here in five years in the same way that they're here now, because it really depends on what happens with regulating these markets. But I think the behaviors that they're engendering in people like these, these increased appetites for risk and gambling and taking wild financial chances and like, gamifying our everyday lives and our consumption of news, I don't think that those things are going to go away. And so I see it as maybe
- [04:52]
Peter Kafka
if you'd started covering and maybe this would have been a direct link from the NFT boom, right? And crypto and the pandemic.
- [04:58]
Kate Nibs
It's funny because I did dab in NFT coverage. And I wrote about this completely bonkers startup that allowed you to make an NFT of your tweets and then sell the nft. And I did that and then I was the first and last reporter to do that. They were like, no, you're not allowed to sell your tweets as NFTs.
- [05:17]
Peter Kafka
I tried doing that and no one wanted to buy my, my, my. And unless I was doing the wrong one, who knows?
- [05:22]
Kate Nibs
And now you know, I think the market's over there, but so I saw there's now a startup that is allowing people to make prediction market wagers on how popular people's tweets are. And I really see them as spiritual siblings. I got to look into whether they have any of the same founders or not. But yeah, it's all part of this. I think NFTs are truly part of this bigger story about the corrosion of American culture via gamifying and financializing everything.
- [05:52]
Peter Kafka
So I'd heard about prediction markets a few years ago. A guy know who's got a day job in media was telling me he made more money betting on politics on I can't remember Kalshi or Predict It. He was making more money because he thought he had a smart edge on politics. I don't know if he still does. When did this go from weird guy who's in the sort of fringes of tech and media to mainstream thing that you see advertised non stop? What spurred that move?
- [06:22]
Kate Nibs
I'm really curious if that guy was actually really good at betting or just really underpaid, but we could talk about that later. So there are a few different ways of looking at this. Like in one sense this is pretty recent. It mainly came around when there were changes made that allowed Kalshi and Polymarket to really take off in the US in another way. The story of this started earlier when gambling, sports gambling became legal and people just got more accustomed to spending money on wagers on their phones.
- [06:57]
Peter Kafka
So sports betting gets effectively legalized like 2018 and then rolls out on a state by state basis. It's not legal everywhere in the US we could talk about that. Yeah, but that's. So you're, you're, you're, you're saying, okay, people got more used to sports betting, doing betting on things from their phones and that leads us to prediction markets.
- [07:13]
Kate Nibs
Yes, but then I do think that, you know, as you were saying, there's predict it which is a smaller election themed market. I actually played around on it probably five or six years ago. I made Some money on John Fetterman winning. The concept of a prediction market is pretty old. Like they've been around for a while. There was an, you know, the University of Iowa ran an election themed market, Predict it is from New Zealand, I believe. So in a sense, you know, they started out as this sort of academic niche thing and then grew and then just had this explosive moment. I also think there is a very compelling case to be made that these really are, as some of the people who work for these markets would have you believe, that these really are financial instruments. And that to talk about prediction markets, you can go back and talk about the start of the commodities marketplaces in places like Chicago, where I'm from. There are some really arcane laws about what you can and can't wager on or make trades on in prediction markets. One of them, you cannot buy contracts about onion futures. And that all stems from this guy. I think it was like in the 60s, basically seized control of the onion futures market in such a way that there was this huge outcry and it was categorized as gambling. And federal regulators just said, no more onions. You know, onion markets. Too corrupt. We can't do that.
- [08:51]
Peter Kafka
This is like the end of trading places with the orange futures.
- [08:54]
Kate Nibs
Yes, yes. So I like, I do think that there is like a reasonable position you could take is that this is. Prediction markets are. Are truly an outgrowth of crazy futures trading.
- [09:08]
Peter Kafka
And again, the idea, the reason, I mean, you're the expert, but my understanding is like the reason this stuff is regulated to any degree at all by. By commodity future.
- [09:17]
Kate Nibs
Yeah, cftc, Commodity Futures Commission is because
- [09:21]
Peter Kafka
these derivatives and being able to hedge risk, if you're in agriculture essentially, or other industries is a useful thing. And so if you're in the orange business, but you also think that maybe oranges are gonna have a bad year. You can sort of hedge appropriately for that risk. And that's a real tool that people use.
- [09:36]
Kate Nibs
It is a real tool. And then so the modern prediction markets are arguing pretty forcefully right now that they can be used in the same way for a wide variety of things. You'll hear boosters of the industry talk about how, you know, energy firms are hedging on weather markets and like whether the Strait of Hormuz will open or close. So, yeah, that is a viewpoint.
- [09:59]
Peter Kafka
So before we get too esoteric, let's just talk about a bit about sort of the modern incarnation of these. I feel like these got national coverage in 2024 around the election. I think Elon Musk was telling Joe Rogan that he had a machine that could predict the future. And it turns out he was talking about prediction markets. And there was a lot of. Are the prediction markets more accurate than the polls? And maybe there was some argument that it was. And then maybe not coincidentally, you have a Trump administration that gets elected after 24 that seems remarkably receptive to this stuff. And in fact, Donald Trump Jr. Is connected to both Kelshi and Polymarket. So how much of the boom is literally because we have a new administration and regulators and boosters who are in power who want this stuff to happen?
- [10:50]
Kate Nibs
I definitely think we would be having a very different conversation if we were looking at a different administration in power, because, yeah, as you mentioned, Donald Trump Jr. Is an advisor to both of these companies, and I believe he's invested in polymarket as well. And then the Trump family, you know, they have Truth Social. They're actually planning their own prediction market. Truth prediction, sure, why not? Yeah, totally normal. And so they're friendly, obviously, in that way. The federal, the CFTC under the Trump administration has taken an extremely friendly approach thus far. They are adamant that they are the proper regulator of these markets. And the reason they've had to come out and say, this is our jurisdiction, everyone else back off, is because there is currently this huge push from a variety of different, like state regulators and authorities to try to get some of these prediction markets to abide by state gambling laws. You know, that would really curtail how they operate. And yet, like the federal government right now is saying, no, we want them to grow and flourish and we don't want them to have to abide by state gambling laws.
- [11:58]
Peter Kafka
So there's. So, yeah, so a bunch of stuff going on here. There's a turf battle, right, between federal regulators, state regulators, politicians. It does not break down cleanly on Democrat, Republican lines. So this could take forever. But can you broadly sort of explain who's pro prediction markets politically and who is trying to push them back? I mean, presumably if you run a legal gambling company, you probably don't want competition from prediction markets, but I think those guys are also investing in it. So tell me how this, how the battle lines?
- [12:29]
Kate Nibs
Yeah, they are very. It looks like one of those boards where you got the crazy guy with all the different things, you know what I'm talking about?
- [12:36]
Peter Kafka
The red string.
- [12:37]
Kate Nibs
Yeah. So it doesn't break down right versus Left or Democrat versus Republican. The federal government thus far has been quite friendly. As we were saying, the cftc, it's not like they're not regulating them at all. But they're taking a pretty laissez faire approach. They don't want the states to have
- [12:55]
Peter Kafka
jurisdiction, various states, and they're, they're out there doing interviews. The head of the CFTC is doing op eds saying don't come near this, this is my deal.
- [13:05]
Kate Nibs
Yeah. He literally said see you in court, I think to Senator Cox in Utah, who, you know, so there's some states like Utah where gambling straight up illegal and they are coming at this from like a principled, we don't like wagering morality. Morality. But then there is also this huge push from states like Nevada where gambling is really intrinsic to the culture. And their issue with this is less is not about morals, it's about getting tax revenue and having these upstart companies follow the same rules that the casinos have been made to follow. Kalshi is actually temporarily, most of its markets are temporarily banned in Nevada as of Friday because, because of these ongoing legal disputes, a court order went out banning it. But so yeah, so there's federal versus states and some of the players in the federal space are Republicans and some of the players in the states are Republicans and they're at each other's throats. There's a big push by lots of different members of Congress. It's pretty bipartisan to introduce legislation to put guardrails up in the industry. There is a piece of legislation just introduced today that would ban sports contracts which are like by far the most popular. I think it's like the sixth or seventh piece of legislation on this issue introduced in the past few months. There's a bunch of new lobbying groups like Trump's ex chief of staff, Mick Mulvaney has introduced a anti prediction market lobbying group called Gambling is Not Investing. But then the prediction market industry has its own lobbying group that actually has some Democratic lawmakers on its side. So it's just this big messy battle right now.
- [14:59]
Peter Kafka
And so it could get dealt with by Congress. Congress doesn't really do much in the modern incarnation, although they did pass the Ban Tik Tok bill a couple years ago. That's what.
- [15:10]
Kate Nibs
And again, now no one can use TikTok, right?
- [15:12]
Peter Kafka
Yeah. It seems like it's going to end up at the Supreme Court at some point as well.
- [15:19]
Kate Nibs
I think so. I think maybe even as early as this year.
- [15:23]
Peter Kafka
And then part of the thing that makes this so interesting is that this is an Internet product. Right. So lots of stuff is happening outside of the U.S. and in fact, I think you tell me, but my understanding is most people in the US can't use polymarket legally. You can explain to me how it works, but. I know that, but Kelshi sent me an ad of the day of super bowl and said you should bet on the big game. And I downloaded the app and I connected it to my Apple pay and it took all of a couple minutes and actually there was a problem actually funding it, but whatever. But his point is I was able to make a bet legally right away. I lost my money on the length of the super bowl pre game, I guess. But when I go to polymarket, it either tells me I can't use it in the US or I can't use it in New York. And I'm pretty sure that if I do use it, I need to use a VPN and or crypto. And it's confusing me because I see polymarket and Kalsi referred to as sort of equivalent, but it seems like there's a lot more friction to involve yourself in polymarket. So first of all, how does, how does something happen off books outside of the US in a way that lots of people in the US can actually use?
- [16:28]
Kate Nibs
So most of the people in the US who are using polymarket are using it via vpn, a virtual private network. So as you're saying, these two companies get brought up in conversation a lot because they are by far the two leading companies in the space, but they are pretty different. Kalsheet is currently federally legal in all 50 states. It like went through this licensing process
- [16:49]
Peter Kafka
with the cftc, got licensed by the cftc.
- [16:53]
Kate Nibs
Polymarket was actually banned by Biden CFTC because it didn't go through what it that that version of the CFTC deemed
- [17:01]
Peter Kafka
the appropriate CEO, got raided. Right. Right before or after the election and he was very blase about it and I think kind of flipping everybody off and thought it was a big hoot.
- [17:11]
Kate Nibs
So now they're allowed back in the US in a very limited capacity. There's like a wait list you have to join and they're only offering a very small smattering of contracts, mostly on sports. So when you hear about people using polymarket to for example, like bet on events in the war in Iran, that's the international version, which people in the US are not legally allowed to use. And yeah, so people in the US who are using it are getting on a VPN and then because it's crypto based, you know, they can go via a crypto wallet. That's not necessary. I mean it's traceable, but like there's not this huge enforcement push to like bust A random man in New Jersey for betting $500 on international poly Market. So, yeah, they're like. They're quite different.
- [17:58]
Peter Kafka
If you assigned. If you told me I had to make a bet on polymarket, I'm sure I could figure out how to do it. I'm sure I could figure out how to do it.
- [18:05]
Kate Nibs
I believe in using VPN and a
- [18:07]
Peter Kafka
crypto, but it wouldn't be easy. Do you have any sense of sort of, like, when we talk about Cal and polymarket, if they are sort of roughly equivalent or one is the dominant one and the other one gets a lot of attention?
- [18:19]
Kate Nibs
I think that Polymarket, because it was sort of the first big name, might be coasting a little bit on its name recognition in comparison to how popular it is. Because Kalshi is definitely for, like, just a regular person who wants to experiment with these. It just is way easier to use for people in the United States. But you got to remember, this is a global thing. And, like, people in Europe are super into polymarket. They're placing. There was this French guy who made hundreds of thousands, if not millions of dollars on Donald Trump's election. So, like, it is popular. It just. There is this barrier to entry in the US Right now.
- [18:58]
Peter Kafka
Can you help? I should have asked this at the beginning, but I'm not very good at podcasting. Can you size the market for me? I've been looking around. It's very hard to figure out how big prediction markets are in general and how that compares to, like, legal betting.
- [19:11]
Kate Nibs
Yeah. So there are a bunch of different ways to look at, like, the volume and how many trades are happening, and it's harder to get a sense of the users. I know that it is still a lot smaller than sports betting when we're talking legal sports betting than legal sports betting. Like, the volume that something like Kalshi is doing is less significantly than the volume of something like FanDuel or DraftKings.
- [19:37]
Peter Kafka
What?
- [19:37]
Kate Nibs
But.
- [19:38]
Peter Kafka
And I want to get to the sports betting stuff in a second. But while we're talking about regulation, there is this ongoing discussion about insider trading and how do you regulate it? And also, is there such a thing as insider trading on these prediction markets? Because I've heard people in the past say there is no such thing. You want people with inside information to bet because they know what's going on, and that's democratizing information. I can kind of see that argument, but it also. It makes no sense. If you have the ability to. To profit directly from this, it seems like it's going to lead to all kinds of problems. But for starters, who is going to regulate this stuff? I just saw right before we started recording a story across the wire saying, oh, polymarket now has insider trading rules. And I thought that's interesting. Why did they just announce those? So what do the markets themselves say about insider trading and what do people who have the ability to fine or jail these folks say about insider trading?
- [20:39]
Kate Nibs
So one thing to note is like when we talk about insider trading, we're usually talking about it in the context of like someone who's an insider at a company like Google or something taking non public material information they know about that company and using it to profit in like the stock market and in traditional financial system.
- [20:59]
Peter Kafka
And there are real rules about that and there are still fuzzy, but there are real rules.
- [21:02]
Kate Nibs
Like you, you know, their companies have very clear definitions about what non public material information is and how you can use it. And the fuzzy thing about prediction markets is now that there are so many different forms of contracts, sometimes it's kind of clear because you know, there are markets that let you bet on like how Google's earnings, what the Google's earnings look like. You know, you could see very easily how someone would insider trade on that if it was a Google employee making that kind of bet on a prediction market. But then you get to the prediction
- [21:39]
Peter Kafka
market say that's not legal. I mean Google would have a problem with that obviously.
- [21:42]
Kate Nibs
Yeah, it's against their terms and I think that that would fit the definition of an insider trading situation from the cftc. But then you have all these situations like at the super bowl you could bet on like which song Bad Bunny would perform first. And then people were saying, well, what about, you know, if, if one of the people who were the grass in his halftime show, there were thousands of
- [22:05]
Peter Kafka
people involved in the production of that, of that of Time show or either directly involved or would have knowledge of that. Could they bet on that?
- [22:12]
Kate Nibs
Yeah. And like all of them have cousins that they probably told. Can the cousins bet on it? So in situations like that it's a lot fuzzier. And then it really comes down to enforcement discretion here though, like who is actually going to be arresting the cousin of the Bad Bunny grass for this.
- [22:28]
Peter Kafka
So there's two different things, right? There's what do the markets themselves say about this? Do they? It seems like they want some kind of of insider trading not to be legal, but they're okay with other stuff.
- [22:39]
Kate Nibs
So Kalshi has really come out swinging, trying to establish itself as like the good angel on your prediction market shoulder versus like the bad boy Poly market. They have this whole enforcement wing and they recently released some information about insider trading cases that they'd flagged to the cftc. They were pretty small potatoes cases honestly, but they're at least making one.
- [23:03]
Peter Kafka
Was like an editor at Mr. Beast Content Farm.
- [23:07]
Kate Nibs
But yeah, their stance is you can't insider trade and we're gonna, we have
- [23:10]
Peter Kafka
this, we don't want you to do it and if we find out about it, not only will we kick you off the platform, but we'll report you to the Feds.
- [23:15]
Kate Nibs
Yeah, the CFTC came out on X and posted that it looked like those cases that Kalshee had reported. The fact pattern appeared to confirm or like suggest insider trading. Like who? We'll see what happens if, if anyone gets arrested. I also, because Kalshi is like a licensed financial instrument, it can fine its users so it find people. I don't think, I don't think that's very well known that you could actually just straight up somehow owe the prediction markets money if you do something that they deem illegal. Polymarket is a funnier case though because it has this big international component and because it's sort of, it's more of a like ideologically driven company, it seems, you know, a little more libertarian and it. Shane Copeland, this CEO had come out and said he's the one who was like making a case for why insider trading was actually good. So I did. I also saw a brief post on X about them coming out with some new surveillance tools for their international version. But I actually was just trying to find any more details about it and I can't. To my knowledge there hasn't been a situation, at least one made public where Polymarket has alerted authorities about insider trading or market manipulation. There has been a case in Israel where the government arrested two people because they suspected them of insider trading on information about war movements on Polymarket.
- [24:52]
Peter Kafka
It Right. And presumably right, you could like say you knew the US was going to start bombing Iran on a certain date because you're in the military or your cousin is or something. You could definitely get in trouble with the armed services for passing that information along. But it's possible that that would be legal according to either Polymarket or Kalji.
- [25:13]
Kate Nibs
I think it would probably be considered against their TOs. But then it's like who is for Kelshi at least. Again, I'm a little. I'm not sure what happened today with Polymarket, but it's whether or not it technically violated any sort of bylaws. It's just right now we are not seeing any major effort to tamp down, especially with polymarket, which again, is where there's more room for this kind of behavior because polymarket has more markets just in general.
- [25:44]
Peter Kafka
We'll be right back with Kate. Nick. But first, a word from a sponsor. Fox News is now streaming live on Fox 1. When it matters most, turn to the voices you trust. We go beyond the headlines, bringing you the stories you won't hear anywhere else. Live coverage, sharp analysis, real perspective at home or on the go. Stay connected when it counts. Stream Fox News on Fox 1.
- [26:15]
Kate Nibs
Download today.
- [26:24]
Peter Kafka
There's basically been one guy in Republican politics who's argued for a regime change in Iran for years and for America to take a proactive military role in making it happen. Ambassador John Bolton, President Trump's former national security advisor. But now even Bolton says Donald Trump is messing it up.
- [26:42]
Kate Nibs
As far as we can tell, he did. No preparation of the opposition actually inside Iran. No coordination, no effort to see what they would do, no effort to support them, to provide resources, money, arms, if that's what they wanted. Telecommunications. Just no coordination at all. And they don't seem prepared for it.
- [27:05]
Peter Kafka
How Trump lost the Republican Party's biggest Iran war. Hawk today. Explain every weekday and on Saturdays, too.
- [27:16]
Kate Nibs
Hi, I'm Brene Brown.
- [27:17]
Peter Kafka
And I'm Adam Grant.
- [27:18]
Kate Nibs
And we're here to invite you to the Curiosity Shop, a podcast that's a
- [27:21]
Peter Kafka
place for listening, wondering, thinking, feeling and questioning.
- [27:26]
Kate Nibs
It's gonna be fun. We rarely agree, but we almost never disagree.
- [27:31]
Peter Kafka
And we're always learning.
- [27:32]
Kate Nibs
That's true. You can subscribe to the Curiosity shop on YouTube or follow in your favorite podcast app to automatically receive new episodes every Thursday.
- [27:45]
Peter Kafka
And we're back. So we've been talking about the different things you can bet on. And you brought up the French guy who made all the money betting on Trump in 2024. And that lit up a lot of signals for a lot of people, like, oh, I could bet on things other than sports. That said, I see a ton of Kelshi ads coming across my tikt. My hunch is that the bulk or a meaningful amount of at least US Prediction market betting is sports betting. And I'm assuming that is in states like Texas and California where you can't legally bet on sports, but you could bet on Sports through CalSHI. So first of all, do we have data about sort of what percent of the bets are actually sports bets versus everything else?
- [28:27]
Kate Nibs
Yes, there have been a few different studies and it's higher than 80%, in some cases, perhaps higher than 90%. And so, yeah, it's sports betting. It's sports betting.
- [28:39]
Peter Kafka
Or it's just sports betting that you could normally be doing on FanDuel or DraftKings.
- [28:46]
Kate Nibs
Yeah, although they would. There's like all these different, you know, they're technically different because you're buying, but
- [28:52]
Peter Kafka
we're still scratching the same age.
- [28:54]
Kate Nibs
Yeah, yeah, but you're putting money down on the outcome of a sporting event. So. Yes. So that is. You can't talk about prediction markets without talking about the sports component because that is the majority of their customers.
- [29:07]
Peter Kafka
And when the polymarket and Kalshi people are speaking to the consumers and to investors, is sort of that the way they imagine the market is going to go? Or do they say, no, no, literally everything one day will be something you could. I know the Kelshi guy had some quote about everything should be financialized and you should bet on everything. Is that what they really think is going to happen or is this really effectively a sports betting compet that's sort of gussied up with, with other language and regulations?
- [29:35]
Kate Nibs
I think right now anyone who's honestly looking at these markets will admit that as they function now, they are primarily competitors or complements to sports betting, because that is just where the volume is like. Both projects did not start out intending to be these hubs of sports betting, though. I, they, you know, they definitely both come from these philosophical schools where they think that they are genuinely useful forecasting tools and they really endorse the idea of allowing people to make money predicting the outcome of all sorts of different future events. More about like politics and world news. I think like that was more tied to the original idea, but yeah, so they basically fell backwards into being really big players in the sports wagering world.
- [30:32]
Peter Kafka
So tease out the prediction markets are good, actually argument. So leaving sports betting aside, because it seems like either that's going to be legal or it won't and people will either enjoy it or they won't. But on the one hand, I think a lot of people hear why would you want to be betting on war or any of these outray things that you can bet on a prediction market and I can imagine a counter is what do you think people in financial services do all day? What do you think they're doing when they're betting? When they're making contracts on the price of oil? Right. You're betting on what's gonna be happening in the Gulf, et cetera. Hedge funds can make Bets essentially on who's gonna win an election because they're figuring out how regulation's gonna work. Why shouldn't this be available to everyone? If sophisticated financial institutions can do it, why can't I do it?
- [31:19]
Kate Nibs
It?
- [31:20]
Peter Kafka
Yeah, like more or less.
- [31:21]
Kate Nibs
The, the argument that's one argument is, you know, this democratizes something that's available to quant firms and traders. Like, let's let retail people get involved. They should be able to have a say. We're all consenting adults here. Why do you have to get a license to be able to bet on who wins? Which, like, I find fairly reasonable, honestly, like, although for me it's less like, like making geopolitically tilted financial transactions is good and everyone should do it and more, it's kind of all slimy. So why.
- [31:59]
Peter Kafka
We can all get in the muck.
- [32:00]
Kate Nibs
We can all get in the muck. But then there is also this idea that these are valuable forecasting tools and that, you know, we as a society are better off if we can glimpse our future. And these are ways to do so that are more effective than others. Whether or not that's true is like a whole thorny debate because there, you know, there are instances where it was clear that the prediction markets did do a better job than traditional polling. Case in point, some of the most recent US elections. But you know, it's like as they grow more popular, they can increasingly become victims of their own success because there will be more parties involved attempting to manipulate the markets. And they become less of a tool to get like a pulse check on how regular people are feeling and more of just a tool to see how market makers and certain forces that are able to shape the markets feel and they just lose their efficacy basically as. Yeah, they gain more traction. There's also one of the other, the
- [33:12]
Peter Kafka
more distributed this gets, the less good they become a predictive the future future.
- [33:15]
Kate Nibs
Yeah, that's an argument. And. But again, it's like we're still kind of too in it to know whether whether that's true or not.
- [33:21]
Peter Kafka
We'll be right back. But first, a word from a sponsor.
- [33:28]
Kate Nibs
This week on net worth and chill. It's my birthday and I'm turning 32. So I'm sharing 32 life lessons I've learned that have actually changed my perspective. These aren't the picture perfect Instagram infographic versions. These are the real hard, uncomfortable truth truths about money, career, relationships, and everything in between. I'll explain why choosing a rest day is non negotiable or your body will choose it for you, why you should never take advice from anyone you don't want to be and why nobody is actually looking at you, so you should just go for it. Plus, I'm breaking down, why you should always negotiate your salary, why individualism is making you broke, and yes, why you should try eating a popsicle in the shower after a bad day. Listen wherever you get your podcasts or watch on YouTube.com YourRichBFF what's it like
- [34:14]
Peter Kafka
to talk to a digital twin of a relative who died before you were born? This week on Solutions with Henry Blodgett, I talked to writer and artist Amy Kurzweil about just that. She helped her father, famed inventor and futurist Ray Kurzweil, build a chatbot based on her grandfather. We discuss how increasingly lifelike digital representations of people will change human relationships, especially how we grieve and how AI is forcing us to reckon with what consciousness even means. Follow Solutions with Henry Blodgett to hear our conversation. And we're back. One of the industries that's become very interested in this are the media and entertainment industries. All kinds of big mainstream media organizations. Cn, cnbc. I don't believe your employer is doing this. I don't think the folks at Axel Springer are doing this. At Business Insider. I don't think Vox Media is doing it. But a lot of these folks are signing up to do deals with calshear, Polymark, and I think essentially to sort of like treat them like a ticker and say you can see what people think about the future of oil here. I don't think they're participating directly in it, but I know the sports leagues are also interested in this. Baseball just signed up. That seems to me to be a direct, direct connection. Like, all right, this is sports betting. So we want to be involved in it. And we used to hate sports betting, but now that sports betting is legal, we want to be involved in it. And then I was talking with Matt Bellany from Puck a couple weeks ago at the Oscars and saying you could bet on whether Michael B. Jordan or Timothee Chalamet was going to win best actor. I bet on Timmy.
- [35:58]
Kate Nibs
I'm sorry to hear that.
- [35:59]
Peter Kafka
So I lost my money. It's all right. Well, you know why? Because Matt Bellany gave me a bad Insider tip. But he was saying, yeah, we think the Oscars will definitely want to incorporate this in some way. We already saw it with the Golden Globes because it will bring more.
- [36:13]
Kate Nibs
Yeah.
- [36:13]
Peter Kafka
To the Oscars. And that's fundamentally what they want so how do you think this stuff is gonna show up in sort of modern media and entertainment?
- [36:20]
Kate Nibs
Yeah, I mean, I agree that it will become more entrenched. I was actually surprised there wasn't something at the Oscars this year since it had been at the Globes. And I think, like, the general public liked it. And I saw the viewer Oscars for. Or the viewer numbers for the Oscars seem pretty bad. So I'm guessing that they're gonna.
- [36:39]
Peter Kafka
They're gonna drop every year because the Oscars are less interesting.
- [36:42]
Kate Nibs
Yeah. Bring back the sluts. But, yeah, I think we're going to continue seeing this. I mean, if I was a media executive, which I'm not for like a million reasons, is putting aside all of the moral issues about these platforms, I would certainly be looking at how to get in on the action, because this is, you know, the media has been in like a prolonged existential crisis and it's not getting out of it anytime soon. And we're facing Google zero and, you know, not everyone can have wordle. So someone's gonna be looking for ways to incorporate these more than just as a ticker. There was a Verge piece that came out recently about how an independent journalist had been propositioned by one of the. Rick Ellis said no, but he had been asked to write content that incorporated information about the markets. I think think someone's probably going to take that deal. And also, I really would not be surprised if we didn't. I don't want to speak this into existence, but I just think it's coming that there will be some sort of platform where, like, in addition to comments, the readers can purchase a yes or no market on, like, whether something from the story will happen. Like, they will be more entrenched in the media moving forward. And I'm also just waiting. I really think it's probably already happened, but there's going to be some sort of horrific scandal involving insider trading and journalists. I, I would bet on that because we're just paying.
- [38:24]
Peter Kafka
Yeah. You led me to the where. Where I wanted to end this conversation sort of the, the unforeseen and. And very easy to foresee consequences of this stuff. And it's already. We've already crossed into the icky zone a bunch of times. We had that over. There was a big. A lot of people were betting on when the head of Iran would be taken out and whether his death qualified as him being taken out or not. There was a story last week about an Israeli journalist who'd reported on bombs falling in Israel and then was harassed by at least one, probably several people who were making a bet on that and wanted him to change his reporting. Given the fact that there seems like we're going to have some kind of prediction market that will be legalized in the US and will certainly operate outside of us, it seems like all of these, what do we call them, externalities are going to happen and no one's really going to have responsibility for it. I'm sure polymarket and Kalsi would say they don't want Israeli journalists to be threatened for making accurate reports about bombs falling in Israel. That said, I don't know what they can do to stop it. Are there any guardrails around any of this?
- [39:33]
Kate Nibs
So Kalshi does have narrower set of parameters around like what kind of markets it offers. So it doesn't offer like death or war assessment assassination markets, which like helps, I guess. Whereas polymarket, I don't think it offers like straight up assassination markets, but it does more war themed. So the fact that there, there's a wider variety of markets from which to choose and then get mad at a journalist about how they reported on it makes it seem like polymarket probably has more exposure here. But then it's also covered like right now because all of that sort of action is happening in its offshore iteration. You know, the question of whether any U.S. law enforcement agency is actually going to pursue it for anything is an open one because right now it hasn't. So I don't think we're going to see this sort of behavior stop anytime soon unless there is a change in the way that enforcement is approached and,
- [40:38]
Peter Kafka
and is there any indication. And again, we're talking about Kelsey and polymarket, but in theory anyone could start one of these things and people are us.
- [40:45]
Kate Nibs
And there's this huge rush of new ones coming up. I don't know if any of them will.
- [40:50]
Peter Kafka
And I'm sure you could have versions of like, you know, you could have Elon, the Grok version of this where you could make crazy bets that other people won't let you make. Oh God, don't speak that you can do that. It's probably happened already. Do the folks from Polymark and Kelsey talk about responsibility that they themselves have for again, any of these sort of externalities about, about, about people, they can say, look, we don't want you to harass people and if we find out you have, we'll kick you out. But they're also creating the machine that puts all this in motion. And do they talk about responsibility for any of that?
- [41:26]
Kate Nibs
Yeah, I mean, they definitely do. Especially Kelshi is really trying to position itself as, like this, the responsible version of a prediction market. So, yes, they're definitely talking about it, but they remind me a lot of, you know, all of these other big tech platforms that talk all day long about responsibility. But then what are they actually going to do? Like the Meta case. That's.
- [41:54]
Peter Kafka
Well, they also stopped talking about it after the last election too. Right. They said, well, that was part of the old days and now we don't have a trust and safety team anymore.
- [42:01]
Kate Nibs
And we.
- [42:01]
Peter Kafka
Actually, some of that was happening before the election.
- [42:03]
Kate Nibs
But yeah, yeah, we've seen recently they've sort of jumped on these conversations about responsibility. I think in response to the growing backlash against how the prediction market industry is currently operating. Like the. In the past few months, we've really seen this major push to make sure everyone knows that they do have rules and they're not just a wild West. And that definitely came in response to a bunch of people calling them the wild west again and again.
- [42:37]
Peter Kafka
In the same way that Facebook used to take out ads saying, we think regulation is good and we would like to be regulated, and we call on Washington to regulate us, and they don't take those ads out anymore. But the point is, it was. It was. They were taking out those ads because there was an external push to get them to at least say that they cared about.
- [42:53]
Kate Nibs
Totally. And I bet you could. I mean, if Kalsha marketing team wanted to save a few bucks, they could just like, literally copy paste a few words and send out what Meta was doing.
- [43:03]
Peter Kafka
What? So you bet, you've been on this beat for how long?
- [43:06]
Kate Nibs
Since February. So it's very new.
- [43:10]
Peter Kafka
What is.
- [43:10]
Kate Nibs
It's March.
- [43:11]
Peter Kafka
Okay, so you're brand new. What is the craziest prediction market bet that has come in for you? Which. Which one? What's. What's. What's your best bet so far?
- [43:19]
Kate Nibs
Oh, my gosh. I mean, the whole scandal around, all the better as being really, really mad that Kelshi didn't pay out when Khomeini died was wild to watch. I did feel bad.
- [43:35]
Peter Kafka
Oh, I mean, I meant, have you made a. Have you met a crazy, bad.
- [43:38]
Kate Nibs
No, no, no. Peter, I cannot participate in these markets anymore.
- [43:41]
Peter Kafka
You have to. How else would you understand how they work?
- [43:44]
Kate Nibs
I mean, if. I know, maybe I should ask Conde to do, like, the McKay Coppins Atlantic piece where they gave him 10K.
- [43:50]
Peter Kafka
Yes, absolutely.
- [43:51]
Kate Nibs
I. Okay, let me talk to Katie Drummond about that after this. But no, so far, I've been, like, playing it safe. I'm not. Not. I'm just watching. Okay. I'm actually really interested. I. I gotta ask my editors too, like, whether we're going to put anything in our employee handbook about whether we can use these markets or not. I know CNN doesn't let its reporters participate in prediction markets anymore. I was. I was on a CNN podcast last week and they. They told me that, and I was like, I don't know if Conde has that rule, but. Yeah, right now playing it saf. But after we get off the phone, I'm gonna ask for $10,000. Go back that call.
- [44:35]
Peter Kafka
Exactly. They can still afford it. They still have office. They still have fancy offices.
- [44:39]
Kate Nibs
So you lost the Timmy Chalamet, but is there anything else that. Is there anything you've won on?
- [44:47]
Peter Kafka
I'm trying to think. I think I. Well, no. I made what I think was a good $1 bet on Joan Cornyn. Although we still have to see how that pans out. Definitely lost money in the Super. Super bowl pregame. Yeah. No, I'm not a good. Better.
- [45:04]
Kate Nibs
No. Here's the thing.
- [45:05]
Peter Kafka
But it is remarkably easy to bet on. Kelsey. I will say you just download it goes right to your Apple pay. And that's the. The last thing right. Is do you think. And. And we're just guessing here. We have not seen Apple or Google step in and say, hey, we're a little concerned with sports. With legal sports betting happening on our phones. Incredibly easy to do that. I can't imagine they're going to say anything about prediction markets until they're forced to. But any murmurs being uneasy about people using their devices to make these bets.
- [45:32]
Kate Nibs
You've just given me a really good story idea. I hope that everyone else is covering this industry.
- [45:37]
Peter Kafka
No one will hear this.
- [45:39]
Kate Nibs
Not to my knowledge. But I'm definitely going to look into that because I'm sure there are people with feelings.
- [45:45]
Peter Kafka
I predict that this story is going to go on for a while. And we will talk to you about this again, Kate. So thank you for coming on.
- [45:52]
Kate Nibs
So happy to be here.
- [45:54]
Peter Kafka
Thanks again to Kate Nibs. She's excellent. Really glad she came on. Thanks to Charlotte Silver, who is also excellent. She produces and edits the shows. Our advertisers are excellent because they bring this show to you for free. You guys, of course, are excellent as well. We are all excelling in excellence. See you next week. Martha listens to her favorite band all the time. In the car, gym, even sleeping. So when they finally went on tour, Martha bundled her flight and hotel on Expedia to see them live. She saved so much she got a seat close enough to actually see and hear them. Sort of. You were made to scream from the front row. We were made to quietly save you. More Expedia Made to travel Savings vary and subject to availability. Flight inclusive packages are atoll protected Vital farms Farmers do a lot for their hens, like giving them open pastures with lots of fresh air and sunshine because who doesn't love a good sunbathe, a stretch and a breeze through their feathers while foraging on a natural buffet of grasses? One thing is for sure, all that extra care means good eggs for you. So look for the black carton in the egg aisle and visit vitalfarms.com to learn more. VitalFarms Good Eggs no shortcuts how many discounts does USAA Auto Insurance offer offer? Too many to say here. Multi vehicle discount Safe driver discount New vehicle discount Storage discount How many discounts
- [47:26]
Kate Nibs
will you stack up? Tap the banner or visit usaa.com autodiscounts restrictions apply.