Dan Primack (2:26)

Money Market madness. If money is evil, then that building is hell.

Jonathan Cohen (2:30)

The show goes on.

Ed Elson (2:36)

Welcome to Profit you Markets. I'm Ed elson. It is March 5th. Let's check in on yesterday's market vitals. The major indices climbed as investor attention shifted stateside. A report showed robust stock services sector growth for February ADP private jobs data came in better than expected and a tech rally gave the Nasdaq an extra boost. Meanwhile, the 10 year remained elevated and oil prices were flat on the day. Okay, what else is happening? Prediction markets are under intense scrutiny. After half a billion dollars in trades tied to the U.S. strikes on Iran came to light. Bloomberg reported $529 million was traded on Polymarket alone. On the timing of the strike, account made more than half a million dollars with the first trade placed just an hour before the news broke publicly. Meanwhile, Poly Markets competitor Kalshi saw nearly $55 million in trade volume on whether Ayatollah Khamenei would be ousted. However, it halted those markets shortly after he was killed, saying that it doesn't allow markets tied directly to death. Now Democratic Senator Chris Murphy says he will introduce legislation, quote, ASAP, to stop people with ties to Trump from profiting off of these wars. Here to help us break down what comes next in prediction markets, we're speaking with Jonathan Cohen, policy leader at the Institute for Boys and Men and author of Losing America's Reckless Bet on Sports Gambling. Jonathan, good to see you. I know you usually talk about sports betting and you've written a book about it which has been massively informative to many of us. Now we're on to the next phase here where people are betting and gambling on war and potentially death. And it's creating all of these issues and all of these rifts. Kalsh is saying, no, we don't let you bet on people dying or not dying. That's its own conversation. Let's just start with your initial reactions to the fact that we're here and what this means in your view for markets going forward.

Jonathan Cohen (4:47)

I don't know what the problem is. I'm just trying to make a little bit of money, Ed. You know, I got kids at home. You know, I'm obviously, I'm going to try to gamble with all my insider information on the death of Ayatollah Khomeini. I don't know what the problem could be. I mean, really, this speaks to, I mean, when the Supreme Court legalized sports gambling in 2018. Right. Surely we did not anticipate what we now have. Right. Which is basically the Gamblification of everything. And this is sort of what Kalshi has been promising and what their market is based on is you can leverage your knowledge of Taylor Swift, of gas prices, of the temperature of sports to making money. And the logical extreme of this is when there are wars, people are going to want to gamble on wars, as sick and twisted and weird and sort of undemocratic as that might feel.

Ed Elson (5:28)

So where do we draw the line here? Because, I mean, Kalshi is saying that they're not. I mean, it's hard for Kalshi to draw lines in the first place. And in fact, we spoke with the CEO of Kalshi and we tried to have a conversation about this. And, you know, it is a difficult thing to figure out, but they have have drawn a line at death, it seems. Why is that necessarily the line? Is it because that is illegal or because that's just an arena they don't want to touch?

Jonathan Cohen (5:58)

I think it's a little bit of both. Again, Kalshi, as a reminder, the reason it's able to exist is that it claims to be an investment platform and it is regulated as an investment platform rather than a gambling platform. So they really don't want to do anything that might upset that status and their sort of legitimacy or what they see as sort of the social value they are providing, which is elevating the wisdom of the crowds on issues. So I do believe there are some legal restrictions related specifically to markets on death. And maybe they see it as just a bridge too far sort of morally to keep their good standing as a good citizen. Whether or not they phrased, you know, this all comes down to Khomeini out as Iran leader, and out apparently did not include death, which is why all these retail traders are super upset. But fundamentally it boils down to a lot of people not reading the fine print and thinking that this market that let them do sort of do whatever they want actually does have some sort of rules, specifically when it comes to death, apparently.

Ed Elson (6:55)

What is your view on gambling versus investing versus trading? This is becoming more and more like the conversation when it comes to prediction markets, which in my view are going to become a part of how we talk about markets in the future. I mean, this is becoming integrated into everything we do. I genuinely use prediction markets data to understand the future and to report on the news. How do you draw the distinctions between gambling, investing and trading?

Jonathan Cohen (7:28)

I mean, it's always been a thin line, right? Like, why is buying a soybean future? Why is that investing? But betting on the Philadelphia Eagles is gambling. To me, it boils down to some secondary utility from the money that you place into the product. So if I buy stock in Apple, you know, the value of Apple goes up. They can make more iPhones, they can make better phones and so on. But when I buy an event contract on the New England Patriots to win the Super Bowl. First of all, I lose money. Second of all, the New England Patriots are not more likely to win the super bowl because I have bought an event contract on them. And there is no, I don't see any sort of social benefit for the rest of the country or the rest of the world to know that a 35 year old dad in central Connecticut thinks that the New England Patriots are going to win the Super Bowl. So when there's some genuine social utility beyond just wisdom of the crowds, which I do not see as sort of actually beneficial in a real way, then I'm willing to call something investing. But when it's just about my entertainment or my attempt to make money, that to me is just gambling, pure and simple. And so much of what prediction markets do to me is clearly just gambling.

Ed Elson (8:33)

If there is a social utility to, let's say, I mean, we're talking about war here, there is an argument to be made that if we want to understand how to plan for the future, how to plan for potentially life threatening events, then maybe it is helpful to have markets that give us some insight into that. Would that fit your view of some level of social utility that makes it something different from betting on, say, a sports game?

Jonathan Cohen (9:03)

Maybe I'm sympathetic, but let me sort of give you the opposite version. Maybe the worst case scenario in all this, let's say the opposition leader in Bangladesh or whatever goes into a prediction market and puts a bunch of money on Bangladeshi prime minister out sometime this year. All it takes is what, $15,000 to sort of drive up the spike in the market. Everyone's going to say, huh, what does somebody in Bangladesh know about the Bangladeshi Prime Minister? They can drive a news cycle, they could drive a political cycle. A potential actual ouster of the Bangladeshi Prime Minister just with like $15,000 on polymarket. That's all it takes. So as whatever benefit we get on a social utility standpoint, I could see and the exact opposite happening and the harm and more wars, more destruction, more death, whatever happening because of the availability to gamble on the outcome.

Ed Elson (9:50)

The other thing I was thinking here is if there, I mean, we learned over the weekend that these platforms are very afraid or do not want to touch death. They don't want to touch people betting on death and betting on murder, assassination, et cetera. And when you think about like why that is to your point, I wonder if to an extent these platforms would be liable if say someone placed a wager on, you know, here's $500 that this guy's going to get assassinated. Then someone goes out and actually assassinates them because maybe they actually had money on the line. At which point perhaps the betting platform or the prediction markets trading platform is in some sense liable and responsible for that death and for that assassination. Is that something that you could see playing out and would that be like an actual argument if that were to occur?

Jonathan Cohen (10:46)

Yeah. I don't know about legally liable, but, like, responsible? Absolutely. Like my, my bet on will Ed Elson get punched in the face within the next week. You know, like all of a sudden I have the ability to manipulate that market. If I were to come down to New York and punch you in the face, and then I can make a bunch of money. We actually saw a version of this, as crazy as it might seem, with when people were throwing dildos onto the court at WNBA games. And then there was a website where you can like, I guess, pay people to dare them to do things. And you could pay like 500 bucks to someone to throw. Throw a dildo onto the court of the WNBA game. And then you could buy a prediction market contract predicting that someone would throw a dildo onto the court at the WNBA game. Why have I said that word so many times? So, yes, it is rife for manipulation and ripe for getting people to do things in the real world that they might not otherwise have done because they can make money off of it.

Ed Elson (11:32)

The other thing that I found fascinating recently, Polymarket was running a market that let people trade on the odds of a nuclear detonation anywhere in the world. Volume spiked to nearly a quarter of a million dollars in a single day after the Iran strikes happened. And then people started getting very nervous because traders were pricing in a 24% chance of a nuclear detonation somewhere. And that was on Tuesday. And then there was a lot of backlash. Polymarket decided to pull that market, and now it no longer exists. I just want to get your reactions to, one, the fact that we are betting on nuclear war and nuclear detonation, and two, the fact that trade is priced in a 24% probability that we would see a nuke at some point in the near future.

Jonathan Cohen (12:23)

Let's hope that's the one market that had no insiders. Let's hope that's the one market that was purely speculative. I mean, I think Polymarket, just to be really clear, right. Which has drawn the ire of many of the Senators this past week, is actually not fully yet available in the US and is sort of primed still to enter reenter the US market. So I wonder if them responding to this sort of public backlash is in part to sort of remain in the good graces of the US market, both politically and sort of socially and culturally, so that they can sort of reenter the market and so that this can really be the sort of Coke and Pepsi 2 horse race that everyone is ultimately anticipating between Kalshi and between Polymarket when, when the company does arrive here sort of in full throat.

Ed Elson (13:02)

Just before we end here. What do you think is going to be the future of this from a regulatory perspective? Senator Murphy is talking about regulating this stuff. It's becoming more and more popular in the cultural conversation. What is the regulatory future of these prediction markets in light of what we've seen following the strikes?

Jonathan Cohen (13:20)

As folks may know, there are a lot of states that are currently suing these platforms, Kalshi in particular, specifically over the question of sports contracts, which just to be really clear, sports related event contracts account for 90% of the trading volume on Calcion any given day, which any given day does not usually include a war with Iran. So I think ultimately where folks see this headed is the Supreme Court, right, which is sort of designed to take to aggregate lots of state level lawsuits and sort of deciding them at once. So whether that lawsuit is going to specifically focus on sports contracts or sort of the right of these platforms to exist, I don't know. But I think that is the most likely given the administration, given the administration's ties to the prediction markets, given the comments from Mike Selig, the head of the Commodities Future Trading Commission, which is the agency that purportedly oversees prediction markets. By letting them do whatever they want, then ultimately I think the most realistic regulatory approach will actually just come from the judicial branch rather than through traditional regulation.

Ed Elson (14:20)

All right. Jonathan Cohen, policy lead at the Institute for Boys and Men, author of Losing Big America's Reckless Bet on Sports Gambling. Jonathan, good to see you. Thank you for joining us.

Jonathan Cohen (14:30)

Thanks. And proud owner of 24% chance that there's going to be a nuclear bomb in the next year. I can't wait.

Ed Elson (14:39)

After the break, the new era of defense tech. And for even more market insights, you can subscribe to my Weekly newsletter@edwardelson.substack.com.

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Ed Elson (17:51)

We're back with Proftree Markets. Defence tech startups are raising billions, and they're reshaping an industry long dominated by a handful of old economy giants. Defense tech company Anduril is currently raising $4 billion, doll dollars in a round that could double the startup's valuation to $60 billion. At the same time, the Pentagon is negotiating contracts with OpenAI and of course, anthropic pushing to bring frontier AI into defense workflows. Saronic Technologies is building autonomous boats for the Navy, and Shield AI is building an AI pilot that's being tested in Air Force efforts. All told, defense tech startups had their best funding year ever in 2025. Venture capital deals jumped to a record $50 billion, up from $27 billion in 2024. So here to discuss this new wave of defense tech companies, we're joined by Dan Primack, business editor at Axios and author of the Pro Rata newsletter. Dan, thank you for joining us on profit markets. I want to start with Anduril's fundraiser. I mean, just a giant round, $4 billion, $60 billion valuation. You reported on this. Tell us what we know about this round.

Dan Primack (19:07)

Yeah, it's not completely done yet, but the, but the broad strokes of it are I think, you know, some other investors might come in and they haven't finalized all the paperwork. But yeah, look, just for some context here, prior to this round, Anduril had raised a total of just over $6 billion total, which by the way, is an enormous amount of money for any startup. But they're going to put 4 billion more on top of this, which means they'll have raised over 10, be valued at over 60. Look, this basically means it would be valued at more than some defense primes are valued at in the public market.

Ed Elson (19:38)

What does Anduril actually do? This is, I mean, it's a name that we keep on hearing. And for those who don't know about Anduril, like, what are they building, what are they trying to do?

Dan Primack (19:48)

The real kind of nub of Anduril is autonomy. The idea of making autonomous weapons, some fully autonomous, some autonomous, you know, with a human in the loop kind of. And with that. Think of a lot of self driving right now, which is self driving, but you actually have somebody sitting at the, you know, in the driver's seat who can hit the brake or can grab the wheel if need be. That's really the guts of it, is what they're doing. And that means also, you know, applying AI or applying machine learning to weaponry and to other sorts of detection technologies, security technologies.

Ed Elson (20:20)

So valued at 30 and a half billion dollars last year, the valuation has doubled. Now is, is part of this story the fact that is more warfare happening in the world.

Dan Primack (20:33)

Part of it is there's more warfare, more defense spending in the US Right. If you look at the, if you look at the, what most people view as the tax break bill, the big beautiful bill that got passed last year by Congress and the Trump, and signed into law by the Trump administration, huge increase in defense spending. So there's that, there's a recognition that, that new technologies, just like they're transforming every other part of our society, also can transform what were kind of some staid weapons. And you want to keep up obviously with the other countries and your adversaries. But look, yes, we are fighting more than we have before in the US and our allies are whether, whether that be arming people in Ukraine, whether that be what's happening right now in Iran, whether that be what happened, you know, a month or two ago in Venezuela. Yeah, we are in more theaters than the US has been in for a long time.

Ed Elson (21:22)

What about Silicon Valley's role in this? Because that seems to be also something that has changed. You had all of these very legacy prime defense companies, Northrop Grumman, Lockheed Martin, et cetera, and they have their own histories. But now it seems as though investors, VCs in Silicon Valley who invest in like consumer tech apps, who invest in things like DoorDash and Uber, they're also investing in the weaponry of tomorrow. Is this not becoming a larger story in Silicon Valley and is that a new paradigm?

Dan Primack (21:59)

It is definitely new. I mean, I remember going out Silicon Valley, I'm going to guess it was about eight years ago now over to Founder Funds offices and Founders Fund was one of the earliest investors in Enduro. And they actually led this most recent or not the new round, but the prior one at thirty and a half billion dollars. And it was a conversation in front of a bunch of Valley people, kind of quote on stage private conversation about venture capitalists investing in defense tech and military tech and how the military was trying to partner with Silicon Valley. By the way, this isn't necessarily a right left thing. Ash Carter, who was Defense Secretary at the beginning of the Biden administration, made tons of inroads and tons of visits to Silicon Valley. So this is something that's both sides. But historically the Valley and Valley engineers haven't wanted to provide things to the military. They've been concerned about how they would get used. I don't think that's completely changed. Definitely look at what's happened with Anthropic and the Pentagon over the last week. But there has been a shift among venture capitalists. And by the way, it wasn't just an ethics thing or a morals thing for venture capitalists. It was also a feeling that we don't want to back companies whose primary customer is the federal government because there becomes all sorts of procurement issues there and all sorts of concentration risk there. And look, Anduril has that. They sell to US Allies also, but they have enormous concentration risk with the US Government.

Ed Elson (23:18)

It is very interesting that we're now at this point where the backers of our weaponry of tomorrow, I mean, these are Silicon Valley investors, they're tech people. And I guess I don't know the full history of defense in the U.S. but my understanding is this was more in the realm of government. To be funding these companies, funding these weapons. Does that just as someone who's, who's been in these rooms, who knows these people, does that concern you at all? Or is this just, you know, it's just money from a different place?

Dan Primack (23:56)

I think it's just money from a different place, honestly. And it really does make sense, right. When you think about the way that weaponry, or even view it more defensive than weapons, whether that be things like interceptors, etc. These are all technology plays, right? This isn't, you know, training a bunch of guys to be able to go storm a beach, right? That's a, that's a physical thing, you know, put them all in shape. This is technology throughout the stack, right? Everything from the chips to the software. So much of what drone think of drones, right? You know, drone technology has largely been funded by Silicon Valley for both consumer use and now for military use.

Ed Elson (24:31)

Now that we've seen the strikes in Iran, I mean, people are saying it's going to last maybe a couple of weeks, maybe a couple of months. I don't think anyone actually knows. No one knows. What do you think happens next for the defense sector and especially for defense tech, this burgeoning industry that is that we're seeing, Anduril is one of them. Does this mean that we're going to see larger and larger rounds from companies like Anduril? Does this mean more money going forward?

Dan Primack (24:58)

I think it most likely does. I think it most likely does. You know, we don't know, for example, exactly if Anduril technology has been used so far in the strikes in Iran. We don't know that for sure. Although Defense Secretary Hegseth did today speak at a press conference, and he talked about the use of autonomous weaponry. So one can assume that Android technology was used or stuff very similar to that. So, yeah, look, and if for no other reason, the United States is going to have to replenish stockpiles, right? We're spending an enormous, you know, we're spending an enormous amount of money, but also physical hardware on the ground in Iran. Every time we drop something, that's something that we ultimately have to replace, and particularly if we're using autonomous drones, et cetera, those are going to get replaced, most likely by companies that are backed by venture capitalists and Silicon Valley companies.

Ed Elson (25:45)

All right, interesting time to be in Silicon Valley. Dan Primack, business editor at Axios, author of the Pro Rata newsletter. Dan, appreciate your time. Thank you.

Dan Primack (25:54)

Thank you.

Ed Elson (25:58)

Well, as you've probably noticed, the only thing we've really talked about on the show this week is war. We talked about the energy implications of war, the inflation implications of war, the investment implications of war. And while there are other things happening outside of war, the reality is war is what people mostly care about right now. And so that is what we're talking about. Every headline, every article, every podcast for the next few weeks, maybe months, you can safely assume that they will all pretty much be about war. Now, why am I saying this? Well, for one, I think we should just note that this is going to change the complexion of our conversations in everyday life. We will be thinking less about tariffs and less about AI and more about guns and missiles and Iran. That is just the reality of the news cycle. It changes what we think about. Now. The second reason I bring this up is perhaps more relevant to this podcast, and that is this is also going to change the way we think about our investments. And in the same way that war is now taking a larger position in general conversation, it's also going to start taking a larger position in people's portfolios. Investors are going to be thinking across every sector, what are the potential defense applications for this company? How could war be a tailwind for this company? Are there any other military applications and defense angles that maybe other investors aren't seeing? In other words, the way we view the investment world will increasingly be shaped through the lens and by the reality of global warfare. And in fact, we're already seeing this in. Just a few months ago, we all thought the main use case for AI was white collar grunt work, emails, memos, decks, et cetera. Well, now we're learning that AI can also be used by the Pentagon. In fact, it is being used by the Pentagon, it's being used for intelligence in Venezuela, it's being used for airstrikes in Iran. And Suddenly companies like OpenAI and Anthropic, they have been recast not just as AI companies, but also defense companies. These are the kinds of companies that are proving to be actually useful in warfare. And as a result, they are in very high demand right now. And so I think that this could become a trend. If you can position yourself as a company that can protect lives and indeed maybe take lives, well, then in a time of war, that is an entirely new and interesting value proposition. That is something that investors didn't care about two years ago, but suddenly they care a lot about it now. So my prediction as we end this episode is that defense is about to be the new AI. Not just in the sense that it's going to receive a lot more investment, which it will, but also in the sense that it will receive a lot more hype. Every vc, every startup, every tech company will now be asking themselves the same question. And that is, how do we position ourselves and brand ourselves as beneficiaries of war? Now, this is not something to be celebrated. It's not something to be excited about, but it is what it is. Just as war has become the focal point of our attention and our conversations and our social media and the news cycle, all of these things, it would then follow that war is about to become the focal point of our investments, too. Okay, that's it for today. This episode was produced by Claire Miller and Alison Weiss, edited by Joel Patterson and engineered by Benjamin Spencer. Our video editor is Brad Williams. Our research team is Dan Shalon, Isabella Kinsel, Kristen o' Donoghue and Mia Silverio. And our social producer is Jake McPherson. Thank you for listening to Property Markets from Property Media. If you liked what you heard, give us a follow. I'm Ed Elson. Tune in tomorrow for our conversation with Steve Eisman. Adobe Acrobat Studio, your team's home base. Collaborate within a shared PDF space. You've got your docs, your plans, your respects, and then invite the crew to build what's next. Talk up the teamwork. They think that this design could be a contender.

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