THE FUTURE OF BETTING PART 1 - Prediction Markets, Scandals & Legal Battles

Summary

Sharp or Square: The Future of Betting, Part 1 – Prediction Markets, Scandals & Legal Battles

Date: June 18, 2026
Hosts: Chad Millman & Simon Hunter
Guest: Chris Gerlacher (Prediction News)

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Episode Overview

In this special offseason episode, hosts Chad Millman, betting expert, and professional sports gambler Simon Hunter are joined by Chris Gerlacher (Prediction News) to explore the rapid rise and contentious future of prediction markets in betting, with a special focus on sports, legal controversies, and regulatory showdowns. The conversation offers a deep dive into how platforms like Kalshi and Polymarket are upending both the betting landscape and the legal-regulatory status quo, attracting professional bettors and spurring Congressional debate as scandals and “too much innovation” lead to mounting backlash.

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Key Discussion Points & Insights

1. Explosion of Prediction Markets in Sports

[02:33–05:46]

• Chad Millman opens the episode reflecting on the scale of change since last football season, citing unprecedented trading volumes on platforms like Kalshi, which recently hit $17 billion in a month—"the majority of that came from sports."
• Chris Gerlacher emphasizes the staggering growth, recalling when Kalshi and Sportrade were “completely separate companies and different business models.” Now, prediction markets have become pervasive:

  “It’s been staggering to see how much they grew…Pervasive…people are using them in forecast, creative hedges. The sports category is enormous. 85, 95% of volume on the platform.” (Gerlacher, 05:06)

2. How Pros and Casuals Use Prediction Markets

[05:46–08:16]

• Simon Hunter explains the appeal:
  • No more banned pros or limitations (“no limits” as opposed to being restricted to $1 bets at old books).
  • Ease of acting as your own market maker (setting prices, enticing casuals).
  • Evokes Wall Street mentality:

    “Guys on Wall Street do that every day…don’t be so naive. This is a microcosm of the world we live in.” (Hunter, 07:03)

  • Acknowledges drawbacks: withdrawal issues, tax complications—but the upside is letting sharp bettors finally play at scale without restriction.

3. Scandals and Growing Pains: Insider Trading, Regulation, and Public Backlash

[08:16–12:57]

• Media Attention:
  • Prediction markets receive mainstream coverage (e.g., CNN using them for election segments and then reporting on related Congressional hearings).
• Scandals:
  • Noted incidents involving insider trading—IDF reservists betting on missile strikes in Iran, a “Maduro trader” leveraging classified info, even a Mr. Beast staffer cashing in on pre-recorded video mentions.
  • “You don’t want people using classified military information that way. You may get a more accurate forecast, but…” (Gerlacher, 09:19)
• Backlash:
  • Extreme bet variety leads to concern even among gamblers (Chad’s 87-year-old mother-in-law:

    "I can bet on whether the next kid coming up to the stage is going to turn his head left or right. That’s too much. Even I don’t need that." (Millman, 12:00)

  • Over-exuberant influencer marketing and relentless advertising increase political and regulatory scrutiny.

4. Regulatory Reactions & Legal Gray Areas

[12:57–18:04]

• Regulatory Moves:
  • CFTC (Commodity Futures Trading Commission) moving to propose new rules: banning contracts on war/terrorism, curbing player injury/single-play markets vulnerable to direct manipulation.
  • Politicians, both Republicans and Democrats, are “so performative” about regulation, largely for performative outrage:

    “They’re so performative because they have an issue they can latch onto to be outraged about… this is a dominant topic.” (Millman, 14:26)

  • Congressional hearings focus far more on prediction market advertising than on sports betting integrity itself.
• Jurisdiction Conflicts:
  • Federal oversight (CFTC) clashes with states that have painstakingly built up sports betting regulation and revenue streams.
  • Possibility of Supreme Court involvement to settle jurisdictional disputes:

    “We go to the Supreme Court and have them decide.” (Gerlacher, 18:04)

  • Circuit courts split: some favor exchanges like Kalshi, others side with states and tribes.

5. Supreme Court & Legal Nuances: State vs. Federal Rights

[24:57–29:14]

• SCOTUS Hypotheticals:
  • Conservative court, pro-states-rights, but could favor federal preemption if the CFTC is seen as the relevant regulator of “exchange” betting.
  • Subtle legal debates about whether prediction markets count as swaps, futures, or should be repackaged as options.
  • Distinction between “gaming” and “gambling” definitions could become central:

    “Prediction markets could make the argument that sports betting is exempt because the definition of what sports betting is does not fall into the definition of what has been argued…” (Millman, 27:58)

6. Professional Bettors: New Business Models & Platform Dynamics

[29:14–33:33]

• Paradigm Shift:
  • Prediction markets effectively let pros “become the book” by providing liquidity and pricing both sides (yes/no).
  • Obvious professional advantages: larger limits, lower friction, set-your-own-bet style, and even bespoke markets if you know how to reach the right contacts.
  • “These new predictive markets have really changed my life for the better…sportsbooks take more of my money, or I don’t need to give them my money because I can just go to these markets.” (Hunter, 31:38)
• Challenges for New Users:
  • Binary bets and “legalese” terminology can be confusing, but learning curve is short (“watch YouTube, you’ll get it”).

7. Political Outlook: Longevity and Potential for Disruption

[33:33–37:26]

• Political Uncertainty:
  • Can “prediction markets” survive a Democratic administration or are they subject to whiplash every two years?
  • Chris Gerlacher sees long-term resilience:

    “The longer they stick around, the harder they are to get rid of … eliminating them altogether would be much more disruptive…” (Gerlacher, 34:43)

  • Ecosystem effects: entire new industries (data analytics, derivative contracts, institutional adoption) now depend on prediction markets.
• Too Big To Fail?
  • Chris is skeptical of that label but acknowledges the entrenchment of prediction markets, despite ongoing risks of backlash or regulation.

8. What’s Next: AI and the Future

[37:26–38:40]

• The episode closes by teeing up Part 2, which will discuss the growing role of AI and technology in betting ecosystems—Kalshi’s roots in Y Combinator, connections to OpenAI/ChatGPT, and how artificial intelligence is infusing the next wave of betting innovation.

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Notable Quotes

• Chris Gerlacher:

  “You don’t want people using classified military information that way. You may get a more accurate forecast, but you don’t want that forecast out on…Polymarket.” (09:19)

• Chad Millman:

  “My problem is that the people running the prediction markets come across as charlatans and grifters because they continue to say ‘we’re not betting, we’re trading’…with very little distinction and difference between the two.” (14:26)

• Simon Hunter:

  “No more banned pros…that’s the utopia we want to live in, right? … There’s no limits…you can really mess with the markets…” (06:40–07:11) “These new predictive markets have really, it’s changed my life for the better…the sportsbooks are going to take more of my money…now I don’t even need to give them my money because I can just go [to] these markets.” (31:38)

• Chris Gerlacher:

  “The longer they stick around, the harder they are to get rid of…eliminating them altogether would be much more disruptive than it would be even just last year.” (34:43)

• Chad’s mother-in-law (via Chad):

  “I can bet on whether the next kid coming up to the stage is going to turn his head left or right. That’s too much.” (12:00)

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Important Timestamps

• 02:33 – Introduction to the sea change in prediction markets for sports betting
• 05:06 – Early growth and history of prediction markets
• 06:26 – Professional bettors embracing prediction markets
• 09:00 – Insider trading scandals and regulatory backlash
• 12:57 – Backlash from the public and nascent limitations
• 14:26 – Legislative performativity and political posturing
• 18:04 – Supreme Court as ultimate arbiter
• 24:57 – Coming SCOTUS cases and states’ rights debate
• 29:14 – Professional bettors “becoming the book” in new markets
• 34:37 – How the ecosystem around prediction markets makes them harder to disrupt
• 37:26 – Teaser for Part 2: AI’s impact on betting

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Conclusion

This episode of Sharp or Square presents a lively, nuanced discussion on the transformation and turbulence in the world of prediction markets. From exponential growth and professionalization to legal scandals and political maneuvering, Chad, Simon, and Chris map out the uncertain, high-stakes future for both bettors and regulators. The coming Supreme Court battle, shifting administrative winds, and an ever-evolving market signal that the “future of betting” will be as much a courtroom drama as it is a technological revolution.

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Listen to Chris Gerlacher’s podcast "Prediction Market Movers" for deeper industry insights, or stay tuned for Part 2, where the future of AI in betting takes center stage.

Transcript

[Narrator/Announcer]

This is an iHeart podcast.

[Chad Millman]

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[Colin Coward]

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[Simon Hunter]

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[Chad Millman]

Welcome to Sharper Square presented by Hard Rock Fat. We are part of the Volume Podcast Network. This is the show that makes the squares sharper. A mix of wise guys. Pay attention. I am Chad Millman. I am joined Basil, co host, my companion, my compadre, my BFF Professional Better Simon Hunter. Hello Simon.

[Simon Hunter]

Chad, how we doing brother?

[Chad Millman]

We've been promising for a couple months now. We were going to do a couple episodes that looked at sports betting as it is today because even since the end of the football season it has changed so freaking dramatically. As far as where professional, betters are putting their money, what the opportunities are for casual betters. I'm talking about prediction markets. I have been knee deep in these prediction markets, reporting my book since I got the deal to do the book in February of 25. Like the next month, I was sitting in the office of Kalshee with the CEO of Kalshee an hour after he had gotten a cease and desist from the state of New Jersey demanding that Kalshee stop offering sports betting. And they had only been doing it for a month. In May of 2026, 18 months after Kalshee first offered sports betting, they did $17 billion in trading volume and that is the most they had done as a business. And the majority of that came from sports. So I know you've got it. You've been thinking a lot about this and you're participating. I'm excited to talk about it today. Last summer we started talking about this topic with Chris Gerlacher, who does incredible work covering this for Prediction News. A year later, so many things have already changed. We've invited Chris back for part one of our episode covering the world of prediction markets. How they've changed since this time last year, where things are headed. Chris Gerlacher, good to see you again, brother.

[Chris Gerlacher]

Good to see you. Thanks for having me back, dude.

[Chad Millman]

Things have gone crazy.

[Chris Gerlacher]

Yeah, that's what I've noticed.

[Chad Millman]

Crazy. So, like, as someone who is knee deep in this and who has been following this as a journalist during the entire time, are you even a little surprised at the scope and scale and impact and influence of prediction markets, not just on sports, but really globally?

[Chris Gerlacher]

It's been staggering to see how much they grew. I mean, I've been writing about predicted and some of these smaller platforms in 2022. I was writing about Kalshi back when there was a sharp divide between Calshi and Sportrade and they were completely separate companies and different business models. And I'm still shocked at how much they've grown and just how pervasive they've become. And people even are using them in forecast. They're using them in some small creative hedges. And of course, the sports category is enormous. It's 85, 95% of volume on the platform. So there's just so much to watch here, even before diving into all the legal stuff.

[Chad Millman]

Yeah, Simon, as a professional better. Almost every professional better I talk to is experimenting in some way on prediction markets right now. Either they've moved their entire bankroll there and they've given up, completely disbanded their network of runners because they're just using prediction markets. Either they're hedging their market makers, meaning they're setting the prices and enticing a lot of casuals to bet into the prices. How are you seeing it? What do you think about it? How do you want to use it?

[Simon Hunter]

Yeah, it's still a tricky world. Like, for everything good you just said. I know there's a lot of pros who can't get their money off these sites, and that's a big issue with a lot of people. Interesting is there is some good to it. I would say the best part is they're not banning guys, right? And that's. That's the, that's the utopia we want to live in. Right. If you're okay, these casinos are okay having Joe Schmo come in and lose his bankroll in 10 minutes. It should allow guys who are professional to come in and take advantage of the system as well. If they want to limit professionals, Okay, I totally get that. But to a certain extent, there's a difference between limiting the guy to a thousand dollars and a dollar. And to me, that's the best thing about these markets is there's no limits. Like you said, you can really mess with the markets, which, if you have a bankroll on anything, you can do that. Right? Guys on Wall street do that every day. Like, that's why people are like, oh, is this a dirty business? The world we live in? Don't be so naive. Like, this is just a microcosm of the world we live in, in my opinion. So I, I, I'm a huge fan of it. And you've already seen, I mean, DK have made their own. Like, you're seeing these sports books catch up to it, the taxes as well, Something we can dive into as well as a big part of this. It's like, okay, you're gonna, you're gonna tax our losses in the gambling world. Let's go to predictive markets. Like, you haven't even figured out that whole part yet. So, yeah, Chad, it's a really interesting time. And like you said, the smart bettors, they already made this move a couple months ago, Right? Like, we're sponsored by its sportsbook. I can't come on here and talk about these markets like that because me and Chad give out lines for that sportsbook. Right? We're not here to say yes or no. Is the team gonna win? That's just not. Not what we do on this show. So, you know, who knows what the future is gonna hold? But right now, these markets You've seen the wave, Chad. Like you've seen it become part of natural culture. I mean, I've seen it on tv. Now, is it cnn? There's some channel that was just flashing these things up constantly.

[Chad Millman]

Politically, they all do. Well, what's fascinating, Chris, what's fascinating about this is CNN in one show, back to back will go from referring to prediction markets and election coverage to provide context to doing a story about hearings on prediction markets in Congress. Or is prediction, should prediction markets even be legal for some of the markets that are being offered? What are you seeing in terms of context for these prediction markets and how it's emanating more widely into society?

[Chris Gerlacher]

Well, they're certainly getting a lot of attention and some of that has come from some of the big scandals and controversies we've seen with regards to insider trading. So last summer there were some IDF reservists who placed some very accurate bets on missile strikes in Iran on Polymarket. They were arrested this year in the United States. We had the Maduro trader, one of the special forces guys, allegedly bet on the operation Success and Maduro being removed from power. And since he was part of the team going to snatch him, he was in a position to know. But you also don't want people using classified military information. That way you may get a more accurate forecast, but you don't want that forecast out on cashier or excuse me, on polymarket. So there are new worries about this new class of insiders that you've created even in supposedly fun markets. So if you go over to mention markets, for example, over in markets based on what somebody's going to say during a speech or a stream, Mr. Beast had to fire one of his bidders for betting on mentioned markets that were perfectly legal and they were on Kalshi. But he was misusing insider information that he had on pre recorded Mr. Beast videos to make banks. So those are the kinds of issues that are beginning to trickle into Congress. You're seeing some early bills being introduced that aren't necessarily going to go all the way to passing, but subjects that come up over and over again, these insider trading concerns. If you're in the federal government, don't misuse your information, don't resolve markets based on war, violence, terrorism, death, those issues are coming down the pipeline. And even if they don't pass in this term, once you get to 2029 and you get a new CFTC, you can see Congress and you can see a new CFTC start to take more harsh action on prediction markets.

[Simon Hunter]

And I just Want to say really quick go. One of my favorite things he just said there is that you can, even with sportsbooks during the Super Bowl, I can message like these different books and they will put up bets for you, right? If you want to bet on something obscure, they'll put it up. Polymark will do that for you all here you can go, you can message these people and say, hey, can I get action on this? And they'll run it through people and they'll put it up. And that's to me another thing where they've been really cool about that and you've seen what he's just talking about, where it's like now they're getting a little bit of trouble. Some of these things. I think we might see a pullback here in some of these markets for just literally anything you think of, you could bet on that. It was really a wild time there for the last nine months. For anything you could think of, you message a VIP or one of the people, they'll put it up on the site.

[Chad Millman]

Simon, you're not kidding. When, you know, when my son graduated from college in June, a few weeks ago, not even a few weeks ago, like last week, my mother in law, 87 years old, came with us to the ceremony and you know, it's down in Philly and she is not, she is not approved when it comes to the hustle, right? She was born in Brooklyn. She taught science in a public high school in Brooklyn for 30 something years. She has lived in New York City her entire life. I've played cards with the woman. My kids have played cards with the woman. There is nothing about her that is averse to gambling. We're sitting at the stadium, at the Philly stadium and she said to me, hey, have you been paying attention to these prediction records? She goes, kalshee and that Poly something or other. And I said, yeah, they're a big part of the book. And she goes, it's getting ridiculous. And she points to the stage, she goes, I can bet on whether the next kid coming up to the stage is going to turn his head left or right. She's like, that's too much. Like even I don't need that. So Chris, is that some of the backlash? Is that part of the problem here is that everyone got a little bit greedy, a little too, a little too enthusiastic and all of a sudden there's got to be some pullback?

[Chris Gerlacher]

That's part of it. There are already concerns about sports betting coming online and online sports betting and the backlash to all of those Advertisements and prediction markets didn't just step into it. They got aggressive and they went through the influencer marketing on X last year before they pulled that back. This year they, I mean, they're not stepping into a great environment if they want to win hearts and minds over here if we're worried about gambling. So that did not do them any favors. And you know, again, lawmakers may be hearing about it. They are hearing about it now, even if they're still slow to actually put something together that'll be lasting and put guardrails on certain key issues. There is FTC already released a proposed draft of a rule, I think a week and a half ago now or about a week ago. And they've all but prohibited contracts on war, terrorism, assassination. That was pretty much done in practice in the regulated space on Kalshi already. But they're also beginning to pull back on certain sports markets. So player injury markets are out, single play markets are out. That can be definitively fixed by choosing to throw a ball away or throw a pass or botch a shoot or anything. So you are seeing these early limits beginning to be intimated at. We will see how aggressive the CFTC is actually willing to be in Trump too before we get to a new set of five commissioners in 29.

[Chad Millman]

Here's my problem with all of it and I am as libertarian as it gets on this topic. I think everybody, if they want to do it, they should be able to do it. My problem is that the people running the prediction markets come across as charlatans and grifters because they continue to say we're not betting, we're trading with very little distinction and difference between the two. And they continue to put a message as if they are a totally legitimate new form of trading financial instruments when they're just sports books. Kalshi right now, if you look at it has 10% of market share in the sports betting space. The other problem, Chris, is that the politicians are so performative about this. Republicans and the Democrats are so performative because they know they have an issue they can latch onto that they can be outraged about. You know this a month ago, the Senate subcommittee on Commerce had a hearing that was titled Sports Betting Integrity. To our hearing, 70% of the questions were about prediction markets and advertising by prediction markets. The fewest questions were about sports bagged betting integrity. The fewest were about sports bagging integrity. It just feels like this is a dominant topic that people can latch onto to make hay.

[Chris Gerlacher]

I mean, that's what it feels like a lot of days and especially if you look at, excuse me, the issues that are being proposed in some of these bills, they're really surface level issues that Congress would like the CFTC to address, but it doesn't go into deeper, harder topics like how do you put together consumer protections or like responsible trading programs at the cftc. When the CFTC is not a consumer protection agency, they can put together new rules, they can limit, they can say no margin trading for retail or require certain disclosures, but they're not gonna pay out money or anything like that to regular traders. That's not even their remit. So you can't even copy and paste state responsible gambling protocols onto a federal sportsbook with the cftc. So those are hard, nuanced issues that Congress is not even prepared to grapple with yet.

[Chad Millman]

Do you feel like one of the big issues here is that places like Kalship, places like Polymarket, because they are regulated by the cftc, which is the acronym for Commodities Futures Trading Commission, that is a federal agency, they are regulated by a federal agency. They are allowed to create whatever markets they want, as Simon just pointed out. So they are deciding they can offer sports betting markets and the CFTC is allowing them to offer sports betting markets. The issue is that every state that has spent the past eight years regulating, legalizing, getting operators to be licensed, reaping revenue feels like, dudes, what's going on here? You're bypassing the whole system. What is the, what is the resolution here? How does this get fixed?

[Chris Gerlacher]

We go to the Supreme Court and have them decide. So there are a couple of options here that are interesting. One is the Supreme Court rules in favor of the CFTC and the exchanges and says, hey, this is the CFTC's call to make if you want to prohibit sports contracts. It might be frustrating for the states, but you have to go through Congress. That would be the exchange victory. But there's something that's very funny. If you like sports contracts, infuriating if you hate them, that can happen if the Supreme Court rules against the exchanges. One of the legal questions being fought over right now is whether these are swaps, whether these are a specific type of futures contract. And in a Supreme Court laws, the exchanges could say, okay, we're not, fine, we're not swaps. We will delist these, we will repackage them and introduce them back as options, which are a different type of future. And then we're going again and looking back at Congress and back at the CFTC in a future term to put lasting limits on here. But you've got too many states and courts ruling in on this and you're ending up at different places. So you've got the 3rd Circuit that is ruled in favor of Kalshi by 2 to 1. Kalshee has argued before circuits 9 and 4, and those are expected to be victory laps for the states and tribes. The 6th Circuit is heating up, so you need a Supreme Court case to come down and resolve what is likely going to be a circuit split anyway. But you're not going to get resolution or even know whether states can enforce state law or bills they may have passed limiting event contracts and prediction markets until the Supreme Court weighs in and draws that line between federal and state jurisdiction for event contracts. Again, particularly on sports, let's take a

[Chad Millman]

quick break at a word from Hard Rock. But on the other side, I got another question for you about the courts.

[Chris Gerlacher]

Let's do it.

[Chad Millman]

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[Chad Millman]

All right, Chris, so it's going to go to the Supreme Court and this is where I think it gets really interesting because 2018, the Supreme Court, a conservative Supreme Court, ruled in favor of states rights that they should be allowed to offer sports betting. If they wanted to offer sports betting, they could not be commandeered by the federal government. Now a case is going to get to the Supreme Court probably sometime late 2027. It is a more conservative court. The Republican administration has basically washed their hands of any policing of the cftc. The Trumps are intimately involved in the world of prediction markets. They are making a lot of money off prediction markets. They are investors. Donald Trump Jr is on as an advisor to Kalshi on the board of Polymarket, an investor in Polymarket. What are the arguments the Supreme Court can make to rule in favor of prediction markets while not overriding their conservative principles of states rights?

[Chris Gerlacher]

Well, there would be a the way they could split it. There's a straightforward federal preemption argument. So if they're going to favor if they're going to rule in favor of the exchanges, they could say, look, there's a federal preemption issue. The CFTC is a federal agency. They're regulating these specific transactions on these exchanges and that would overrule state law. That's one. Number two would be if I really wanted to mangle a 10th amendment case in a state's rights case, they could say the states have authority over wagers conducted on regulated sportsbooks. But these exchanges are a separate venue. They're regulated by the cftc and the CFTC only controls these transactions over here and separating those into two separate boxes. The way you've seen the exchanges try and argue that in federal court already, they could Adopt that argument for our own. And that could lead to an exchange victory as well. Supreme Court.

[Chad Millman]

There's one more and this is, this is where, you know, Joseph Heller, Catch 22 turns into reality. Simon, I don't even know if you're aware of this. There's actually a distinction in the definition between gaming and gambling. Chris, am I right?

[Chris Gerlacher]

I believe you're right. What I know there is one. I don't know this line of argument. Well, I want to hear it.

[Chad Millman]

So my understanding is that the prediction markets could make the argument that sports betting is exempt because the definition of what sports betting is does not fall into the definition of what has been argued and wonderful in the Supreme Court. And that is one of the arguments that could be made.

[Chris Gerlacher]

Oh, is this the, this is a variation on the, you know, is sports betting a traditional casino game? Right, that.

[Chad Millman]

Exactly.

[Chris Gerlacher]

Yeah, yeah, yeah. That would be another one. I don't know how fruitful that's going to be and I don't know. I mean it's not a constitutional question. So I don't know that the Supreme Court would take it up. It's pretty come up in, well, the CFTC is operating as if a traditional casino game is roulette, blackjack, all the old stuff that we're familiar with and excludes sports betting. And I know a lot of the audience is going to be saying, hey, what about Wes Flagler right down in Florida? The gaming industry really is working with a different definition of gaming than the CFTC is. And that conflict has been frustrating for the past two years or past year and a half or so.

[Chad Millman]

Simon, a lot of the guys that I know who are professionals who are using prediction markets right now, it's because, as you noted, they've been kicked off the platforms and you got to hire a network of runners. And your business all of a sudden becomes about managing, finding out instead of doing the work that you want to do and actually being able to go bet and execute and maneuver in a live space. They're essentially becoming bookmakers on the prediction market platforms. Right. They're using their models to create prices. Prediction markets. You basically bet yes or no and they are offering prices on yes or no and they're betting the no and they're getting the casuals to bet the yes. And the beauty of this is I'll use golf as an example. You want to be a professional golf better and you want to go bet on a sports book. You really, your only option is to bet yes on a litany of markets, of players to Win or not, make the cut or whatever. But you're only betting yes. When you go to a prediction market, you can bet yes or no. You're essentially the book, you're taking all the no's. So you don't need anyone to do anything. You just need people to not do something. If you're on a prediction market, is that an advantage for you as a professional better? Do you. Would you just make more and more bets where you can maybe make less money because you're taking the. No, but you can potentially make more money in the long run?

[Simon Hunter]

A little bit. I would say, Chad, the biggest difference would just be time, how much time you save rather than the whole get up of going to different sports books, having to make different small amounts. You just said you can bet the unlimited amount.

[Narrator/Announcer]

Yes.

[Simon Hunter]

They will limit you on obscure bets. But once again, if you email with these companies because they're so new, I don't want to just say it's a millennial thing, but it feels a little bit like that where it's. If you reach out to these new companies, they literally will reach out back to you. Which as someone that's putting a lot of money into your company, that's how it should be. That's why I hated the way certain sportsbooks would treat me. Where it's like, dude, I've never given someone so much money to be treated so horribly. It just never made sense to me. Me, where it's just a bizarre, bizarre model where this I like again, what it's doing, where it's going to make. I think it's going to make these sports books better. Right. Like I, I had books that before, yes. In the super bowl, they would take any money I want to put down. This past year, very easy to get money down because of these, these markets. Right. These books were panicking. They were like, okay, okay, we will take you. Even though they don't need us anymore. Like I said, these huge sports books no longer need professional betters because they've worked out the method, even long term because there's so many suckers. They don't need to balance their books with professional money. It's just they always will make a profit off these bad betters because the parlay market is just so huge. That was a problem for someone like me professionally, where these new predictive markets have really, it's changed my life for the better in the sense that sportsbooks are going to take more of my money and now I don't even need to give them my money because I can just go, these markets, that's better, better. Like I said, there's a lot of tax reasons as well. And Chad talked a little bit about it where it's like the yes, no part. If you don't know what you're doing and you're new to it, it can honestly be tricky. Like I, I'll never forget the first time I got on there. I was very confused by it. But watch a couple YouTube videos. If you haven't touched these predictive markets, it's very simple. They'll teach you right away what you're looking for. Because they, they like Chetty said they, they worded it very weird where it's all legal stuff. Right? That's why they've made it this certain way, because they're trying not to say that they're a gambling website, like Chad's saying. Because again, first time I heard about prediction markets was politically was nothing to do with sports. It was another way to bet on political markets. So, yeah, for me, my first experience getting into it was the presidential election. So just seeing what's, how much it's changed in this last two years, year and a half has been really interesting. I like you're talking your chat, that's my question to you is even if this gets through the Supreme Court here, say the Democrats won the White House next, is this something they would go after, you think, in the future? Is this just once they win this here, Is this over? Is it a predicament, predictive markets here to stay? Or is this something every two years? Could be, could be getting rid of.

[Chad Millman]

Well, that's a question that I'd want to ask Chris. Let me tell you a quick story, just because it's germane to your presidential election. Simon, I don't know if you remember this, but in the 2024 presidential election, I was getting ready to settle into the night. It's 7pm I'm waiting for John King to give me the results from Kalamazoo county in Michigan. And you texted me and you said elections over. Trump won. I'm like, what are you talking about? I'm just settling in to watch the results. And you're like, check prediction markets. Like he's minus whatever. They're not even taking bets on that anymore. So that's how quickly it's changed. Chris, what's your, the, the, the corollary to Simon's question is how are you handicapping this? When does it end, how does it end? And does it stay as it is? If there's a different Administration.

[Chris Gerlacher]

Well, in a new administration, there's a pressure that both Democratic and Republican commissions have faced. And nobody wants to be responsible for wiping out millions of dollars in trade volume, even if they believe that they're trimming fat and getting rid of extraneous markets. And keep in mind, sports contracts are not just the enormous number of people trading on them. You can get derivatives and other financial products that are built on top of these. There was a company in London, I believe they did this on a political market. They built a bond that resolved based on a prediction market. And if you bet correctly, you get your coupon back plus 7%. And if you bet wrong, I believe you get your coupon back. So there's also a move away from the binary payout structure for people who are using these as actual financial products. But you've also got data companies that are trying to build on top of this. So, like over at Prediction Edge, I do an ad read for it every podcast and I do mine. And, you know, we're looking at election data and pulling it alongside other traditional sources of data as well. So there's this whole ecosystem that's being built on top of these contracts. So eliminating them altogether would be much more disruptive than it would be even just last year when these were mostly just recreational users and retail traders. Now you've got companies coming up like Odd Pool that is going to. I believe it's almost done with Y Combinator now, one of the accelerator startups. But they're putting together the data so that it's clean and that institutions will be able to use that data to back test models so they can price better in the future. So again, you have this whole ecosystem on top that'll be really disruptive if you pull out the base of it, if you pull out the contracts that form the base of it. So I like their chances of sticking around for the longer they stick around. The longer they stick around, the harder they are to get rid of because of that. So if they make it to like the 2030 midterms, that's a really big victory for prediction markets and the ecosystem around it. So, yeah, you'll see individual contracts go away. You'll see maybe some guardrails placed on these. You'll see greater impatience next term in a Democratic administration. But I'm betting against them disappearing altogether, much to the frustration of the states.

[Chad Millman]

Too big to fail.

[Chris Gerlacher]

Well, it's a cousin of too big to fail. It's still possible that you have just enough anti Trump, anti corruption backlash that you're like, look, the prediction market project needs to be disrupted. States need to keep. The states need to keep sports betting. It's on the table and it's possible. I'm just betting against it. I'm very skeptical of too big to fail.

[Chad Millman]

You mentioned Y Combinator, the incubator, the VC incubator. That's a great segue into part two of our Future of Betting podcast series. Kalshi was a Y Combinator company. The former boss of Y Combinator was Sam Altman, who is the CEO of ChatGPT OpenAI, which runs ChatGPT. And the other big influence in sports betting these days is how people are using artificial intelligence. There you go. We're going full circle. Chris Gerlacher, thank you for coming on the show, buddy. Tell everybody your podcast so people can listen to it and get even more details about what's happening in the prediction market space.

[Chris Gerlacher]

Sure, you can find me over at Prediction Market Movers once a week. I'm talking to an entrepreneur or a trader in the prediction market space. So we can see the cool stuff they're working on, some of the great things they're seeing in terms of growth in the industry and some of the pitfalls that they see ahead. So you can get some good criticism of the industry as well from people who are neck deep in it.

[Chad Millman]

Chris is also going to have me on his show when the book comes out because so much of it is about prediction market. You see how I did that? He can't even get out of it now. That's our show. This has been Sharper Square, part of the Volume Podcast Network. Watch or listen on YouTube at Sharper Square like this video. Subscribe to the channel. Download some Spotify Apple Pods wherever you get your pods rate. Review. Subscribe. Leave us. Five stars. Say whatever you want. Feedback is the gift. Until next time. Love you.

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