0:01 Prediction markets are not just
0:04 gambling. There's also a lot of insider
0:06 trading, too. Here's the call sheet CEO
0:08 kind of explaining the goal here, which
0:11 is that eventually we can gamble on everything.
0:12 everything.
0:14 >> The long-term vision is to financialize
0:16 everything and create a tradable asset
0:18 out of any difference in opinion.
0:20 >> Now, understand that guy who wants to
0:22 make a tradable asset out of any
0:24 difference of opinion, anything you care
0:26 about, that guy just partnered with CNN
0:30 and CNBC. Already the news is embracing
0:33 or bear hugging entering gambling
0:36 markets into our news. Just like ESPN
0:39 put sports betting odds into their
0:41 programs and it became a big part of the
0:43 sports watching experience. It's all
0:44 about, hey, what are the odds on the
0:47 game today? What are the markets saying
0:50 the odds are? And part of what I find so
0:53 grading about this dialogue, the debate
0:56 right now is the insistence by these
0:58 CEOs that they are not actually
1:00 gambling. There is propaganda going on
1:02 that they are something completely
1:04 different all because they found a
1:07 regulatory loophole that allows them to
1:09 be gambling in states where it's not
1:11 allowed. So here's just one post that
1:13 expresses that he says Khi is not a
1:15 gambling company. Saying so is
1:16 incorrect. I assume that people calling
1:18 Khi gambling are uninformed rather than
1:21 being defamatory. But Khi is not gaming.
1:24 Now I want to point out to that guy that
1:26 most of the volume on prediction markets
1:29 like KHI is made up by sports betting
1:32 aka the same thing that people bet on
1:34 like with DraftKings, FanDuel, prize
1:37 picks. That's what people are actually
1:39 spending the majority of the volume on
1:43 on Khi specifically. Nevertheless, CEOs
1:45 are bending over backwards, who by the
1:48 way are financially invested in seeing a
1:49 difference. They say there's such a
1:52 difference between sports gambling and,
1:54 you know, prediction markets. Here's
1:56 Vlad Tinv, who actually has prediction
1:58 markets for sports, explaining the
2:00 substantial difference.
2:02 >> Qualitatively different than sports
2:04 gambling for for a couple of reasons.
2:08 One is these are CFTC, federally
2:10 regulated event contracts. And what that
2:13 means is instead of, you know, uh,
2:16 betting against the house or setting a
2:18 line, this is an exchange, a designated
2:21 contract market where buyers and sellers
2:24 are are meeting. So, by the way, by
2:25 meeting, he means they're betting
2:28 against each other. But he's right that
2:30 instead of betting against the house,
2:32 the house is pitting people against each
2:34 other and the house just takes a cut
2:37 based on trading volume. So rather than
2:38 actually setting the line themselves and
2:40 betting against you, they're allowing
2:41 you to bet against other people and
2:43 they're still taking a cut. It's just a
2:44 different way to take a cut.
2:47 >> Um you're not, you know, setting a line.
2:49 Um so I think it's very different.
2:52 >> But it's really not though. You can bet
2:54 on FanDuel or DraftKings one thing and
2:57 you can go bet the same thing basically
3:00 on Robin Hood. It's both sports gambling
3:02 one way or the other. And this has
3:04 generated an interesting fight between
3:07 the nent upcomers who want to be in this
3:10 prediction market game and the casinos
3:12 who kind of are feeling cheated right
3:14 now because they have to go through the
3:17 hoops of gambling regulation. And so you
3:20 actually saw the AGA who I'm actually
3:22 very against. It's a trade group for
3:23 gambling, but I guess the enemy of my
3:26 enemy is my friend for now. Uh,
3:28 basically they put up their own version
3:30 of a propaganda website against the
3:32 prediction markets because the
3:34 prediction markets are eating too much
3:35 of their lunch and they're like, "Hey,
3:37 this is unfair that these guys have the
3:38 loophole." So, they're now
3:40 propagandizing and running ads for the
3:43 fact that prediction markets are just
3:44 sports betting. Like, they are gambling.
3:46 >> When prediction markets become sports
3:48 books, they put consumers and the
3:50 integrity of sports at risk.
3:52 >> That's what the gambling industry is
3:53 saying, while the prediction market
3:55 industry is saying, "No, no, no, guys.
3:56 We're we're we're not we're not just
3:59 that. We are we're a truth engine
4:01 actually. So, it's kind of amazing. They
4:03 actually both ran their own like
4:07 propaganda polls. Like here's some AGA
4:10 research that supposedly shows that 85%
4:12 of Americans say these contracts are
4:14 gambling, not financial instruments. 84%
4:16 say they should only be available
4:17 through statelicicensed sports books.
4:20 Clearly arguing their point. And then if
4:22 you go to Kulshi's website, they have
4:25 their own propaganda survey. Quote,
4:28 "Nationwide poll shows broad support for
4:30 prediction markets. Nine and 10 voters
4:31 say Americans should have access to
4:33 prediction markets, viewing them as
4:35 financial instruments, not gambling."
4:36 Well, gee, guys, which which is it? Can
4:38 we figure it out? It's like the
4:40 prediction market books and the sports
4:42 books and gaming companies are like
4:44 battling out over which is gambling,
4:46 which is not. Of course, I think the
4:49 logical view is that if you are offering
4:50 sports betting the same product as the
4:52 gambling company, those two things are
4:54 the same thing. I mean, yeah, you can't
4:56 use your loophole, but uh I really it's
4:59 a weird position to be in to be agreeing
5:01 with like the propaganda arm of the
5:03 gambling companies, but yeah, they're
5:06 now fighting against the propaganda arm
5:08 of the prediction market. In fact,
5:10 recently the prediction market companies
5:12 have gotten together and created a
5:14 coalition. It's like their own trade
5:16 group called Predict Action and they've
5:18 partnered with Crypto.com, Robin Hood,
5:20 Coinbase, and Underdog. These are all
5:21 guys who are getting in the prediction
5:23 market game. They said, "We created the
5:25 coalition with a simple mission. Provide
5:26 a voice for the prediction markets
5:28 against adverse legacy lobbying groups,
5:31 aka the casinos. They're fighting the
5:34 casinos because they want to win and not
5:36 be seen as gambling so they can win a
5:38 majority share of the gambling in
5:41 America. It is insane. Meanwhile, you
5:43 have the prediction market guys just
5:45 stumbling over themselves for whether we
5:47 should allow actual insider trading in
5:49 their markets. Because that's a part of
5:51 this that we haven't discussed, which is
5:54 that these prediction markets are so
5:56 grading in that they not only don't
5:58 admit what they are, they also try to be
6:00 something they're not, which is they say
6:03 we are not only not gambling, we are the
6:05 news actually and we are such a valuable
6:08 source of information. Here's Vlad Tenev
6:10 again expressing this.
6:13 >> I also think that um you know if if you
6:16 think about the news, right? I I like to
6:19 think about prediction markets as the
6:21 next generation of the news. We know the
6:23 news is economically valuable. You know,
6:26 people pay for getting the newspaper. Uh
6:28 they pay indirectly for, you know, shows
6:31 like this through advertising.
6:34 And so if if you get the news before it
6:36 happens, that should be even more
6:38 economically valuable. So I think a lot
6:40 of people it's it's easy to just kind of
6:42 lump it in with with gambling, but this
6:45 is a a liquid market that gives people
6:47 information in real time. I think
6:49 there's a ton of economic value in that.
6:52 >> Yeah. You know what else gives people
6:55 information in real time are sports
6:57 betting odds. Like you could make the
6:58 same argument for sports betting. It's
7:01 like, oh, you can get a real look at
7:02 who's going to win the game by what all
7:05 the sharp bers are betting at that time.
7:06 You can say the same thing here. But
7:08 this whole idea of like you get the news
7:10 early. The only way you get the news
7:13 early, by the way, is if it's insider
7:14 trading. Everyone understands that,
7:16 right? All these prediction markets are
7:19 doing is just aggregating sentiment on
7:21 the news. The only way you can get
7:24 something that's not in the news from
7:26 these markets is if someone with non
7:30 news information trades, which is aka
7:32 inside information. And there's a funny
7:35 moment where the CEO of Coinbase, who
7:37 again is part of this prediction market
7:39 new Grift, he kind of realizes this and
7:41 he goes, you know, I was talking to the
7:44 CFTC nominee the other day, who by the
7:46 way may regulate these markets. And he
7:47 was kind of trying to decide maybe we
7:50 should allow insider trading cuz maybe
7:52 that makes our product even better. You
7:53 know, I actually had a really
7:55 interesting conversation with uh one of
7:57 the folks that was nominated to be CFTC
8:00 um commissioner about this and I he
8:01 asked me he said, "Do you think we
8:03 should allow insider trading in
8:05 prediction markets?" And I said, "It's
8:06 it's actually a pretty it's not as
8:09 clear-cut question, right? Because if
8:11 your goal is to actually for the 99% of
8:12 people trying to get signal about what's
8:13 going to happen in the world, like is
8:15 the Suez Canal going to be reopened or
8:17 whatever, you actually want insider
8:18 trading. You want, you know, some
8:20 admirable admiral sitting on a ship in
8:22 the Suez Canal who has really good
8:23 information to be trading so you get
8:25 better higher quality signal out of
8:26 them. Right? Now, if you want to
8:28 preserve the integrity of those markets,
8:30 maybe you don't want insider trading,
8:31 right? So, there might be like a
8:33 decentralization test that has to go in
8:35 here, but it's it's not it's not a
8:36 clear-cut answer.
8:37 >> That's right, guys. Maybe we want the
8:39 insider trading so we can get the news
8:43 of tomorrow today by encouraging people
8:45 financially to go ahead and give us the
8:47 news now, right? You encourage basically
8:49 leakers because you financially
8:50 incentivize them trading in your market
8:53 and having an inside edge. I want to be
8:55 super clear. There's a reason we didn't
8:56 allow this in the securities market. I
8:57 mean, you can make the same argument for
8:59 like, well, what if we want the stock
9:02 market to give us tomorrow's news today
9:03 on public companies? You could just
9:05 allow insider trading and that would
9:07 tell you, right, the market would move
9:09 before the news came out. But there's a
9:11 lot of reasons we don't do that. Mainly
9:13 that it's cheating the average trader.
9:16 But these new prediction market CEOs
9:18 don't see it that way. They don't want
9:20 to be regulated by gambling laws. They
9:21 don't want to be regulated by
9:24 securities, insider trading laws. Here's
9:26 the poly market CEO being asked a
9:27 question about insider trading, too. He
9:29 seems to suggest maybe it is also a good thing.
9:30 thing.
9:33 >> But predictive markets do rely on
9:36 someone having some inside information.
9:38 >> Yeah, I think that people going and
9:41 having an edge to the market is a good
9:43 thing. Obviously, you need to curate
9:44 them and you need to be really clear and
9:46 stringent on where the line is drawn and
9:48 like sort of ethics and we spend a lot
9:49 of time on that. But it's sort of an
9:51 inevitability that this will happen and
9:52 there's a lot of benefits from it and
9:55 you know people will adapt. Wait, what?
9:57 What does he mean? It's inevitable that
9:59 we're going to have insider trading and
10:00 people should just adapt to the idea
10:02 that they're going to be frontr run by
10:05 some insider. I mean, is this not crazy
10:08 to anyone else? Like I saw on our Reddit
10:09 the other day, you know, somebody was
10:11 like, "Hey, Coffeezilla, you should
10:14 expose this Google inside trader on Poly
10:15 Market and I was just thinking to myself
10:18 like expose what?" Like this is
10:21 explicitly part of the offering of
10:23 platforms like this is they say, "Hey,
10:24 you're going to get the signal early."
10:26 How do you think they're getting this
10:29 signal? Like this is a feature, not a
10:31 bug of these platforms. And by
10:33 implementing non-insider trading rules,
10:36 they're actually hurting the edge of
10:37 these markets. Now, the last thing I
10:40 want to say is that not all gambling
10:42 companies see prediction markets as a
10:45 bad thing. Actually, there has been a
10:47 big split and divide at the American
10:50 Gaming Association. DraftKings and
10:52 FanDuel recently dropped out. This is
10:54 the NCAA president saying, "I'd be
10:56 willing to conclude that that's a big
10:57 part of their reasoning is they're going
10:59 to get into the prediction market space.
11:01 They can't afford to let those folks
11:03 dominate all that green space they can't
11:06 currently access. Giving away the game
11:08 again that this is all gambling. The
11:09 whole reason that the gambling companies
11:11 hate this is because they're stealing
11:12 their lunch. The whole reason that some
11:13 gambling companies are embracing it is
11:15 because they see it as the future of
11:17 gambling because they can target more
11:19 people at a lower age in more states.
11:21 And when you actually hear the CEOs of
11:22 sports betting companies talk about
11:24 this, they say they think they have an
11:25 edge in this space
11:27 >> and draft kinks and finax. I think we
11:29 have such strategic advantages from the
11:31 enormous customer base that we have to
11:32 all the experience and we have
11:33 >> are you saying like an advantage over
11:35 the couches and polyart?
11:36 >> Yeah def definitely.
11:38 >> Yeah. So some of the gambling companies
11:39 the ones that are leaving the American
11:42 gaming association they're the ones that
11:43 are like yeah this is actually great. We
11:45 love this. We're entering this. We have
11:47 a strategic edge because this is all
11:49 gambling of course and so we're going to
11:50 you know of course clean up cuz we have
11:52 the most experience in the gambling
11:55 space. The only way to really solve this
11:58 is regulation, which we are absolutely
12:00 not going to get clear rules of the road
12:03 on, at least not ones that make any kind
12:05 of meaningful stop to the kind of crazy
12:07 takeover that's been happening. And the
12:09 reason I'm willing to bet on that,
12:11 ironically, is because uh of this
12:14 headline right here. Trump media enters
12:16 prediction market business. If you
12:18 didn't know, the Trump family is getting
12:21 very invested into prediction markets.
12:24 In fact, you had Don Jr. uh become the
12:26 poly market adviser. He was also an
12:28 adviser of KHI as well. Now, I guess
12:31 they're taking all that experience and
12:33 offering a truth social prediction
12:36 market called Truth Predict. It's a
12:38 partnership between Trump's media social
12:40 network, Truth Social, and Crypto.com's
12:43 Derivatives of North America. It'll
12:44 allow our loyal users to engage in
12:46 prediction markets with a trusted
12:47 network while harnessing our social
12:49 platform to provide totally unique ways
12:53 for users to discuss aka gamble and
12:54 compare their predictions. So, our
12:56 president literally has a financial
12:59 stake or at least his family does in the
13:01 prediction markets going well. And part
13:03 of going well means keeping the
13:06 regulatory sort of free open ocean of
13:08 opportunity right now. Uh which means no
13:11 regulation or very little regulation. So
13:13 honestly, I have very low expectations
13:15 for regulators doing anything. The very
13:17 fact that they're debating with Brian
13:19 Armstrong about whether we should just
13:21 allow insider trading with one of the,
13:23 you know, possible commissioners is
13:25 basically a giant red flag of what's to
13:28 come. But I just wanted to cover this. I
13:29 wanted to give people a primer on what
13:32 these platforms are, what they do, what
13:34 their arguments are, and the fact that
13:35 they're fighting with the gambling
13:37 companies over market share of our
13:40 country, which I think is is probably
13:42 bad. Uh pro probably bad. When the
13:45 casinos say you're cheating, you're
13:48 getting ahead by breaking the rules. Uh
