Original subtitles

Downloaded from 9jaRocks.Com

Official 9jaRocks movies site: 9jaRocks.Com

Today we're watching Argentina and Spain in the World Cup Final.

We're in Las Vegas, Nevada at the Mirage Mega Mansion.

This is a Winible World Cup watch weekend.

Winible is essentially OnlyFans for the sports betting creator economy.

The guys in this house have made millions of dollars on prediction markets,

probably eight figures just over the course of the World Cup.

I like betting on Kalshi.

Trading on Polymarket.

At the beginning of the World Cup, you get to pick

who you think is gonna win the whole World Cup.

So, before it started, I put 5,000 dollars on Spain to win the whole thing.

So I put Spain to win.

Like, when you wake up, you gotta put on your lucky underwear,

take a deep breath, say a prayer.

I think prediction markets are low-key taking over the world.

Welcome to day four of flipping 1k into ten grand on Polymarket.

Now, to an industry skyrocketing in popularity, prediction market.

What are you guys talking about?

Prediction market app, dude. You know, online peer-to-peer betting.

Hundred dollars on Kane to score. Done.

10K on Jake Paul makes you 90,000 dollars?

There are two major players, Kalshi and Polymarket.

They really don't like each other.

Kalshi has just posted its most lucrative market ever.

Who will win the finals of the World Cup?

It is shocking

the extent to which prediction markets have proliferated.

Thanks to prediction markets, you can now bet on basically anything.

And I mean anything.

From Taylor Swift's wedding date

to the chances of an Iran nuclear deal.

We're gambling on war.

The longtime teleprompter operator for the president.

He's on leave now for alleged insider trading.

The long-term vision is to financialize everything.

This is my life. Me, just, like, refreshing, refreshing, refreshing.

This is the hyper-financialization or hyper-gamification

of our entire lives.

- Hussein Obama. - Yeah!

And the whole world unfortunately has become somewhat of a casino.

I've been writing about the prediction markets

for almost 25 years now.

The first real prediction market that we know of was started

at the University of Iowa in the late 1980s.

They started with a really obvious one.

How likely a candidate was to win a presidential election.

You would buy a contract in Michael Dukakis

if you thought Dukakis was going to win.

And that market proved to be exceptionally good,

really better than almost all polls.

And by doing so, they create this really powerful

kind of collective forecasting machine

that taps into what I call the wisdom of crowds.

The basic idea of the wisdom of crowds

is that under the right conditions,

groups of people can be remarkably intelligent.

So, if you can figure out ways to tap into that wisdom of crowds,

then you can actually create tools

that will solve problems and even in some circumstances,

and this would be where prediction markets come in,

forecast the future.

This is how it works.

Every prediction market starts with a question.

Let's say, "Will the US government acknowledge

the existence of aliens by 2029?"

And that is a real market in Kalshi right now.

So, there are two options. Yes, or no.

In a prediction market,

there are always two people trading against each other.

So, for you to make this trade,

you would buy shares of yes at 25% odds.

Another person would have to take the other side of that trade at 75%.

The price in the market is always changing

and that reflects the changing opinions of the people in the crowd.

And you can cash out your bet at any point.

When the outcome is known,

the winner gets 100% of the payout and the loser gets nothing.

Kalshi and Polymarket,

they make money by taking a transaction fee.

The more people that bet, the more money they make.

We've got all of this enthusiasm over World Cup

and a betting bonanza.

And Kalshi did more than five billion bucks

in trading volume this week.

Joining us, Tarek Mansour is a CEO and co-founder at Kalshi.

When he left MIT,

he joined really the giants of Wall Street.

Prediction markets are covering things that are top of people's minds.

Things that are very kind of core and front and center right now.

And so, sports have been an amazing propeller.

I mean, it's massive.

I mean, 30 to 40 billion dollars in volume.

The growth has been incredible.

A lot of people watch sports,

so it's an easy way to kind of understand what this is

and get educated about prediction markets.

A big chunk of the users essentially convert to other things

like the economy, politics, weather, culture.

If you're not making money watching Love Island,

you're doing it wrong.

You know, it's interesting. When we started the company, it was 2018.

This was a time where, you know,

you saw the sort of first wave of misinformation, polarization,

the country being driven to the extremes.

You will not resist us!

Social media was supposed to be a solution to that,

but it ended up adding fuel to fire.

I am over it.

The beauty of prediction markets

is the incentive structure is the opposite.

The incentive structure in the system is truth.

It's a truth that's coming from people with skin in the game.

And, you know-- And you think about it, right?

Like, you sit sometimes at a dinner table at Thanksgiving,

and everyone has all these crazy takes.

And you're like, "Hey, let's put ten dollars on it."

And all of a sudden, they get a lot more careful, right?

The person that was so certain about their belief and their opinion,

all of a sudden they're not so sure anymore.

It's objective. It's mathematical.

It's statistical in a way that all the other mechanisms are not.

And I love math.

I grew up in Lebanon with a single mom and I lived, you know--

The way I describe Lebanon is a very volatile country.

In this sort of complex, constantly evolving dynamic environment,

I found math to be a refuge.

And prediction markets are a bit of an application of that.

You want the people that are doing the research.

You want the people that are like very "sharp," or well-informed, or smart.

And imagine if society,

we basically tackled a lot of our big questions by thinking more.

We can think about Spain and climbing Mount Everest.

But you have to deal with that lot first and see where you can go.

Look at the scene here.

- Another Capri Sun? - Yeah.

I just get nervous and I like drinking Capri Sun.

We're a bunch of people who bet and trade on sports for a living

and always trying to make as much money as possible.

In terms of placing this bet, yeah, you know,

you just get probably way too comfortable with moving around large amounts of money.

Since prediction markets started offering sports trading, I've made mid six figures.

I remember not that long ago when…

if Datian lost 100 bucks, it would be pretty devastating.

And now I think it would probably take 30 times to maybe even register.

And that's worth it to you guys?

Making a million dollars in like two weeks?

That seems pretty great to me.

…and he celebrates like LeBron James.

- Wait. Belgium just scored. - Yeah, we fucked-- We missed it.

The prediction markets are faster than the streams,

so Belgium scored before we actually got to see the goal.

You've made so much. This is crazy.

Datian just made like 50,000 dollars on that goal.

Look at him. Doesn't even feel a thing.

The way it works, you have market makers and then you have market takers.

And in the vast majority of cases, the market makers are sharp or smart,

and the market takers are not smart

in the sense that they are making losing trades.

I mean, Datian used to work at Jane Street.

The people at Jane Street are often described as mathematical.

They're problem solvers in the most advanced way.

I mean, yeah, we're all only able to make money

because people smarter than us haven't entered these markets yet.

Describe your perfect counterparty.

I think it's just, like, someone who randomly, like, place orders

and has, like, zero information.

Yeah, someone who just logs in and just wants

to bet on anything that they see.

They're not making a sophisticated choice as to what they're trading.

They're just buying or selling whatever it is that's in front of them.

It's a fancy way of saying

that he wants to be against the 19-year-old

who's randomly firing off.

I'm 19 years old.

I work as a chef and…

I like to bet on Kalshi.

…used to scoring really well.

I think I've always been a little more impulsive

and maybe adventurous than, you know, my peers.

A lot of my friends I grew up with, like,

you know, didn't want to do crazy things as much.

Crazy things like what?

Gamble away all their rent.

- We've been undefeated. - So Kalshi is the sauce?

Thank you Kalshi.

When the Knicks made the finals,

that's when I would say started the peak of how much I was putting into the Kalshi.

I started with 1,000 dollars, you know, went up and down,

and then I borrowed another 1,100 from my roommate.

Yeah, and I lost it all, pretty much.

Kalshi.

I don't understand, but this is going very well.

Gambling can be incredibly dangerous

and problematic for a lot of people.

It's especially true for young people.

I mean, we just saw Timothée Chalamet on TV saying,

"Sign up for Kalshi, it's great."

And one of the things that is most dangerous, in my opinion is…

an influencer saying how they paid their rent

by guessing the weather or some person on YouTube

talking about how easy it is to get rich quick.

The more people you expose to that vice,

the more people who are going to have serious problems.

…will be Spain against Belgium in Los Angeles this Friday.

Tonight, I'm lucky.

We can see it, the final screen, which isn't much, you know.

Now my portfolio is 300 dollars and it's pending payout.

It has been the cause of significant stress

like I haven't paid my rent for a month because of this specifically.

You know, I can say, "No, it doesn't have that much of a grip on me,"

but clearly it does a little bit.

As of right now, I have 57 dollars in my checking account.

Did you ever consider putting limits on your Kalshi account?

Yeah, there's a limit on my Kalshi account.

It's whatever I have in my checking account is the limit.

All right. I'm going to hit the button in three, two, one.

My name is Dustin Gouker.

I'm the host of this podcast, The Event Horizon.

We're here to talk this week about prediction markets.

Over the course of the World Cup,

Kalshi has had the biggest days it's had in its history.

I don't think even I had a sense of how big this would be for Kalshi.

Prediction markets are the fastest growing industry this side of AI.

I have no doubt about it.

These companies have gotten big really fast.

Everything is disrupted by this.

It's like, it's changed how we view the world.

Polymarket kind of dominated for the early 2020s.

They're crypto native

and mostly unregulated offshore until recently.

Kalshi was doing this totally differently.

We spent four years getting regulated before we launched a single product.

We have more than a thousand markets

across politics, entertainment, culture.

But the billions of dollars we're hearing are not

on real-world events that really matter.

Sports are about 85 to 90%

of trading volume at Kalshi right now as we sit here.

It may not be legally gambling,

but what is happening is a 100% just gambling.

Kentucky's Attorney General is suing the prediction market platforms.

…accusing them of facilitating illegal sports betting.

That's what all these court cases are about.

Because gambling has always been the purview of the state.

A year and a half ago now, Kalshi said, we're going to offer this,

but we're going to do it under federal law,

no different than other exchanges where you can buy a stock

or sell a stock.

We don't have to worry about state laws.

We are legally under the federal government

and that's it.

Whether something feels and looks like gambling

doesn't necessarily make it gambling.

Speculation exists in all financial markets.

There's this patchwork state-based solution

where every single state is like some sort

of weird backdoor lobbying.

The CFTC started off just being very hands-off.

Then we got a new chairman of the CFTC, Michael Selig,

and they became not just hands-off,

but an active proponent of the industry.

Why is he doing that?

I have to say this in a way that won't get me in trouble. Let's see.

Some people will argue that it has to do with corruption.

Some people will say it's just deregulation.

I'm not here to pontificate on that.

It's hard to, like, separate the fact that Donald Trump Jr.

is an advisor to both Kalshi and Polymarket.

Certainly, the president, his family has a vested interest

in the success of prediction markets.

And we have a CFTC that is being very friendly now

towards prediction markets.

There's agreements and walls that are put in place

such that we're not dealing with any members

of the president's family when it comes to policy.

We don't engage with the president's family

on any of these types of issues.

So in my belief and understanding there is no sort of conflicts of interest.

The prior administration didn't like the prediction markets.

I mean, that was very clear.

They sought to ban the product

with respect to political prediction markets.

The courts threw it out and then we saw the gates open.

Prediction markets are absolutely exploding.

Events in pop culture and tech and sports and climate

and the world and literally anything you can think of.

I've been in the seat for about six months now

and there's no clear rules of the road yet,

but we're trying to put those in place as soon as we can.

What's your message then

to states who are trying to limit prediction markets?

The law is clear.

The law provides that the CFTC has exclusive federal

regulatory authority over these markets

because they are national markets.

To any state that seeks to circumvent federal regulation

and replace federal law with state law,

we will see you in court.

An exclusive interview is Polymarket founder

and CEO Shayne Coplan.

…bounced around this sort of startup tech crypto scene for a while.

This NYU dropout crypto bad boy.

He's now a billionaire.

I think that when people think about prediction markets right now,

all they think about is sports.

I love sports, but…

I didn't start Polymarket for it to be a sports site.

I found myself in a lucky position.

It was during the pandemic.

I was broke.

I was living in the Lower East Side.

And I was like, when are things gonna open back up?

When people talk about the vaccine, when's it gonna be ready?

When's shelter in place gonna be over?

Are things gonna go back to normal?

And I was like, this idea

of information markets is the perfect…

this is the perfect use case in the perfect moment.

And I think because of a mix of my nerdy passion of markets

and this sort of like academic literature

about what today we think of as prediction markets,

plus maybe just enough creativity

and being so broke that I had nothing to lose.

The triad of that, I was like,

"Screw it, I'm going to go build this thing."

You know, when Polymarket really glowed up and became a thing,

it was all about politics.

I think the real watershed moment, the inflection point,

was during the first debate between Biden and Trump.

With the COVID…

When Biden started stumbling with his words,

the Polymarket for him dropping out was skyrocketing

and the Polymarket for him winning was tanking.

And someone said to me, it was like a really funny quote.

They were like, "Shayne, there's really two things that can happen here."

"Either he'll drop out and you build one of the most important sites in the world

or nothing's gonna happen and you've lost all credibility,

no one's ever gonna take Polymarket seriously again."

I was like, "Okay." Like, you know… Like, let's see what happens.

We are coming on the air at this hour with breaking news

President Biden has just announced that he is ending his re-election bid.

When he dropped out, that was a moment.

Just a stunning announcement from…

And then Election Day was this crazy moment where

the way that the market moved that night and called Trump winning

when the TV stations were still talking about, "Oh, it's neck and neck."

At the very end, we find a tie nationally,

49% for Harris, 49% for Trump.

Harris having the slight edge over Trump

in the latest national poll, very slight.

Polymarket was spot on the entire time.

That was one of the most gratifying moments ever,

just because the idea worked.

The idea worked.

And from that moment on, there was the level of credibility

that Polymarket had and the way people thought about it

had just changed entirely.

So prediction markets have gotten very popular,

but there hasn't been a steady evolution.

Another exotic idea from the Pentagon's

Defense Advanced Research Projects Agency,

DARPA.

A futures market, if you will, in terror.

In 2003, the intelligence community

was planning on launching public markets

in geopolitical events called "the policy analysis market."

It was going to be open to anyone.

The hope was that the collective judgment of that market

would yield some useful information for the U.S. intelligence community.

What they mostly wanted to forecast were things

like the political stability of regimes or what was going to happen

to oil in upcoming years.

But when they went to work and kind of advertised the market,

they also talked about things like,

whether or not there would be a missile attack from North Korea

or betting on assassinations.

There was this just massive backlash against it.

The federal government is encouraging people to bet on

and make money from atrocities and terrorist attacks.

You're gonna make money if terrible things happen.

Why are we potentially creating an incentive for people to,

like, go out and try an assassination?

It is a tragic waste of taxpayers' money.

It will be offensive to almost everyone. Can you imagine…

And the amazing thing is, as soon as there was any pressure, they folded.

I mean, the whole thing was over within, like, two days.

I think the main thing that has changed, honestly,

is that we are just much more comfortable with gambling

than we were 20 years ago.

So when you give people the chance to bet on pretty much anything,

it gets complicated really fast.

And it seems like there are three big issues,

let's call them the "Dark Side of Prediction Markets."

The first one is insider trading.

A U.S. Special Forces soldier who helped to plan the January capture

of Venezuelan President Nicolás Maduro has been indicted.

Now pleading not guilty.

Authorities say he won more than 400,000 dollars

using classified information to win on Polymarket.

Polymarket says it referred the suspicious bets

to the Department of Justice.

The second problem is the problem of people

gaming the things that are used to measure the outcomes.

This involves tampered weather data.

France's national forecaster has filed a police complaint

after detecting suspicious temperature spikes

at Paris' Charles de Gaulle airport.

Somehow the equipment was tampered with, maybe a lighter, maybe a hairdryer,

to give this five-degree Celsius spike in the reading.

Third, and I think by far the most consequential,

is when the existence of a prediction market,

actually changes what people do.

There was a Kalshi market

on whether or not George Santos would show up

at the State of the Union address.

I'm going to be there for the State of the Union

in the gallery, guys.

Santos had reportedly made a bet on Kalshi on the "no" side of the contract.

That is, he would not show up.

During the address, he posted, "Watching State of the Union

from an airport TV was not part of the plan."

By skipping the speech, sources say he pocketed

tens of thousands of dollars.

I do think going forward, they're just gonna have to figure out

how to manage this.

All right, so where are we on requesting materials

from the traders in Georgia?

He keeps spamming our inbox.

Because the account is frozen?

Yeah, yeah.

I suspect that that person's just nervous also

that there's an inquiry into their activity.

Any regulated financial institution is going to face

people who come to commit financial crime,

whether it's money laundering, whether it's insider trading,

market manipulation, etc.

So I lead our investigations and the enforcement actions

that we undertake.

Our team's grown quite a bit in the last year.

We have about 15 to 20 employees,

individuals who are just focused on surveillance.

We have individuals who are surveilling for fraud,

and then also a legal team.

We've hired surveillance analysts from the FBI.

We have people with backgrounds at the CFTC

and the Department of Justice.

There's been a significant increase in our investigative and referral efforts

over the last six months in particular, just as the exchange has grown.

Our surveillance algorithms are running over every single trade

happening on the exchange.

When they demonstrate some anomalous behavior,

whether that's a very well-timed trade, a pattern of very well-timed trades,

a very significant price jump that occurs right after an unusual trade,

all those things might trigger a trade that comes across my desk

or the surveillance team's desk.

So, then…

There's probably a 100, 150 each quarter that are meaningful investigations

that may lead to some finding of wrongdoing or disciplinary action.

And we've made dozens of referrals to law enforcement.

Any new product or evolution in technology

leads to really smart bad actors figuring out how to game that system.

And the key is to try to stay one or five steps

in front of them at all times.

You won't always succeed at that.

This is one of the big things that I spoiled myself with.

This is paid for by prediction markets.

With the press of a button,

you can go from a sunlit room to what becomes total darkness.

Brought to me 100% by Kalshi.

My wife would not let me spend this money if it wasn't just like bonus money.

Back in March of 2024,

Kalshi really started to hit the culture markets hard.

In theory, their music and movie markets,

the way that you win 'em is by using math.

So, I turned, you know, a 10,000 dollar deposit

into over 200,000 dollars in about six or seven months.

The most common plays that I would do on Spotify

is who will get number one during a given month.

June 28th…

Talk to me, talk to me

…I noticed some weird pricing on Olivia Dean.

Somebody thought that there was a more than 11% chance

Olivia Dean was going to get first.

And I thought the true odds of Olivia Dean getting first place

naturally was zero.

This was an old song.

When I dug into the details, I was very concerned.

The data that I was looking at is the top 200 songs.

Most of 'em saw a drop.

Two of them were newer songs, like newer small songs.

It's not unusual for those to go up,

but for a well-established song to go up almost 20%

like this Drake song did,

or 7% like this Olivia Dean song did,

this is a very strong sign that fraud was happening.

In theory, somebody is stream botting or stream boosting.

It's just artificial, automated ways of "listening to music"

where nobody's really listening to it.

They're just trying to run up the numbers.

So, at this point, I had 17,000 dollars that Drake wouldn't get first place,

and I had 13,000 dollars

that Olivia Dean wouldn't get first place.

And I was quite worried.

So, I started sending emails. I emailed Kalshi.

I emailed Spotify saying I was completely convinced

that the Drake and Olivia Dean streams were being botted,

but they didn't seem to take it very seriously.

Then the results come out, and I look at who's in first place,

and it wasn't Olivia Dean.

And it wasn't Drake.

It was Malcolm Todd.

Like, what? That makes no sense.

Malcolm Todd wasn't even on the radar as a possibility.

And if you look at this chart, you can see, boom,

just this huge spike.

So, his streams went up by 70% in a single day.

And then they paid it out, and then I was pissed.

Spotify removed the streams.

And they admitted that they were fraudulent.

But then in seeing how Kalshi handled it,

how they just stopped replying, I liquidated my Kalshi account.

So, I withdrew maybe 220,000 dollars?

Dad!

There are individuals who take a look at something and say,

I can conclude this is bots and it's manipulation,

and they may very well be right.

But from a legal perspective,

you need evidence to make that determination.

You can't just say it looks like a duck and it quacks like a duck so it is.

We're gathering the evidence we would need

to make that determination,

but that's pretty much the most that I can comment on

in terms of specifics about that.

Okay, Patricio.

It's kind of the Wild West right now.

Regulation has not caught up to what these markets are doing at all.

And as long as it's the platforms basically policing themselves,

they're going to grow as much as they possibly can…

Gonna go and get a goal!

…offer as many markets as they possibly can,

and consequences be damned.

It is day 11 of the US-Israel war with Iran.

The strikes lighting up the night sky

and sending people rushing to shelter.

My name is Emanuel Fabian.

I've been working for The Times of Israel

for around six years now.

I basically cover everything related to the Israeli military.

I'm at this point covering the Iranian attacks on Israel

and Israel's attacks on Iran.

On March 10th, there was, you know, one of several missiles that day,

which struck outside the city of Beit Shemesh near Jerusalem.

They reported there was no injuries, no damage.

There wasn't anything particularly unusual

in the grand scheme of things of this war.

Much later that day, I get kind of an unusual email,

essentially asking me to change my earlier reporting.

And they were claiming that the missile that struck was fragments

that were following an interception of a missile.

And I respond to them and said,

"Look, residents told me that they felt a massive explosion

and a shockwave that shook all their windows."

And the army also confirmed to me that it was a missile that struck the area.

And then I started getting a barrage of messages.

They wrote here, "If you do not correct this by 1:00 a.m. Israel time,

you are brining upon yourself damage you have never imagined you would suffer."

"You make us lose 900,000 dollars,

we will invest no less than that to finish you."

It was scary at that point. I'm married. I have a young daughter.

I didn't know what this person was actually capable of.

At that point, it was very clear to me that it was bets on Polymarket.

Essentially, the bet was,

"Did Iran strike Israel on a specific date?"

You can see that the amount of money

that was bet here reached 23 million dollars.

Those who had voted "no" were the ones trying to convince me

to change my report and to say that it was intercepted.

But I was not going to change the story

and it was going to stay exactly how it is.

It wouldn't surprise me if there are many more cases.

Journalists being threatened to change their reporting,

I don't think I'll be the last.

Prediction markets are a cesspool.

Even if it is legal, right, is there something immoral

or ethically questionable here about betting

on geopolitical events when lives are potentially at stake?

We haven't done a good enough job in terms of, you know,

distilling why we do what we do.

I know that we are probably in some, like, vibe debt, maybe,

in terms of just how people kind of

group Polymarket in with a lot of other stuff.

It's the latest allegation of insider trading on prediction markets.

Someone opened an account on Polymarket

and now they can make over a million.

What are your thoughts on this? This is just another coinky-dink.

Kalshi is proven itself over the last few months.

We are applying these rules no matter who it is.

If somebody is going to try to cheat, we will catch them.

It's not some sort of offshore thing where it's done in the shadows.

It's done right here in the middle of our financial system.

I know what happens in this office. I know the conversation we have.

I know what I care about and what drives me.

And you have to kind of oscillate between cutting out the noise,

but also understanding people's criticism and concerns.

Maybe there's things that you missed that other people are flagging.

And maybe they hate you, but maybe they're actually making some good points.

This is inherently evil and bad.

Do you think Kenzie's gonna do the splits on Love Island?

It feels nihilistic, right?

It feels like, why are we betting on everything?

There's a place for prediction markets. I think they should definitely exist.

I think they have values.

I just think there needs to be more guardrails,

more thought put into how this industry

- has come about and where it's headed. - Come on!

Right now it feels like all gas, no brakes.

When this is everywhere and you have a completely gamblified world…

people are not going to integrate it healthily into their lives.

And I'm as guilty of that as anybody.

I'm kind of just letting it ride.

When everything's a market,

the opportunities for cheating are basically endless.

That's a reality that we're going to be facing now.

And it's going to be much more difficult to sort of

find what's true now.

And that, I think, really worries me.

With a couple of months to go until the midterms,

we've already seen volume that's far exceeded 2024.

What I'm most interested in about them

is their usefulness for forecasting the future.

And these midterms are going to generate a lot of interest

because there's a lot at stake in them.

And so in that way, this is kind of

one of the bigger tests of prediction markets.

I think prediction markets have definitely hit critical mass.

The growth in the prediction market has been so fast because they work.

We're putting the prediction markets data next to the news, next to polls,

next to everything else, so people can look at everything

and make their own independent assessment.

I think that it's inevitable that everyone will be

looking at it to kind of understand what will happen.

The only thing that you have to believe…

to believe that prediction markets are going to keep growing the way

they've been growing, is that there's going to be interesting news in the world.

I feel like there's so much work left to be done

in terms of the inventive side of prediction markets

and what could be that isn't yet.

We're very committed to this vision because we think it's one

of the most important things we could be working on.

And I feel like if I don't go and invent that

or realize that vision, it probably won't happen.