Are Prediction Markets Ruining Everything? with Chris Beam

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And there's a hot new friend that's helping Americans lose money faster than ever before. Thanks to prediction markets, you can literally gamble on anything now. Nobody was putting money down that there be an American Pope, but you were. Yeah, and his odds were 250 to 1. Google engineer accused of using confidential company information to win more than $1 million on Polymarket. Tell she lets you legally trade on anything. Tell me make big money from Polymarket. You're 95. I just want to infinite money glitch on Kelsey. This is a strategy that people will usually make hundreds of dollars a day from their count. If you've never heard of the prediction market companies, Kelsey and Polymarket-- I honestly don't know how you haven't heard of them-- because they are literally everywhere. If I see another Kelsey or Polymarket advertisement-- Timothy Shalamet ad, street signs, cable news, cairons, the Golden Globes, podcasts, wait a second. Wait, didn't know. Just get this, get this out of here. We are not running a prediction market on this show. I have not taken money from Polymarket, OK? Let me make that very clear. And of course, I am not going to make a Drake show. I haven't done those since Patriot Act. I am in recovery, plus Kendrick killed him. He's already dead. Now, Kelsey and Polymarket have exploded in popularity since they're founding in 2020 and 2021. And it's easy to dismiss them as the latest internet get-rich-quick scheme, like NFTs, or Gogecoin, or Yodeling in a Walmart. All of you said, "I hold all the last-one-digit goodbye." But this is on a whole 'nother scale. I mean, the sheer magnitude is freaking nuts over the last year. The amount of monthly trading on Calche and Polymarket went from less than $5 billion to $24 billion in only seven months. How are these markets convincing millions of people to set their savings on fire like they're the fucking Joker? All you care about is money. Well, part of the fun is that bets are only limited by people's imagination. A market can be created around any yes or no question. Like, will Jesus return before 2027? Currently, a 2% chance feels high. Or whether Mr. Beast will be a presidential nominee in 2028. Currently, less than a 1% chance feels a little low. Now, those bets genuinely feel like harmless fun, but some of these markets are far more fucked up. Like bets on drug trial results, or US military operations, or how many people the Trump administration will deport. Look, I'm not a gambler. I have never understood the appeal it is reckless. It is shady. It's what Tony soprano does when he's not cheating on his wife. It's her arm, you guys. But Polymarket and Calche have done a great job of rewriting that narrative. Gambling isn't shady anymore. It's a cool new way to make some money during these trying times. These companies are on your side. Hell, Polymarket even opened up a free grocery store for a day in New York City. So you know they're the good guys. Why are you here? I'm here because they, Polymarket, which I've never heard of until now, they are giving away free groceries. Inflation is across the country. There are many families that are in the visual struggling to provide for their families. Now, you might be thinking this is a cynical ploy by billionaire grifters to exploit vulnerable people, desperate to pull their family out of poverty, but you are wrong. I'm not sure why you're wrong, but let's just say I can't afford litigation insurance. So use your imagination. Gambling has now become so normalized in America that more than a quarter of Gen Z investors treat sports betting as part of their legitimate financial plans with over half of them putting money intended for investing into sports betting. And look, I get it. Young men are stupid. They do parkour. They date Chelsea when they know she's not right for them. But prediction markets play directly into the financial nihilism of 20-somethings. You know the whole, like, everything is red, man, it's late-stage capitalism. It's all fucked up. So get your bag. I understand that. Influencers on TikTok are literally advertising what a great money hack they are. If you're right, you'd get back $150. No way. That's a lot. Put that one in for me. Like, at this point, I am convinced that an astronaut is going to land on the moon. And there's going to be some type of advertisement for fucking Kelsey right there on the moon. I mean, why even go to college when you could win $100,000 on a bet that Donald Trump says McDonald's? Like this guy. I'm saying, "Dawls in January." [MUSIC PLAYING] Good deal, it's usual. But you know, in the old days, McDonald's-- But the more closely you look at prediction markets, the more you realize they aren't away around the rig system. A lot of reporting makes them feel like they are a rigged system. Journal analysis of 1.6 million polymarket accounts found that losers vastly outnumber the winners. About 1/10 of a percent of accounts take the majority of winnings. 1/10 of 1% making all the money? I mean, what is this? America and a Wall Street Journal investigation found that a lot of those influencer videos, the ones showing off their big polymarket payoffs, they were fake. Including the guy I just showed you, who won $100,000 on the McDonald's bet. They even set up a fake URL to look like polymarket. But the L was replaced with an I. Influencers, who have worked with Polymarket, told us that the company gave them a password to access the website so that they can create real-looking trades. All these fake wins are part of a campaign that's gotten over 140 million views. That's right, folks. I hate to break it to you here, but people online are deceitful pieces of s---. But hey, maybe I'm going too hard on these guys. Maybe I'm just jealous that I couldn't be a billionaire by age 25, like Kalshi's CEO, Tariq Mansoor. It's like a way to monetize your knowledge. Same way like a newbie driver monetizes their free time. When I was 25, I was still doing Taco Bell commercials. Live Mass. Tariq has defended himself against his critics, assuring us that prediction markets are not unregulated casinos, ruining the minds, bank accounts, and future prospects of a generation of young men. No. Prediction markets are all about finding the truth. They quote, "Take debate from the realm of subjective emotion to the realm of objective math." Sure. Maybe the objective math is right. Maybe there really is a 2% chance the Prophet Issa will return in 2027. Because look, I don't have all the info. Maybe some insiders have a better sense of this. Like the Pope? Or Jesus is a teleprompter guy. Although that reminds me of another issue that has cropped up a lot with prediction markets. A White House teleprompter operator allegedly used inside information to make more than $100,000 betting on the President's speeches. A special forces soldier has been charged for making more than $400,000 by betting on weather or not. Venezuela and President Nicolas Majuro would be removed from office. Recandidates for Federal Office have been suspended from the prediction market platform, Kelsey, accused of a kind of insider trading on their own elections. Now, technically insider trading is prohibited on these platforms. But a lot of the open questions being bet on are things that hundreds of insiders are going to have the answer to way ahead of everyone else. Like, when an album is going to be dropped or whether I'm going to make a joke about Drake in this piece, which I am not. These are things tons of people have information on, which makes the whole thing a little sus. In response, Senator Chris Murphy put forward legislation that would ban betting on government action or markets where one person controls the outcome. These are fundamentally corrupt markets, rife with insider trading, and incredibly perverse incentives. One of the areas where this is most obvious is when people bet on US military actions. Researchers have found that a small group of people making these bets are incredibly lucky. We spotted nine polymarket accounts, all connected, who made collectively 2.4 million dollars. $1 million, betting almost exclusively on US military operations. 98% win rates. 98. 98. 98. Lock alone cannot explain those numbers. Goddamn. If only we had a 98% win rate when it came to actually fighting wars instead of betting on them. And wave one, let me say wave one. Sider trading isn't the only way these markets can be abused. They can also be abused by market manipulation. Literally changing the outcome of a question to help you win a bet. For example, Polymarket lets users bet on the maximum temperature in major cities. In April, the temperature reading at the Charles de Gaulle airport in Paris, France momentarily spiked, which made a long-shot Polymarket bet on Paris temperature pay $21,000 to a single user. That led police to investigate whether someone tampered with the airport thermometer used to determine the winner of that bet. Market manipulation has become such a problem that platforms are now reminding people, hey, don't break the law. On one Polymarket bet about whether or not a gorilla would escape from the zoo, the rules point to the specific terrorism law. You would be breaking if you helped the gorilla escape. This is f***ing nuts. These companies are creating thermostat ISIS and Harambe ISIS. Meanwhile, they're claiming the moral high ground throwing out free groceries like Drake in the God's plan video. He seems like such a good guy. What the f*** is going on? I literally told you, don't put that in the. If that was you, you're gone. You replaced my AI. I have no problem doing that. Get out. Now, the obvious solution here is for government to get involved and clean this mess up. Right now, prediction markets are regulated by the CFTC, which is not a community college in central Florida. It's the commodities futures trading commission, which was established in the 1970s to regulate food prices. Basically, it is so outdated, it might as well be a community college in central Florida. Their own chairman doesn't even believe in them. Just following our fantastic meeting yesterday at the White House with the president, you know, he took us back to the. Oh, well, after the meeting and he asked me, which is the more powerful agency is at the SEC or the CFTC. You know, I told him it might be the CFTC these days, but now I'm just kidding. Oh, yeah, man. Yeah. We f***ing suck, man. We are dog s*** and our commission is for f***ing losers. Now, ideally, an industry that's basically gambling would be regulated by the state gambling commissions. But CalShi and Polymarket argue that wouldn't be appropriate because their users aren't gambling. Their users are trading, which is a wild thing to say about websites that are used for a s*** load of sports betting. But there's a good reason why prediction markets want to be treated as trading and not gambling. It's cheaper. If you're a state-regulated sportsbook in New York, you're paying a 51% tax. You have to pay a licensing fee to offer a sportsbook in that state, and then multiply that by every state that has sports betting that's been legalized. Regulated sportsbooks have to do something on problem gambling. You have to provide a number that people, if they want to get help, they can get help. I know it seems kind of dumb, but putting the gambling addiction outline on a product really changes the vibe. Do you know how much money my cousins would have saved if every pack of Pokemon cards had that number on the bottom? You were never going to get a special art Rare Ancient Blastoy's Card Asif. The odds were won in 120 packs. You f***ing idiot! The defense of prediction markets has even gone a step further. Professor Robben Hansen, one of the intellectual godfathers of prediction markets, is out here, saying that they should be protected free speech. Betting on questions that matter, that should be a constitutional free speech issue. There are things you can say with bets that you can't say through protests or letters to the editor. Big things you can say, you can get a lot of information this way. Cool, so just so I'm clear. Free speech is anything that gives you information. Hey, do you remember when gambling icon Al Capone beat that guy to death with a baseball bat in front of all those dinner guests in the Untouchables? Yeah, that was in murder. He was just imparting important information to the marketplace of ideas as the founding fathers intended with a hefty wooden object. And the most unsurprising fact about all of this is that this entire industry is being co-signed by Al Capone's biggest fan. The late great Al Fonse Capone, Al Capone was the greatest gangster of them all. The Trump administration is actively suing states trying to regulate prediction markets. Meanwhile, Don Jr. is an investor in polymarket and an advisor to both polymarket and calcium. Now, you might assume the companies did this to get access to the president through his son, but you would be wrong. Stop being a hater, because polymarket CEO Shane Coplin explained the real reason in an interview with 60 minutes. I think there's going to be people watching who think that you put the president's son on your advisory board to get influence, to be able to protect yourself. So, it's definitely not to protect myself, right? I'm a young entrepreneur. If I have people who believe in what I do, who understand how politics works and help guide me and teach me, you know, there's nothing wrong about that. The idea that Don Jr., the man who makes Kendall Roy look well-adjusted, could teach a human being about anything, is insane. Unless, of course, you want to learn how to do a line of cocaine off your own arach penis. Now, to talk about all of this, not Don Jr.'s arach penis, everything that I talked about before that. I decided to sit down with a reporter who has been covering prediction markets in depth. Bloomberg's Chris B. Calci Polymarket. The way they pitch themselves is as sources of truth. I was just interested in to what extent that is true. We talked about how prediction markets are creating havoc in ways you might not even realize. The more prediction markets kind of encroach on different parts of our lives, I think it's going to make it harder to trust what we see. The economic impacts of this industry, especially on young people. The whole thing can be kind of bleak. It forces you to engage with the world in this very kind of calculated way. And what is being done to try to rein these platforms in? I think there's a strong possibility that this backlash leads to some sort of crackdown. So stick around, there's an 80% chance you'll enjoy the rest of this episode. In a 30% chance, I make some kind of basketball analogy and a 1% chance. I mentioned the phrase honky-tonk, which I just did, so I guess you're bet paid off. Most of us think bank fees aren't annoying, but unavoidable part of life, like taxes or a meal prep. But what if I told you they actually aren't? If you start banking with chime, you can make the most out of your money. Chime doesn't gage keep rewards and pile on hidden fees. They offer no monthly fees, no overdraft fees, and no minimum balance fees. Seriously, you can overdraft up to $200 with spot-me fee-free. 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Do you think prediction markets improve trust or do you think they undermine trust? Well, I think if you ask the prediction markets, the platforms, they will say this is about building trust. It's about helping people understand what the truth is. I think in some cases that can be true. We probably have a slightly better sense of what some election outcomes will be compared to just looking at polls because of prediction markets. I think there is this other piece of it that the platforms don't talk about, which is that when prediction markets exist, it makes it harder to trust what you see. What do you mean by that? One example is a while ago there was a prediction market about a White House press conference and how long it was going to run. Famous 65 minute White House press conference. Yes. Okay. Got it. Exactly. Yeah. So explain this to me. So basically there was a market where you could bet how long the press conference was going to go Yeah, and one of the options was to bet over under 65 minutes, right and the press secretary Caroline Levit cut off the press conference seconds before the 65 minute cutoff. Thank you all very much. It's great to be back with you and people lost their mind not because they had a ton of money riding on this ultimately it wasn't that big a market but because it looked like Manipulation they thought that oh she must have purposely you know cut off the the press conference in order to Help out someone who was betting on it um and I bring up that example just because It seems like that's not what happened like I said it was a thin market barely anyone made any money on this but It introduced doubt as to what you were seeing and so the more prediction markets kind of encroach on different parts of Our lives, you know whether it's politics or entertainment or or whatever I think it's going to make it harder to trust what we see you're saying it's it's gonna tickle that little conspiracy theory part of our Yeah, we all kind of have a little bit of like was this a setup are they in on it totally so Donald Trump is incredibly unpredictable You insert him with prediction markets what type of chaos does that create? The kind of chaos that hugely benefits prediction market companies So these these are companies that For them uncertainty is the best possible thing because that means that more people are going to be betting on On these markets when there's more uncertainty when you're not sure what's going to happen And so you could argue that president Trump is the greatest gift that prediction markets could have asked for One because he's his administration has taken the Extremely friendly approach to to regulating prediction markets, but also just because You don't know what he's gonna do next so if there's a market on Will there be a peace deal with Iran? You know today he says yes In the morning Iran says no they deny it, you know in the afternoon They say yes, and he says no and you know this just plays out in the in the prediction markets where it's just generating unbelievable amounts of volume all of which the fees accrue to the Companies in your reporting, you know when we talk about prediction markets or betting and I don't want to use them interchangeably But that idea of putting a financial incentive behind a particular domain. It was usually the domain generally was sports In your reporting, what have you found when you put that domain on literally everything it could be anything from You know A video that you see on YouTube to a natural disaster to Local politics what ends up happening is a byproduct of that. I think a couple things a couple things happen as a result That question makes sense. Yeah, yeah, definitely. Um, I think a big part of it is that Just as a user you start to see the world in terms of Narrow slices. It's like when you're betting on a baseball game, okay, you know say you're you're doing a parlay bet You know you're combining you know how many hits someone's gonna get versus home runs versus walks whatever um It shifts your attention. It shifts what you're looking at as you watch the game instead of kind of enjoying the game as a holistic experience Yeah, you're paying attention to these narrow things which is not necessarily better or worse Maybe you're someone who really enjoys. Let me tell you something. It's gotten far worse I go to a lot of live sporting now and there's a lot of dudes that are all up on these platforms and they're They're probably into quite a bit of coke but they are on one and they're ruining the overall experience But I think what you're saying is true they have the inability to zoom out and enjoy the whole game and they are obsessing about how many rebounds Yeah, I think the town's is gonna get in the third quarter. Yeah, and it's fucking up the vibe Yeah, well, and and and I think that same phenomenon applies to the rest of the world where sure if you start betting on elections It might get you into politics more you you might get more interested in it you might read more about it But it's going to be with these purely for these purely economic reasons um and I think there's a There's a risk in Seeing the world in purely economic terms purely transactional terms that takes away from the experience of You know enjoying things or experiencing as human beings. I mean what you're talking about is is pretty dark And we're gonna get into that because you you you cover it and you're reporting But one of the things that you know Cal sheet and polymarket have both said is they've gotten a ton of attention when it comes to political predictions And one of their critiques of traditional polling is hey traditional polling is irrelevant because who who literally has A landline is picking it up and giving an answer to a pollster I've never this has never happened to me in my life nobody that I know has also participated in a political poll But is there some validity to this argument that hey polling is a relevant you know Cal sheet is far more reliable. I'm telling you where the American public stands So a lot of scholars have looked at this and and tried to study whether Prediction markets are more or less accurate than polls um overall it it looks pretty good for prediction markets really Yes And but it depends it depends on the the size of the market so at the Presidential level those prediction markets tend to be extremely Accurate because you have tons of people betting on it. There's a huge amounts of liquidity It's harder to manipulate as a result But when you move down the ballot when you're looking at you know congressional elections or local, you know, mayoral elections The the um amount of people betting is much smaller and therefore you could possibly Manipulate you could drive a candidate's odds up or down with a few thousand or possibly even of just a few hundred bucks Here's my question though isn't that Group also a particular type of person what I mean by that is per what I said about the dude who was coked out of his mind Fucking up the next game because he kept screaming about how many rebounds crawl on any towns is gonna gonna get in the third quarter Are the people betting on these particular platforms a particular type of person meaning they're not reflective of the American populace at large It's a particular type of coked out lunatic that wants to bet on this particular thing Does that make sense absolutely so that narrative um Was that I heard that a lot in 2024 uh in the run up to the the presidential election because you probably remember Both poly-market and kalshi had trump up disproportionately to compared to polls And so a lot of people were saying oh, you know, these are just crypto bros who want trump to win and they're like boosting his odds as a result um There might have been something to that but it ended up being correct and um That and since then prediction markets have exploded in terms of popularity in terms of volume And so the more people we have by what degree was it correct was it Did it um did it predict it within a pretty close margin um I would have to go back and check okay and and compare um But if you looked at i mean obviously it's it's fluctuating over time um, but my understanding is that Uh prediction markets basically had trump favored um a few hours like it significantly favored a few hours before The networks called it so basically if you were watching poly-market and or kalshi you would have gotten a strong sense that trump was going to win significantly longer before you know cnbc told you how do you reconcile that with some of the election results that they've gotten that aren't even remotely accurate You know, uh, they had francesca hong and was constant over 95% chance of winning she lost lsaid and michigan over 90% chance of winning barely one angi next year in florida only about 8% odds of winning she won So how do you reconcile it with that? Yeah, I think i think they're wrong a lot still um, I think what's happening there is that um prediction markets are Taking a lot of different factors into account one of which is polls so if polls have something completely wrong I think prediction markets are more likely to get it wrong as a result um I don't i don't think that um Anyone saying that that prediction markets are perfect and the the academics that I talked to about this um It didn't seem like they were trying to carry water for the companies. Yeah, um It it seemed like what they were saying is that uh Polls polling has flaws for the reasons you were explaining about you know response rate and everything Um prediction markets have their own flaws as far as vulnerability vulnerability to manipulation or what have you Um, I think the best thing you can say for them. is that it's one tool among many, one indicator among many that you can look at in order to try to get a sense of what's going to happen in a race. You know, it's interesting. There's this old saying of the wisdom of the crowds. Based on your reporting, how wise are crowds? Well, it depends what you want them to. What you're asking is I'm terrified of them. Whether they're wearing jerseys or hats or tattoos, you name it, I'm generally terrified of crowds. I would say the same. I think if you're asking them to count jelly beans in a jar, they're pretty good at it. The idea behind prediction markets is that they're even better at it when you force them to put money on it. Because then you don't have people bullshitting as much, you could still have people trying to nudge the result one way or the other, but they would lose money, or at least they would make themselves vulnerable to losing money to other people who predict the accurate outcome. If there's a really narrow domain, say technology, politics, but if you happen to have a job where you're working on a very specific thing, surely there's a small group of people that have insider info. What do these platforms do to prevent insider trading? Well, we would have to distinguish between Kalshi and Polymarket. Kalshi overall has positioned itself as the adult in the room, saying they're cooperating with regulation, they welcome regulation, and that includes cracking down on insider trading or manipulation. They say that they have a lot of people in the company focused on rooting out possible insider traders. When you register, you can tell them who you are, you often have to say what your job is. If you're a congressional staffer, for example, or a journalist, or someone who may have inside information, they say they're keeping an eye on that. How much of an eye they can keep on that, how many people they can track at once in across thousands of markets, is kind of an open question, it seems like it would be extremely difficult. If you have a friend that has a cousin that works at SpaceX, well, now you have insider info. Yeah. They say, "Oh, we have AI sussing out these connections," and it's like, all right, it seems like a tough job, ultimately you're going to need human beings to verify those things, but I see what their argument here is, in the analog world, they had to get on their catch me if you can and really check the receipt, so to speak. In a digital world, is it easier to find these conflicts of interest? Are they able to track it down faster than they were in the past? Or is it even marketer now? Because so much of information is decentralized, you can do things pseudonymously, anonymously. Is there a kind of an easy way to back channel and just be on a signal, discord, or whatever and get your info? I mean, look, on the one hand, yes, there's more information out there about everyone, and so maybe it's easier to trace their digital trail. On the other hand, there's more things to keep track of. As you have more and more markets covering more and more narrow areas of the world, how many corners are you going to launch investigations into? The example that people talked about during the Super Bowl was who were betting on the songs that Bad Bunny would play, is his dancer responsible for keeping that a secret? Is that person's cousin responsible for keeping that a secret? How far out are you? Or the staff in the arena that heard him during rehearsals? Exactly. They could've put something together, and are they particularly nefarious? I'll give you one that's particularly hairy. I'm a North Cal kid, grew up in Northern California. Right now there's a polymarket bet for whether the next Google Gemini Pro model will be released by the end of September. There's a ton of people who work at Google that watch the show. There's a ton of people, half of Mountain View, work at Google. Maybe someone has a screenshot or a Slack message that can confirm or deny whether or not that's going to happen. So should that bet be legal? It's an interesting example because there've been very few cases of prediction market insider trading being prosecuted. One of them does involve a Google employee betting last year on what would be the most searched Google query of the year. Prosecutors did go after this Google employee who made $1.2 million because he had that exact kind of information. What's interesting is that they didn't go after him for what we would call insider trading. They went after him for wire fraud. The idea was not that he was divulging secrets, but that he was stealing information from the company, like from Google itself. It's an interesting distinction because we think of insider trading in the context of security, stocks. You know someone gave me a tip and then I made a bet. Exactly. But in this case, the prediction markets are not securities. So it's not really clear that those laws apply, and so this is the new wire fraud. I mean, yeah, that's the term that they're going to use for and after it, yeah, got it. But so to really answer your question, there are so many potential insiders in so many of these markets that when you ask some of the leaders of these organizations, like what are you going to do about that? Of course, they'll say, yes, we're going to trace these bets and figure out who could be insiders and investigate it. But at a certain point, you reach a limit of what they're capable of. Yeah. Doesn't it become whack them all at some point where you're like, how many different markets, how many different domains, and who's going to be the internet slew that's keeping track of all of this? Yeah. And also it's ambiguous what the law even says about that, about the cousins, dog sitters of bad bunny's dancer. And so sometimes what they'll say at a call sheet or wherever is people who are participating in these markets need to just anticipate that there's going to be a certain amount of people who just know the answer to this. They don't come out and say, like, you know, insider trade is going to happen. There's nothing you can do about it. If they have suggested that you need to be smart about it and just have a sense, I mean, Chris is pretty crazy because already to get involved in one of these markets, you got to have a little bit of that paranoia brain of like, hey, something's a foot, yeah, you know what? I'm going to place a bet. You kind of got to be willing to dance with a devil a little bit here. But now you're inserting another layer of paranoia on top of that, which gets pretty messy. Are you saying that's already baked into the CalShi iTunes user agreement of like, hey, just so you know, if you click accept, you have to be willing to accept there is some insider trading going on. I don't think they would phrase it that way. And honestly, I'm not sure I would phrase it that way. Like, take for example, you know, a weather market. Yeah. If you have access to the nodes run by NASA that, you know, can tell you what the weather is like a split second before someone else like, is that insider trading? Like, I don't know. Maybe you just have a really good, it's certainly cheating. If you're going to place a bet on it, it seems unfair. But then again, there's so many of these markets, people are going to have different, they're going to have access to different levels of information on it. You know, if you have a Bloomberg terminal, like I work at Bloomberg, if you have a Bloomberg terminal, you're going to have better data on a lot of markets than people who don't have it. Right. And is that fair? Is it unfair? I don't know. But I think when you can apply that same logic to a lot of prediction markets, where if you're going to place a bet on it, you've to anticipate that they're going to be people with different kind of tiers of access. So just so if you were to play the game, just be aware that there's going to be other people that have a quote unquote competitive edge on you. And some of that edge is through information and access to it. Yeah. Hey, it's Julia Louis Dreyfus from The Wiser than Meat Podcast, among other things. And I've got a little holiday wisdom for you. Hosting during the holidays means lots of cooking, and that means your trash is going to be full of smelly, rotting food, yuck. So here's the wisdom. Get a mill food recycler. I did. We've had ours for years, and it has totally transformed our kitchen. It's unbelievable how much cleaner everything is now, plus it's so easy to use. You toss in basically any food you don't eat, peels, pits, meat, dairy bones. Last year we put in a whole turkey carcass, really. While you sleep, mill automatically dries and grinds all your food waste down to about a fifth of its size. That means at night you can fill it after a big elaborate dinner and by morning they'll be room for breakfast. Nothing rots, nothing stinks, no fruit flies. And my favorite part, no more of those gross, drippy mid-dinner garbage runs. If you want a cleaner, calmer kitchen this holiday season, go to mill.com/wiseer for an exclusive offer. That's mill.com/wiseer. Happy hosting. This is a bit of a spicy question. Just to play doubles advocate, aren't you biased by the fact that prediction markets are competition for journalism? Because a journalist may reveal inside information, right? According to anonymous sources. So then why do I need the New York times to tell me whether or not the United States is going to invade Cuba when I can go to Polly Market? They certainly see themselves that way. I think Polly Market, Kalshi, they kind of see themselves as an alternative to the news or maybe like an addition to the news. I find prediction markets fascinating and I find them useful in the sense of it's another data point by which to it's another lens through which to see the world. I mean, are you basically saying in all seriousness, you see it as a way of, hey, I do journalism, I do reporting, that's one way to kind of verify it within the blockchain, so to speak. And then you're like, hey, as part of my utility belt, there's also these prediction markets. And I can kind of cross check and verify. Yeah, and I don't think it's different from polling in that way where like, you know, the New York times will interview a lot of people. It will also conduct polls and you know, pair with Sienna College or whatever to run a scientific poll. And I think these are all just different tools that help us get at the truth. They all have strengths and they all have weaknesses. You know, I can interview someone who tells me something that's completely false or lies to me or would have you and prediction markets, likewise, could mislead me in certain scenarios. So inside information is clearly an issue in prediction markets. Yes. Yeah. Okay. But there's also market manipulation. What is the difference between these two concepts? So insider information is when you have some knowledge that the vast majority of people don't have because of maybe your job, maybe a member of your family can help you get a leg up on a certain market manipulation is when you have the power or ability to influence the outcome of a market. So for example, this is another real world example. Yeah. A few months ago, there was a weather market about, you know, what's the temperature going to be in Paris. And some guy went to the airport in Paris where he found one of the nodes that was measuring the temperature. And he brought a hair dryer and held the hair dryer up to that node until it drove the temperature up past a certain threshold. Yeah. Such that the bet would pay out for him. Got it. That's manipulation. So this hair dryer guy had his thumb on the scale. Yes. Yes. Exactly. And so, you know, that's one super narrow example. But there's a lot of different ways of manipulating. You could influence the metric itself like he did with the election market. For example, especially if it's a thinly traded election market, you could put a ton of money on one candidate, drive up their odds. Then some newspaper writes about how their odds on polymarket spiked and maybe they have momentum. Now, it can be this self-fulfilling prophecies. Exactly. Exactly. We're, you know, just by virtue of having money, you could help influence the outcome. Right now, prediction markets aren't governed by state gambling commissions. By the way, the moment I just read staying gambling commissions, I immediately think of boxing. And I'm like, this is all shady. Like the first place my mind goes to a shady, but they're not governed by state gambling commissions. They are governed by the CFTC. The leaders of Calcian polymarket say their users don't gamble. They trade. They hedge risk. So my question is, can we be serious? Sure. No, come on. Can we be serious? Well, let me rephrase that for real. Can we be serious? If Calcian stopped fucking around, can we be serious? If you understand the subtext of what I'm saying, can we please be serious? Yeah, absolutely. I think, look, what you're getting at is, if you ask your average person, is this gambling, is, you know, buying a contract on whether the Boston Celtics will win or not, betting on the outcome of the game, is that gambling or not? The obvious intuitive answer is yes. The user experience is the same. You use draft kings, you use Calci, the experience feels very similar. What these companies will tell you is that it's trading derivatives, in particular, a kind of derivative called an event contract, which is real. Event contracts exist. You can bet on the CME, the Chicago mercantile exchange on whether a company will reach a certain level of earnings or not. You can bet on events out there. Calcian Polymarket are saying that those events should include sports events. Therefore, it is trading derivatives. It's not gambling. What is the real reason that they don't want to be regulated like casinos then? Well, if they were to be regulated like real casinos that is by the States, they would need to adhere to every States law. They would need to pay taxes. They would need to give money to anti-addiction organizations to education. And frankly, they wouldn't have a business because for one, Calci, especially in the US, the vast majority of its trading volume is sports. So if you take out the sports, they would still be a business, but it would be much smaller. But more importantly, or equally important is that they rely on having large pools of liquidity to make these markets function. And if they had to, instead of having one big pool on who's going to win the presidency, instead if they had to have 50 smaller pools in one for each state, one adhering to state laws, they wouldn't be nearly as efficient or useful. And it wouldn't work as well for them. Sure. I mean, what you've basically elucidated is like, yeah, there'd be no real business here. There's no financial model that works for them. Yeah. Could Calcian Polymarket have succeeded without Donald Trump? It's a very good question. So Calci started, it launched in 2021, just with the handful of markets, you know, was economic indicators, boring markets. Yeah. In 2023, it filed application with the CFTC to allow prediction, sorry, to allow political markets. And initially, the CFTC said, no, this was under Biden, obviously. They said, it's too subject to manipulation inside or trading. Also, they said, it could hurt public trust in democracy itself. Right. So in, I think, May 2024, they said, no, they were overruled in October of 2024, a court said that, no, these political markets should be allowed. And that was just before the election when, you know, Trump won. But my point is just that that court ruling was before the Trump election. And so it's possible, I mean, sure, the Trump administration has kind of opened the floodgates for all these areas of deregulation, including prediction markets. I don't think it would have been nearly as friendly under Biden. But we were already seeing trends in the direction. Are you saying that the ball was already rolling in that direction, even if the Biden administration or another democratic administration put, put up some guardrails, it was already heading in that direction. Yeah. I think, I think it's likely that we would have seen some markets be allowed, such as politics. Look, we know who the usual winners are here. And this story is as tale as old as time. It's the usual billionaires, grifters, et cetera. Tell me about the losers. Who are the people that are losing out or on the other end of the stick here that are getting the short end? Well, a lot more people lose than win. It wouldn't surprise you to learn. All of these markets, the winners are dominated by, I mean, they're called sharps. They're basically people who spend all day, every day studying the markets, getting the best possible information. That's just basically chronically online people. Is that what you're describing? Well, you can be chronically online and lose a lot of money on free shipping. I don't know, I'm aware. I've been on Reddit, yep. Brother, I've been on Reddit. Yeah, yeah. So, I mean, in general, the people losing money is anyone who is not spending all day studying these markets to try to get an edge. And as they get bigger, as the markets spread into more and more areas, it becomes harder and harder to get that edge because you have sharps already there, but now you're starting to have hedge funds come in. You're having Wall Street market makers coming in who are using algorithms to trade. I think it just makes it harder and harder for the average person to turn a profit. Well, from your reporting, it seems like everyone's brain is getting cooked here, whether you're a Wall Street bro on Adderall or you live with your mother and you're in her basement and you're on Adderall, but you're talking about a generation of young men that their brains are getting fucking fried. I wanna show you a poll quote from some of your reporting where you talk about Austin Minton, a 23-year-old live streamer. So, this passage really stuck with me. Minton says he never used to pay attention to politics. Now, it's his life. He talks politics with his dad at the dinner table. I feel bad for him because every time I've done this with my dad, it's been a fucking nightmare. Lately, he's been watching videos of George W. Bush to beef up his knowledge of history. It gives you a real motive to be educated about something because without that motive, there would be no reason to learn about anything. That last sentence is so fucking dark. If I can't get paid, why learn? How did you feel when you were talking to Chris about this? Did this also leave you existentially sad? - Honestly, the whole thing I feel like it can be kind of bleak. The talking to traders about any of these markets, because I think it forces you to engage with the world in this very kind of calculated way. - Yeah. - I will say, I think it cuts both ways sometimes. I actually believe him when he says that he's been able to bond with his dad over talking about politics. I think that's probably true. There's something to that. But when the ultimate purpose is in order to make money, and he's also a live streamer, so this is part of his business, it just orients you to the world in a way where you're constantly looking for edge, as opposed to trying to learn something for its own sake. - Or there being a financial motive to it. Exactly, that's what I felt, which is this idea of why learn anything or do anything unless there's money to be made, which to me is a really kind of bleak way to look at life. - Yeah, I think, say you're watching a movie that just came out and you put a lot of money on who's gonna win an Oscar. We were watching down footage of watching some of these industry leaders talk, and it sounds like there's something kind of ideological going on here. The CEO of CalShi said they're replacing debate, subjectivity, and talk with markets, accuracy, and truth, and that his long-term goal for CalShi was to financialize everything and create a tradable asset out of any difference and opinion. So for me, this sounds psychotic. How does it sound to you? - It seems like it's a way of seeing the world that is foreign to a human being. People who just kind of go through the world wanting to engage with other human beings. - Yeah, and have subjective experiences and form subjective opinions, and see great value in subjectivity. I think the desire to convert everything to information, there are people who like that, who love it, who are attracted to it, and also attracted to the idea that can also create a greater good. It can help us have better information in the world. I don't feel personally attracted to that worldview, but I recognize that it's out there. - Everything that you're talking about and that the CEOs of these platforms are saying is it feels very libertarian. Where they go, "You know what? The price is the ultimate truth." Who cares what you think, who cares what I think, the price, that's the real truth. Is that just a cover for the grift? Or do you think they really believe that? - Oh, I think they really believe it. - I think a lot of people really believe it. But why? Because I think, as you say, it's a philosophy. It's this idea that markets operate in a way that is superior to, it's aggregating information. So in an election, I only have a certain amount of information about what's gonna happen, but maybe you conducted a poll and your friend, knows the candidate and someone else lives in the district and with all our opinions combined, that's gonna be more accurate. I don't think that basic idea is a grift. I think there's something real there. And I think the kind of prediction market purists who I met at Manifest at this conference, they're in it for the ideas, genuinely. - Let's get into the Manifest stuff. So you went to Manifest. This isn't Berkeley. It was the annual gathering of prediction market boosters along with speakers, attendees. They could bet on whether certain things would happen at the conference or not, including whether or not there would be an orgy. Now, is this a cult thing or just Berkeley being Berkeley? Can't it be both? - It's a great answer. - And I don't know if Polymarket has that as something you could bet on. - Good point. - So you start off the story in all seriousness with a guy wearing a gold sequin jacket and a silver hat saying that prediction markets are humanity's best shot, not a shot, best shot at establishing collective knowledge. Did you ask him if he had ever heard of books? He's written quite a few. - What was your response to him? - Well, so you're talking about Elias Ryukowski, who is kind of a legendary figure in the world of the rationalists. That's a whole rabbit hole we could go down of basically people in the Bay Area who believe in using logic and numbers and data to solve problems. I mean, they see prediction markets as collectors of data that are better than a book, that are better than any number of books because it will take the information from those books and put it together and then also put it in with prices from other markets and people who've never read a book or every piece of data imaginable and combine those. So I didn't ask him this specifically, but I think he would say books are great. He wrote an extremely long and quite famous piece of Harry Potter fan fiction. I think he would be a big defender of books, but he would say that when you're trying to answer certain questions or try to get to certain approaching universal truths that markets are better. So what's funny here, at least to me, is that a lot of these guys have this very high-faluten attitude when it comes to prediction markets. They want it to be an intellectual high-minded thing. When in reality the majority of the use cases are sports betting and who's gonna be a Taylor Swift sweating. It's like they built a slot machine but they want people to use it to write poetry for them, but that's just not gonna happen. I think that they, the sort of, as you say, like high-faluten high-minded use cases for this still exist in the sense that they want corporations to use these to make better executive decisions. They wanna use them to have a better sense of what inflation will be next month. Those use cases are out there and I think they are defensible from a philosophical perspective, also from a utilitarian perspective. There's also this huge number of markets that are clearly pointless. - Yes. you know, whether Pete Davidson shows up at the Super Bowl or not. Right. Who cares? And I care. Well, then you're in luck. Okay. But I actually asked Shane Copeland about this when I talk to him. Uh, the CEO of Polymarket. Yeah. And about these kind of frivolous markets. And he said, I don't care for those. So I think even he acknowledges that like these are kind of pointless. Um, what the Kalshi executives would say, what they have said is that, look, it's not up to us to decide what people want. If people want to bet on who's going to win love islands. Right. Who are we to stop them? Yeah, yeah. Right. Well, even if the government ends up cracking down on these prediction markets, do you think they're just going to exist in some form now that we've let the genie out of the bottle? So Polymarket is a crypto company. And so, uh, what that means is that the main Polymarket platform operates internationally. It's not US-based. So technically, uh, Americans are not allowed to trade on it. There's also a US platform that's much smaller. That's mostly sports. But when you hear about, you know, the more controversial markets, like, you know, the capture of Nicholas Maduro or, you know, missile strikes, like that's almost all on Polymarket's international crypto platform. Um, there's nothing regulators can do about that. Like that will continue to exist. Or some version of it will probably continue to exist forever. Uh, Calche is a regulated US-based company. And that is something that the CFTC, if it wanted, or, you know, the next administration, if it wanted, could, um, could impose a lot more rules on than it is currently. These are a final question, but I'd love your kind of overarching insight and maybe even your prediction on the future. A Pew survey last year found that an increasing percentage of Americans across all ages and all demographics, and including people who bet on sports, think that sports betting is a net bad for society. Could this eventually get translated into this stuff being banned again? Essentially, this type of betting or these types of platforms, almost having their cigarettes moment. I think it's entirely possible. And some of the biggest prediction market boosters out there agree. So when I talk to Robin Hanson, he's been around so long that he's seen these prediction markets come and go over the years. And he worries that there's going to be a backlash largely because of this equivalence with sports betting and the fact that people are lumping them into the same category. From his perspective, that would be a bad thing if prediction markets got banned again, but that's been the case for decades that people decided, you know, we shouldn't have people betting on elections. This is a sacred civic activity that we, sure, like maybe you could get some greater level of accuracy if you ran a prediction market. But even considering that, it's not worth it. It's not worth the trade off. This is something that we need to preserve as a human experience that we're not turning into a hub of information and betting. So yeah, I think there's a strong possibility that this backlash leads to some sort of crackdown, maybe with a new administration, especially if it's run by Democrats. But I would also say there's a possibility that these, you know, dozen plus cases that play out in the States end up going to the Supreme Court. And the Supreme Court could very easily rule in favor of Calche and say that, you know what, this is not the province of the States. This belongs under the CFTC and the CFTC right now is extremely prediction market friendly and could, in some ways, entrench rules that means that the prediction markets continue to exist. What could save young men from this is, you know, knowledge, information, self-control, or maybe even the release of GTA 6? I would not be surprised if there's an in-game prediction market in GTA 6. Probably. I don't know that there's any easy answers here. Obviously, you know, the States require gambling companies to put money into anti-addiction programs and all that. Those have mixed results, I think. You could require that prediction market companies do the same. But I think ultimately, I'm probably pessimistic, but I think the genies out of the bottle, especially considering what we're talking about, you know, crypto-based platforms. You can ban Americans from using it, but they can just use a VPN. And it looks like that's what they're already doing in large numbers. So I don't know that there's much to do other than just try to get people to focus on the ability to enjoy a movie for its own sake as opposed to, you know, betting on whether it will or won't win these awards. Chris Beam, thank you so much for being on the show. Thank you.