David Yaffe-Bellany

Okay.

And the cost of those contracts, of a yes or of a no, always fluctuates between $0 and $1.

And that price is essentially a reflection of what the market of bettors out there think is going to happen.

So if the yes option on the Iranian regime falling is going for 20 cents, then that means there's about a 20 percent likelihood of the regime falling.

Exactly.

And then the payout arrives when the event either definitively happens or doesn't happen.

So if the regime does fall and you bought that yes contract at 20 cents and you correctly predicted what would happen...

Then the contract rises in value to $1, and you get your payout.

And because this resembles a kind of financial market, it falls under a different type of regulation than traditional sportsbooks.

Sportsbooks are regulated by the states, their state laws governing gambling, and the prediction markets instead are regulated at the federal level by a financial agency called the Commodity Futures Trading Commission, the CFTC.

And the idea here is that the CFTC should be protecting against abuses in the realm of prediction markets.

Insider trading is an easy example of that or market manipulation, things that could threaten the integrity of a financial market.

But Copeland didn't go down that path.

Initially, he didn't register polymarket with the CFTC.

And that's sort of in line with the kind of move fast and break things ethos of the tech industry.

Exactly.

And Copeland was taking a similar approach.

But ultimately, that got him into a lot of trouble.

In 2022, the CFTC fined PolyMarket $1.4 million.

And as part of that legal settlement, Copeland had to agree that PolyMarket wouldn't operate in the United States.