Jared Diamond

It's a more complicated question than you probably think because the answer is it depends on who you ask, right?

To the prediction markets companies themselves, this is a financial product.

It's trading on futures the way any sort of financial product would be traded.

But to most people, to the general consumer, prediction markets are the latest trend in the growing American pastime of betting.

Good question.

So it's a little complicated, but I'll try to simplify it.

With traditional sports betting, you, the consumer, the gambler, are betting against the house.

The house being, let's say, FanDuel, DraftKings, or in the old days, an old-fashioned casino in Las Vegas.

the house sets the line and you are betting against them.

So if you win, the house loses and vice versa.

In prediction markets, there is no house.

Polymarket and Kalshi, you are wagering

or trading with other people as opposed to betting against this centralized house.

That is essentially the difference.

And it is to this point what has allowed Kalshi and Polymarket to operate as a financial product and not as a gambling product, which really is at the center of this entire discussion about what these things are and sets up a huge fight to come that likely ends up at the Supreme Court.

So to answer that, we really need to talk quickly about how sports gambling in America came to be.

Right back in 2018, the Supreme Court decides, hey, states have the constitutional right to legalize sports gambling if they want.

And since then, many states have.

Nearly 40 states now have some form of legal sports betting.

In many of them, it's online sports betting.