Joe Wiesenthal

It's these other things where in theory, these might be useful instruments for hedging some sort of economic risk.

Maybe not the Taylor Swift one or the halftime show ones, but some of these other ones.

But like in theory, some of these contracts could be useful for hedging.

And so the question is, yeah, but will anyone use them?

And so on this discussion, we really had the pleasure of someone who has done very little media in general and who is right in the heart of trying to essentially solve this chicken and egg problem.

Listen to our conversation with Jeremy Mallitz, the head of prediction markets at Susquehanna International Group.

All right, why don't you tell us, just let's start really simply.

What does the prediction markets desk at Susquehanna do?

It's incredible that you're here.

I know.

Let's talk about, OK, there's some contract out there.

Who is going to win the Texas primary election?

Let's just say.

So there's an exchange, and there's an instrument, and it's either going to end at 100 or 0, et cetera.

Why does this market need market makers?

Why can't it be entirely peer-to-peer such that if all of us in the room just wanted to trade, we make a price amongst each other on an exchange?

Why is a market maker an important part of the infrastructure for this to work?

So this sort of leads into the next question, and it's maybe the multi-billion dollar question of prediction markets, which is, okay, we know that there is a huge amount of the prediction markets business, which is just sports betting under a slightly different form.

But you mentioned hedging, and this gets to the core question, which is, in theory, there are a lot of instruments on these prediction market platforms that could be useful hedging instruments for corporations, say a market on snowfall in New York City, which might affect an airline or something like that.

Maybe they want to hedge that.