Transcript generated automatically by AI and may contain errors.
Chapter 1: What is the main topic discussed in this episode?
The Clare Byrne Show on Newstalk with Aviva Insurance.
Chapter 2: What are prediction markets like Polymarket and Kalshi?
Now, people are placing huge wagers on prediction markets such as Kalshi and Polymarket on issues ranging from when will the war in Iran end to who will win the French Open this week and just about everything in between. Supporters say this is a smart way to make money. Others say it is gambling at best and a facilitator of insider trading at worst. So where does the truth of this lie?
Chapter 3: How has Polymarket evolved since its inception?
Well, Mitch Labiak is senior business journalist with the BBC and he's been investigating this extensively. And Mitch is with us now. Good morning, Mitch.
Morning, how you doing?
I'm doing very well and thank you for joining us and explaining all of this to us because we've heard a lot about polymarket in particular. Where did it all start or how long has it been around for?
Yeah, good question.
Chapter 4: What regulations allow prediction markets to operate in the US?
I mean, in terms of how long Polymarket has been around for, we're talking since 2020. Kaoshi, which is one of the other big prediction markets operators, sort of similar situation. But in that time, they've grown rapidly. Just to give you an idea of numbers, Polymarket is worth $9 billion. Kaoshi is worth $22 billion. These are companies that essentially didn't exist a decade ago.
Chapter 5: How do prediction markets differ from traditional gambling?
So phenomenal growth in a very short period of time.
And the Americans, so it came about there, did it, because it sort of circumvents the strict rules around gambling?
Correct. Yes, you're spot on. So essentially in the U.S. prediction markets, which polymarket and calcium both are, are classed as trading. So they're regulated by the Commodities Futures Trading Commission. So according to the U.S.
Chapter 6: What insights do prediction markets provide compared to opinion polls?
regulation and the U.S. law on a federal level, they are sort of in the same bracket as commodities. buying or selling what are known as futures or derivatives, which to me and you just means buying or selling oil on the commodities market. And the idea is that prediction markets, according to the US law anyway, fall into that same bracket, which allows them to operate in all 50 states.
And the reason that's significant is because gambling is prohibited in many US states, but trading is not. So they're able to sort of operate in this way, which many people argue looks a lot like gambling, but it's not regulated as gambling in the US.
And there doesn't seem to be much of a political appetite to tackle this.
No, no.
Chapter 7: Are regular users able to profit from prediction markets?
I mean, well, it's a funny one, isn't it? So certainly Donald Trump's, as is often the case with Mr. Trump, there's a difference in what Donald Trump says and what happens. So what has happened is that there's been this lax... Well, lax attitude towards treating it as gambling anyway, whereas the Democrats are calling for much more stringent legislation.
But the Commodities Trading Future Commission under Trump's administration has been deceptive. has been happy to keep it that way. But when Trump has been asked about this personally, he says that he's against prediction markets and he doesn't like what he calls the casino-fying of world events, never mind that his own son is heavily invested in prediction markets.
Tell me about that.
Chapter 8: What are the concerns surrounding insider trading in prediction markets?
Tell me about his own son being heavily invested because we have heard about this as an undercurrent to this entire story. But what is the level of involvement there?
We're talking, yeah, we're talking, I mean, we're talking sort of, you know, sort of an executive level position. We're talking sort of, I believe, somewhere around a billion dollars of investment. But it sort of speaks to sort of how the Trump administration often runs.
I mean, you think of sort of Trump's backing of cryptocurrency from a legislative point of view, and then also some direct investments in cryptocurrency as well. This certainly seems similar. It's sort of a new frontier for presidents. It's not something we've sort of come across before. So, yeah, a very odd one would be a generous way of putting it.
People really started to take notice of Polly Market, didn't they, around the time of the 2024 American presidential election, when all the bets were going on Trump, but the opinion polls were suggesting that it would be a Democrat win. So then in the aftermath, people say, well, hang on a second, maybe it's this thing that really has the gauge on public opinion.
Yeah, you're precisely right. I think what excites people about it, so to sort of, you know, people who defend these markets will very quickly say they're better than opinion polls. And the reason for that being that, you know, as one of the people we spoke to for the BBC story I wrote said, you know, people have always had opinion on anything
but this is quite literally putting your money where your mouth is. So that sort of helps to create a more accurate polling. Academics have noticed this as well. The first prediction market actually operated way back in the 1980s in the US, but it was purely an academic exercise and it wasn't run as a... As a multi-billion dollar company, it was run as an academic exercise.
Academics would sort of trade a maximum of $100, I think it was, each just to see on who they thought would win the election. And they found that their prediction markets were more accurate than polling.
And now that they've sort of exploded into the mainstream, as you say, with the 2024 election, so it has proven that at least the last big litmus test, that 2024 election, the prediction markets predicted Donald Trump win when the polls didn't. So that's definitely one of the defences of them.
And are punters, like regular punters, making money on these things or is it just the big guys?
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