Are Prediction Markets Gambling? A Lot Rides on the Answer.
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What is the main topic discussed in this episode?
Hey, it's Anna Martin from the New York Times. What if I told you you'll never have to hear this line again?
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From the New York Times, I'm Natalie Kitroeff. This is the Daily.
Why are prediction markets like Kalshi and Polymarket facing legal challenges?
Over the last year, America has witnessed the explosion of prediction markets. Platforms like Kalshi and Polymarket, which allow you to wager on just about anything, from who will win a football game to the weather in New York City. But now those hugely popular platforms are in the middle of a legal battle that could determine whether they get reined in or whether betting on everything becomes the norm everywhere. Today, my colleague David Yaffe-Bellany explains.
It's Tuesday, September twenty ninth.
David, welcome back to the show. It's wonderful to have you.
Thanks for having me.
So the last time you were here, you walked us through the rise of these prediction markets. And since then, they've gotten even bigger and they've become a target of a growing number of legal challenges. So can you just start by giving us a lay of the land here? Where do things stand?
Yeah, a lot has happened. These platforms have been exploding for months, but now they're exploding even more, if that's possible. There was about thirty-eight billion dollars in betting last month on the biggest prediction market. That's already up to forty two billion dollars in the month of September. Wow. So there's a real burst of consumer interest in these products. And they've sort of become ubiquitous.
Hey, have you heard about this prediction market Kalshi?
You can't turn on the TV and watch a sports game without getting bombarded with a prediction market ad. With Kalshi, you can trade on anything. From culture to the weather.
I'd like sportsbooks. Kalshi doesn't set the odds. Other users do.
There's a recent one with LeBron James. It's live training. You gotta stay on your toes.
Morning, Eli. Hello, LeBron.
Another recent one with Sydney Sweeney.
Trading on
sports.
Tight spaws.
Just seems like all the top celebrities are getting kind of sucked into this world.
Right. And now that football season has started, it is truly inescapable for some of us. Absolutely.
And football season is sports betting season, and that's surely gonna lead to another burst in popularity and more money flowing into these platforms. But at the same time that all of this interest has surged, there have also been a succession of scandals around prediction markets.
A US Special Forces soldier who helped to plan the January capture of Venezuelan president Nicolas Maduro has been indicted for allegedly using classified information about the raid to place bets in the prediction market.
Most of them have revolved around insider trading, which of course is the idea that you could take confidential information and use it to make money on these platforms.
Gabriel Perez is accused of making more than $90,000, nearly a hundred thousand bucks on Kalshi by betting on what the president would say during his speeches. Remember, this is the guy running the prompter.
For instance, there might be a prediction market question about, say, who's gonna attend the state of the union. And if you have confidential advanced information about that, then you can bet based on it.
This morning, sources say disgraced former Congressman George Santos is under investigation for possible insider trading on the prediction market Kalshi.
And in fact, exactly that scenario played out this year when George Santos placed a bet on his own attendance at the State of the Union. Oh my god.
By skipping the speech, sources say he pocketed tens of thousands of dollars. Kalshi froze his account and a gun.
He got caught and ended up having to pay a big fine, and it was the latest fun episode in the never ending George Santos saga.
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Chapters
8 chapters
1
What is the main topic discussed in this episode?
0:00–0:43
2
Why are prediction markets like Kalshi and Polymarket facing legal challenges?
0:43–5:22
3
Are prediction markets gambling, and should states or the federal government regulate them?
5:22–7:37
4
How are prediction markets different from traditional sports betting apps?
7:37–10:19
5
Can people use prediction markets to hedge financial risks instead of gambling?
10:19–12:01
6
What have courts ruled about who can regulate prediction markets?
12:01–13:21
7
How are Donald Trump Jr. and the Trump administration shaping prediction market regulation?
13:21–17:38
8
Why do states want to regulate prediction markets and collect taxes from them?
17:38–27:53
Speakers
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