Chapter 1: What is the main topic discussed in this episode?
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From The New York Times, I'm Natalie Ketro-Eff. This is The Daily. Seemingly overnight, America has seen an explosion of new betting platforms that have radically expanded the universe of gambling. They're called prediction markets. They let you bet on all kinds of things, like will the U.S. attack Iran? What specific words will the president say? And who will be at Taylor Swift's wedding?
Today, my colleague David Yaffe-Bellini explains how these platforms became so widespread so fast, and how betting on everything could change the way we live. It's Wednesday, February 4th. David, it's wonderful to have you here in studio.
Thanks so much for having me.
So we are coming to you because you cover crypto, which can often lead you to the nichest corners of the internet. I kind of think of you as having a fringe capitalism beat. Is that fair?
That sounds about right.
Okay. And you've been looking into these prediction markets, which I have a million questions about. But before we get into those questions, I want you to first just lay out for people who don't know these things, what are they? What are these markets?
At a really high level, a prediction market is a platform where you can bet on pretty much everything. Most people are familiar with sports betting, even the sort of advanced sports betting that we get these days where you're betting on whether a player will make a free throw. Prediction markets expand that idea into all corners of politics and culture.
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Chapter 2: What are prediction markets and how did they emerge?
Am I right to think that these markets went from being quite marginal to suddenly being at the forefront of a lot of cultural and political events?
To some extent, that's right. Go back even two or three years ago, and no one was really talking about prediction markets. But if you zoom out a little further, what's happening now is really the culmination of a trend that started back in 2018. Hmm.
A U.S. Supreme Court ruling today has opened the door to a dramatic expansion of legal sports betting.
That's when the Supreme Court overturned a U.S. law that had effectively banned most sports betting in the U.S. Once that law was ruled unconstitutional, we saw a sort of avalanche of gambling.
The gaming industry is calling this a groundbreaking decision that will revolutionize the gambling business. Right, this was a huge moment.
Yeah, it was enormous.
DraftKings announcing that it will enter the legal betting atmosphere throughout states that choose to legalize it.
Sports gambling companies across the country went state by state getting permission to offer their services. And suddenly people could gamble from their phones. And this was a huge transformation in the U.S. I mean, in other countries, there's sort of always been this type of gambling, but it wasn't really possible in the U.S. It was something you had to do in a clandestine way.
And suddenly it was all happening out in the open and the marketing was enormous. You couldn't avoid it.
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Chapter 3: How did the Supreme Court ruling impact the gambling landscape?
became a formal advisor to Polly Market. And most importantly, the Justice Department under Trump officially dropped this investigation into Copeland.
And this is all happening in the context of a legal battle involving one of PolyMarket's competitors, a company called Kalshi that also offers its own prediction market, which around the time of the election had won a big legal dispute with the CFTC.
So suddenly all these legal troubles that had been hovering over the company and the markets in general, they kind of seem to disappear.
Yeah, they vanish. So you've got this culmination of a bunch of things, a kind of pro-business attitude brought by the Trump administration, this legal victory secured by Kelshi. And so while it didn't happen overnight, what that meant is that U.S.-based users were now allowed to use these platforms without a VPN. They become easily available to almost anyone.
I just found out about Polymarket. I started with $10 and I'm up like $100-something.
And that feeds into this larger cultural shift.
I'm a full-time polymarket trader, and a lot of people don't understand how you can make a full-time living on polymarket. But let me explain.
People are using these platforms more and more. They're more available in the United States.
The NHL just became the first major U.S. pro league to strike licensing deals with prediction market platforms, Kalshi and Polymarket. Polymarket is going to become the official prediction market partner for the UFC.
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Chapter 4: What is the story behind the founding of Polymarket?
Right.
But the reality is the way they work, as you've described it, is much more like gambling than the stock market, right? These are quick fix kind of bets.
Look, as I've started reporting on these platforms, I've also started using them with a small amount of the New York Times' money. Oh, wow. How much? $20. Oh, wow. Generous. And any profits would go to charity. So it was a real philanthropic opportunity for me. How'd you do? I've already blown it. I'm down to $10. Okay. You're no French whale. Exactly.
But one thing I learned from playing around with these platforms a little bit is that it does feel like gambling. These platforms are designed to kind of suck you in. They've got bright colors, and you see numbers going up and down, and it's exciting. And when you're just playing around with a few dollars of your company's money, that's totally fine.
But when you're potentially vulnerable to addiction and you're spending money that you need for other things on these platforms, there's a real risk. And one thing we know about this type of betting is that it's especially popular among young people, especially young men. It's kind of their vice of choice these days.
And so whatever the long-term consequences of this are, it's probably going to be felt by that demographic, young people.
Right. If you have a gambling addiction, like you said, there's all these reasons why you're compelled to keep betting. And if you're just someone who finds them fun, you're looking for entertainment. You're looking for this kind of world that's been created by these markets, which as you've described it to me, kind of turns reality into something like a video game.
Yeah, and the consequences of that are starting to become clear. It's changing the stakes of reality for people, changing the way they relate to things that are happening in the world, even things that are really important and have human consequences. I mean, we have seen prediction markets betting on the L.A. wildfires, on how quickly they would be contained.
There was betting on the war in Gaza, whether that situation would be classified as a famine. Hmm. And all those things are devastating for the real people in those situations. But now you have a class of internet speculator who's engaging with them as potentially profit-making opportunities.
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