Chapter 1: What are prediction markets and how did they originate?
NPR continues to follow the breaking news out of Iran. U.S. and Israeli forces launched combat operations yesterday. President Trump announced the airstrikes were targeting regime change in the country. We'll bring you much more tomorrow morning on Up First. And you can also hear the latest coverage on our national security podcast, Sources and Methods with Mayor Louise Kelly, or in the NPR app.
I'm Aisha Roscoe, and this is the Sunday Story from Up First, where we go beyond the news of the day to bring you one big story. The recent Super Bowl was awash with betting, and while most people were betting on the game, TikTok user atcadenbooth had other plans.
I'm camping outside the Super Bowl stadium with this listening device for the next few days. Because you can bet on how long the national anthem will be, so I'm going to try to time the rehearsal and make money.
Chapter 2: How do betting apps like Kalshi and Polymarket work?
When the TikTok influencer showed up outside the stadium to time the rehearsal, he expected lots of people to be there doing the same thing.
I thought I was going to show up here and there would be 500 people sitting outside. Everyone's saying it's so genius, but I really thought there'd be 500 people in lawn chairs all trying to make easy money.
Booth used the information he got from timing the rehearsal to place a bet on the length of the national anthem performance, and he won. These kind of niche bets are growing in popularity, especially on apps known as prediction markets, and the bets being placed on these apps go far beyond sports.
People can bet on things like who will be the 2028 Republican presidential nominee, the weather in a number of cities, or even how long a government shutdown will last. NPR correspondent Bobby Allen has been covering this new way to place bets, and he joins me now. Hey, Bobby.
Hey, Aisha.
Okay, so, you know, look, I've never placed a bet on these sites.
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Chapter 3: Who are the typical users of prediction markets?
I really don't like losing money. Like, you know what I'm saying? Unless I'm getting something in return. But I know the two most popular sites are Kaoshi and Polymarket. And I've downloaded Kaoshi. Can you walk me through how it works?
Sure.
Sure. So pull up the CalShe app and within a couple clicks, you can connect this to your checking account. So you can directly put in money from your checking or savings account.
Chapter 4: What types of bets can you place on these platforms?
And then you could start placing bets. You could see there's sports, there's mentions.
I see elections. Who will be the 2028 Democratic nominee for president? Who will win the 2028 U.S. presidential election? Gavin Newsom is at 21 percent. J.D. Vance at 24 percent. I see a lot of politics on his.
Chapter 5: Are prediction markets considered gambling?
So let's zoom in on just one. So the State of the Union happened earlier this weekend. People were going on these apps and making all kinds of bets, you know, on how long it would be down to like the second, you know, what words Trump would say. So would he say fake news? Would he say hoax? Would he say windmill drill, baby drill? And, you know, traders were placing money on whether
he would or not say these things. And then they stream the event live. And then it becomes this kind of like high stakes, edge of your seat, adrenaline propelled kind of situation where you're like, should I cash out now?
Chapter 6: What regulations govern prediction markets and betting apps?
Should I wait? Should I cash out now? Is he going to say it? Isn't he going to say it? And the people who are into these, they're called mention markets on Calci and Polymarket do this all day. They get up at like 10 a.m. and they do it till three in the morning, going to press conferences around the world, trying to cash in on whether people are going to say or not say things.
So as you're watching the press conference, you could jump out or watching the State of the Union, you could jump out if you're like, I don't think he's going to say it. Does that save you money?
Exactly.
Chapter 7: How do insider trading practices affect prediction markets?
So the odds are constantly moving depending on how the conversation is going. For instance, if President Trump starts talking about oil, the chance that he's going to say drill, baby, drill is going to go way up, right? Because it's related to that. So you see the odds move. So your money increases.
So you can cash out there or you can hold your breath and hope that he says the word you put money on and get a big payday. I mean, it's just really a crazy situation.
And so is NPR on these apps? Like, is there something about, like, the Sunday story or what we're going to have?
There's no Sunday story market yet, but our CEO, Catherine Marr, there was many thousands of dollars being wagered on whether she would step down by the end of last year.
Chapter 8: What does the future hold for prediction markets in the U.S.?
People lost money on that. Who thought she would? And there is also a market about what tiny desk artists will be performing this year. And, you know, Aisha, if you and I really wanted to make money on that, we could probably make a few calls and make that happen.
We have some inside information on that. We have inside information on that. So we could make some money.
Yeah, we really could. Now, I'm not encouraging that since that would probably be a federal crime. But yes, lots of people have access to information that could certainly give them an edge.
Today on The Sunday Story, we're going to do a deep dive into the world of prediction markets, what they are, where they came from, and where they're taking us. And we hear about who's winning on these platforms and who's losing. Stay with us. We're back with the Sunday story and we're taking a dive into the origins and growing popularity of prediction markets.
And joining me to make sense of all this is NPR correspondent Bobby Allen. So, Bobby, can you give us an idea of like what these prediction markets are and where did they come from?
Sure. So the idea of prediction markets, the first early instance of them was in Iowa in the 1980s during the 1988 presidential election, the George H.W. Bush election, because these political scientists thought, OK, we have punditry, we have traditional polls, we have the mainstream media. But what if people put their money where their mouth is and take wagers on the presidential election?
And the result was so promising and it was more accurate than any poll at the time that this became a thing that political scientists have really been interested in and have tried to replicate in a sort of academic ivory tower kind of setting. And that's where it has remained until very, very recently. So jump ahead. until right before the 2016 election.
And Tarek Mansour, who at the time was a Goldman Sachs trader, was getting calls from wealthy clients who said, look, if Trump loses, this could be bad for my investment portfolio. If Trump wins, this could be bad for my investment portfolio. How do I get exposure to this? Like, how can I short this? Or how can I make money on this? What can I do? And there was no way to really do it.
Tarek Mansour likes talking about how There was ways to like invest in like a proxy. So you could invest in like the whole S&P 500 or invest in other things that might go up or down if Trump wins or loses. But there was no way to directly bet on the outcome of is Trump going to win or lose? And that was his kind of –
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