Why Almost Everyone Loses on Prediction Markets
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What is the main topic discussed in this episode?
Access to affordable credit helps me pay my employees, but I don't really need it. Inflation is killing me. But who cares? Big retailers are making record profits. That's why we support the Durbin Marshall credit card bill. See? Banks and credit unions help small businesses make payroll. This bill would cut the vital resources they need. While increasing megastore profits. They deserve it, don't they?
Tell Congress, stop the Durbin Marshall money grab for corporate megastores. Paid for by the Electronic Payments Coalition. President Trump announces a new plan for opening the Strait of Hormuz, but traders seem unconvinced. Plus, GameStop makes a massive play for e-commerce giant eBay. And the journal reveals why most prediction market bets end in a loss.
Kalshi and Polymarket have pitched themselves as this everyman's platform, where anyone can monetize their beliefs and win. But what they don't mention is that you'll probably lose.
It's Monday, May 4th. I'm Daniel Bach for The Wall Street Journal, filling in for Luke Vargas. And here is the AM edition of What's News, the top headlines and business stories moving your world today. President Trump has said the U.S. would begin guiding commercial ships out of the Strait of Hormuz today in an effort to unblock the waterway. But critics point to how the plan doesn't involve naval escorts. Instead, Project Freedom allows for countries, insurance companies, and shippers to coordinate in a bid to get traffic flowing through the strait. For now, though, oil traders appear unconvinced it will resolve a supply crunch that has sent prices soaring. Futures tied to Brent crude rose above $109 a barrel this morning.
And those higher oil prices have led to a surge in fuel costs for airlines, with the sector this weekend claiming its first victim of the war. Spirit Airlines is shut down after bailout talks with the Trump administration failed. Before the war in Iran, the low-cost carrier had plans to get out of bankruptcy. But with its jet fuel more than doubling since, the airline couldn't pull through. Like many affected travelers, Journal reporter Dean Seale had a flight already on the books. He's looked into what customers need to know following the airline's closure. The airline said all flights have been canceled and that it will automatically process refunds for tickets bought with a credit or debit card.
What recent announcement did President Trump make regarding the Strait of Hormuz?
Customers can go to SpiritRestructuring.com for more information. The Department of Transportation said Saturday that several airlines are offering a mix of capped and reduced fares for impacted Spirit customers.
United, Delta, JetBlue, and Southwest are capping their ticket prices for Spirit customers. It's going to vary between the airlines. You have to go to their websites to take advantage of these special offers. It is normally going to be about $200 for a one-way ticket.
How is GameStop positioning itself in the e-commerce market?
That was US Transportation Secretary Sean Duffy. Another sector suffering from the war in Iran is the auto industry. The war is driving up US aluminum prices by choking off critical shipments from the Persian Gulf. Combined with a 50% tariff and a major supplier outage, the cost of primary aluminum from smelters is nearly 90% higher than a year ago.
Why do most prediction market bets end in a loss?
The supply crunch leaves the auto industry facing a severe shortage for a metal that has become critical for truck building.
The automotive industry depends on aluminum because it's lightweight, and the more you use, the better your fuel economy is because you're taking weight out of a vehicle.
That's Journal reporter Bob Tita, who covers the metals industry. He says that the pain is especially acute at Ford. Aluminum is used in the best-selling vehicle in the U.S., the F-150 pickup.
What platforms are popular for prediction markets and what do they claim?
So Ford is the biggest user of aluminum from the plant in Oswego, New York, operated by Novellus, and it can't get enough aluminum. It's caused a slowdown in production of the F-150s, so there's dealers that are nervous about having enough trucks to sell, particularly now in the summer months. There's been some discussion about
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Chapters
6 chapters
1
What is the main topic discussed in this episode?
0:00–2:23
2
What recent announcement did President Trump make regarding the Strait of Hormuz?
2:23–2:54
3
How is GameStop positioning itself in the e-commerce market?
2:54–3:16
4
Why do most prediction market bets end in a loss?
3:16–3:46
5
What platforms are popular for prediction markets and what do they claim?
3:46–4:52
6
What are the statistics on user losses in prediction markets like Kalshi and Polymarket?
4:52–14:23
Speakers
6 identifiedMore from WSJ What’s News
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