Speaker 1: Pushkin.
Speaker 2: Hey, it's Jacob. This week, I want to play for
Speaker 2: you an episode from another podcast that Pushkin just launched.
Speaker 2: It's a show called Risky Business and it's hosted by
Speaker 2: Nate Silver and Maria Konikova. It's a show about making
Speaker 2: better decisions. Both Nate and Maria are journalists and they
Speaker 2: are also high stakes poker players, so they're bringing their
Speaker 2: perspective both from their work in journalism and from the
Speaker 2: poker table to help you think about risk and decision making.
Speaker 2: On the show, they talk about everything from poker to
Speaker 2: politics to making better choices in your own life. The
Speaker 2: show is called Risky Business with Nate Silver and Maria Kanakova.
Speaker 2: You can find it wherever, and I hope you like
Speaker 2: it here it.
Speaker 3: Is Welcome back to Risky Business, a show about making
Speaker 3: better decisions. I'm Maria Kanakova and I'm Nate Silver. Today
Speaker 3: we'll be talking about a few different things, starting with
Speaker 3: justice Sonya so Toe Mayor and whether or not she
Speaker 3: should retire.
Speaker 4: And we'll talk about degenerate sports betting in the world
Speaker 4: of professional athletes. A Major League Baseball player were suspended
Speaker 4: for life last week for betting on his own team's games.
Speaker 3: And talking about a different area of degeneracy. We're going
Speaker 3: to be giving you a little taste of the world
Speaker 3: of memestocks with the return of Roaring Kitty aka Keith
Speaker 3: gill get a little bit into what that means for
Speaker 3: the world of trading more broadly. So so Nate, There's
Speaker 3: been a lot of talk, and we've talked about the
Speaker 3: Supreme Court right now and what's going on with it.
Speaker 3: Something that we haven't talked about is the fact that
Speaker 3: one of the only liberal justices, Sonya so Tamayor, is
Speaker 3: reaching a point where she is getting older. She's seventy
Speaker 3: years old. She is not in great health, she has diabetes.
Speaker 3: She often travels with a physician. And we're nearing the
Speaker 3: end of the Biden and administration, and as you and
Speaker 3: I have discussed on previous episodes, we don't know if
Speaker 3: Biden is going to get re elected. We don't know
Speaker 3: if the Democrats are going to stay in power. So
Speaker 3: what does this mean for the Supreme Court? What does
Speaker 3: this mean for Justice? So to Mayor, should she be
Speaker 3: considering retiring right now while Biden can still definitely replace her.
Speaker 4: So she is sixty nine, she turns seventy eight later
Speaker 4: this month.
Speaker 3: I'm sorry. I'm so sorry, Sonya. I aged you and
Speaker 3: I and I apologize.
Speaker 4: That's what we call a newspeg in the business. It's
Speaker 4: almost her seventieth birthday. We're getting ahead of the news,
Speaker 4: and therefore that's why we're partly why we're doing this now,
Speaker 4: but also because we, as you said, Maria, maybe toward
Speaker 4: the end of Biden's we are toward the end of
Speaker 4: his first term in office, and maybe the end of
Speaker 4: any terms in office. If the polls are right. Donald
Speaker 4: Trump is a head right now, although it's close. If
Speaker 4: Biden does prevail, Democrats could also lose the Senate. There
Speaker 4: are Democratic held seats, for example, up in West Virginia
Speaker 4: and Montana. In West Virginia, Joe Manchin has retired, so
Speaker 4: that seat's like gone for sure. Montana, to a lesser extent,
Speaker 4: Ohio are tough hoold for Democrats, So even if Biden
Speaker 4: returns to the presidency, you might have an uncooperative Republican Senate.
Speaker 4: So you asked, should she consider retiring, and the answer
Speaker 4: she should not just consider. She should retire today. Go
Speaker 4: take one of these university president jobs. Everybody is quitting
Speaker 4: go be president of Yale or Harvard, or go, you know,
Speaker 4: go make lots of money selling a book, go under
Speaker 4: the World Series of Poker main event. I'm sure she's
Speaker 4: a very candy poker player, but she should absolutely retire
Speaker 4: if she actually cares about any of the values that
Speaker 4: she purports to care about, these kind of liberal, progressive values.
Speaker 4: Because she doesn't retire, then she very easily be replaced
Speaker 4: by another conservative justice, leading to a seven to two
Speaker 4: conservative majority.
Speaker 3: And that is that's going to be difficult to overcome.
Speaker 3: I mean, if we have a seven to two conservative majority,
Speaker 3: it could be. I mean, I don't know how many
Speaker 3: presidents is will need before the Supreme Court is more balanced.
Speaker 1: Could be.
Speaker 4: I mean, So it's it's not just that like the
Speaker 4: Supreme Court would increase our conserns would increase their majority.
Speaker 4: It's also that, like believe it or not, the Supreme
Speaker 4: Court agrees on more issues than you might think. But
Speaker 4: where that middle point falls is is important, right, the
Speaker 4: fact that it does fall with the Barrett or a
Speaker 4: Kavanaugh or on some issues, Justice Gorsic is a little
Speaker 4: bit heterodox on some issues versus like an Alito or
Speaker 4: something like that. Like that also has a material impact
Speaker 4: as far as how far they.
Speaker 1: Will go on certain issues.
Speaker 3: I completely agree with you. Yeah, And I think that,
Speaker 3: and I think that we should really look at the
Speaker 3: past to kind of guide Justice Sotomayor's decision right now,
Speaker 3: because I'm gonna I'm just gonna go ahead and say this,
Speaker 3: and fellow female liberals are going to get really really
Speaker 3: mad at me, but I am so fucking mad at
Speaker 3: RBG that, like, for me, her entire legacy is tainted,
Speaker 3: like the sheer hubris of not retiring when she could
Speaker 3: have been replaced and of being like, no, I'm going
Speaker 3: to live forever. I'm fucking RBG like, look at my
Speaker 3: legacy like I'm invincible, and she, like her legacy is
Speaker 3: Roe v. Wade being overturned. That's her legacy because if
Speaker 3: she had retired early, we would have had an entirely
Speaker 3: different court. And like I used to be like such
Speaker 3: a you know, such an avid RBG fan, and I'm
Speaker 3: not anymore because like, I think that with that one decision,
Speaker 3: she's single handedly set woman back much further than she
Speaker 3: ever advanced them. I said it. People are going to
Speaker 3: get mad at me, but I think that that is
Speaker 3: the truth and I am so pissed at her, like
Speaker 3: from beyond the grave that I just I can rant forever.
Speaker 4: No, I'm glad you said it. I mean, in the
Speaker 4: Silver Bulletin post I wrote about sort of mayor said
Speaker 4: that her retirement is a political IQ test, and that's
Speaker 4: you know, that's a little bit of invective. She's I'm
Speaker 4: sure a very smart woman. I'm not sure how smart.
Speaker 4: Some of the kind of liberal political observers are frankly right,
Speaker 4: because the excuses are dumb. Frankly just dumb. They'll say, well,
Speaker 4: you can't force a Latina justice to retire, Well, sure
Speaker 4: you can.
Speaker 1: There are lots of qualified.
Speaker 4: Latina associate justices and things like that could replace her.
Speaker 4: If you believe that's an important thing to do, right
Speaker 4: or if people say, oh, it's kind of like it's
Speaker 4: ableless to worry about her diabetes, well I'm sorry. If
Speaker 4: you write in the constitution that you have a lifetime
Speaker 4: appointment to something, which, by the way, I think is
Speaker 4: a bad idea.
Speaker 1: I think she'd be limited toward eighteen.
Speaker 4: Years or something like that. But if it's a lifetime appointment,
Speaker 4: absolutely it's a public's responsibility online to consider, like the
Speaker 4: health of the justices. It plays out strategically, but historically
Speaker 4: justices wait to time their retirements for partisan reasons, right
Speaker 4: they want to be replaced by the same party that
Speaker 4: appointed them in the first place. So that's not new.
Speaker 1: You know.
Speaker 4: Justice Kennedy, for example, who was more moderate, did so
Speaker 4: under Trump when he had some time to go. So look,
Speaker 4: maybe some of Mayor is not a believer in the
Speaker 4: polls that show Biden trailing, and.
Speaker 1: Again that is close.
Speaker 4: The issue is just as much, if not more, about
Speaker 4: the Senate in the long term, where in the Senate,
Speaker 4: North Dakota has as many senators as California despite having
Speaker 4: what it is, you know, one fortieth of the population
Speaker 4: or things like that. Currently in the Trumpian coalition, the
Speaker 4: GOP does better among rural voters, white rural voters in particular,
Speaker 4: and they are overrepresented by quite a lot in the Senate.
Speaker 1: So look, if the.
Speaker 4: GOP gets attacked together, they would have potentially a relatively
Speaker 4: durable advantage to the Senate. I do think I kind
Speaker 4: of once you go out more than five or ten years,
Speaker 4: it kind of becomes a fuzzy crystal ball. But the
Speaker 4: basic math is that, like you don't know, what's going
Speaker 4: to happen in terms of medium term political future. You're
Speaker 4: about to turn seventy years old, you have diabetes, like,
Speaker 4: and like, I don't know, Like, by the way, why
Speaker 4: is the ego involved here? Like it just kind of weirdly,
Speaker 4: it's weirdly stubborn. It makes me think less of people
Speaker 4: who seek out power, I suppose.
Speaker 3: Yeah, absolutely, I totally agree. And by the way, an
Speaker 3: important point that you're making that you didn't make explicit
Speaker 3: is that it matters not just who wins the presidency
Speaker 3: but what the majority is in the Senate. Because let's
Speaker 3: not forget the Garland disaster where Obama tried to appoint
Speaker 3: him and the Senate just literally blocked the hearings and
Speaker 3: Garland didn't even get a chance to be considered. And
Speaker 3: that's something that can happen.
Speaker 4: I mean, it reminds me a little bit of like,
Speaker 4: you know, sometimes the failure to make a change is
Speaker 4: the biggest risk, right, It's like, well, why would I
Speaker 4: disrupt the status quota when I have this job? You know,
Speaker 4: seventy years old is not that old for a woman
Speaker 4: who presumably has good health care, even if she has diabetes.
Speaker 4: But like, sometimes the status quo is the riskier is
Speaker 4: the riskier path?
Speaker 1: Right?
Speaker 4: You know right now that she can be replaced by
Speaker 4: another liberal justice. Democrats in the Senate, even the Joe
Speaker 4: Manchins of the world, have been very loyal to Biden
Speaker 4: on judicial appointments. You don't know anything beyond what happens
Speaker 4: in November. And by the way, in terms of like
Speaker 4: pure political tactics to have a big fight of a
Speaker 4: Supreme Court, this is an issue where Democrats now are
Speaker 4: more charged up and talk about abortion rights and things
Speaker 4: like that. I'm sure whoever is nominated it would be
Speaker 4: subject to lots of abuse from Republican commentators. This would
Speaker 4: also be I think a good way to rile up
Speaker 4: democrats generate more enthusiasm, which is a bit flagging for
Speaker 4: Biden right now.
Speaker 1: But I don't know.
Speaker 4: People are like, well, you shouldn't think of politics in
Speaker 4: terms of expected value.
Speaker 1: It's should, yes, you should.
Speaker 3: By the way, everyone who says it's not a game,
Speaker 3: like did you look up? Did you see what the
Speaker 3: Senate tried to do? Right? They're trying to figure out
Speaker 3: how do I how do I game it?
Speaker 1: Right?
Speaker 3: Like they are, This is gamesmanship. This is exactly what
Speaker 3: gamesmanship is to try to figure out how do I
Speaker 3: gain an edge, how do I use the rules to
Speaker 3: try to do what I want, even though the intention
Speaker 3: is not that right. I understand what the spirit of
Speaker 3: the Constitution is and I don't give a fuck. I'm
Speaker 3: just going to do like what I can within the
Speaker 3: rules so that we win. And I think that it's
Speaker 3: absolutely a game in that respect, and it brings out
Speaker 3: the types of people I've written before about kind of
Speaker 3: the difference between sportsmanship and gamesmanship, and the Republicans are
Speaker 3: definitely much more into gamesmanship, and the Democrats are trying
Speaker 3: to take the higher sportsmanlike road, and that ain't working
Speaker 3: out so well when the other people are are better gamesmen.
Speaker 1: Yeah, you know.
Speaker 4: The White House has also not said anything about this,
Speaker 4: in part because they have a candidate who is eighty
Speaker 4: one years old, an Aldea. People are being too old
Speaker 4: for office is a big no no topic that they
Speaker 4: don't want to get into. But also, like some of
Speaker 4: it comes down to identity politics. I think it's fair
Speaker 4: to say I personally think if you kind of take
Speaker 4: progressive politics seriously, the notion that like having someone who
Speaker 4: represents the group, I think that's substantively smaller impact than
Speaker 4: like six three versus seven to two or down the line,
Speaker 4: who knows seven two verses eight one, or five to
Speaker 4: four versus six three or something like that. But this
Speaker 4: is why I don't really find people who are into politics.
Speaker 4: I don't really they're not by crowd, really right, because
Speaker 4: this is a this is such a no brainer.
Speaker 1: This is not close.
Speaker 4: Whereas we talked about Biden the other week, like by
Speaker 4: retiring it's kind of a really tough either way, that's
Speaker 4: really close. This is not close.
Speaker 1: Now, this is like absolute no brainer.
Speaker 3: Totally agree with you. And by the way, I learned
Speaker 3: the hard way, Like when you were saying I think
Speaker 3: a really important point is that you know, seeking the
Speaker 3: status quo kind of saying like, oh, like this is
Speaker 3: the this is the safer way to do it is
Speaker 3: oftentimes not safer.
Speaker 1: Right.
Speaker 3: I learned this the hard way when I started playing poker.
Speaker 3: That like, if you try to do nothing, that's also
Speaker 3: very much in action, right, that is, that is very
Speaker 3: much a choice, that is very much doing something, and
Speaker 3: it's doing something that's not optimal and you're not doing
Speaker 3: it for the right reasons. And that's what's happening right now.
Speaker 3: So like, get your ass in gear, actually look at
Speaker 3: the incentives, look at the future, and try to figure out.
Speaker 3: I think this is also really important what risks are
Speaker 3: worth it and what risks aren't because there is so
Speaker 3: much uncertainty here. We don't know what the percentages are
Speaker 3: because there is this uncertainty about you know, who's going
Speaker 3: to win the presidency, who is going to win the Senate?
Speaker 3: Is that risk worth it? And I think in this
Speaker 3: particular case, it's just a slam dunk. No, it absolutely
Speaker 3: is not.
Speaker 1: We'll be right back.
Speaker 4: Last week, Major League Baseball suspended San Diego Padres shortstop
Speaker 4: Tikipeda Marcano permanently for allegedly having bet on baseball games
Speaker 4: while a member of the Pittsburgh Pirates. It also suspended
Speaker 4: four other players, of who are now in the minor
Speaker 4: leagues for a year for betting on games not involving
Speaker 4: their teams. So there's been a lot of gambling scandal
Speaker 4: news coming out of baseball and other sports slightly of course,
Speaker 4: earlier this year, maybe the best player in the world,
Speaker 4: shohe Otane, his former interpreter and BFF.
Speaker 3: Potentially a potentially former BFF.
Speaker 4: TWA if I committed seventeen million dollars of wirefraud involving
Speaker 4: your account, Maria, would we still be friends?
Speaker 3: Absolutely, Nate, I would forgive. You're in a heartbeat, because
Speaker 3: that would mean that I somehow had seventeen million dollars.
Speaker 1: There you go, if you you know, what's seventeen million?
Speaker 4: If you signed a fifty.
Speaker 3: Between friends, what's seventeen between? What's minus? Isn't it? But
Speaker 3: as you were saying, Mizahara clued guilty, right, he.
Speaker 4: Pled guilty, and Major League Baseball closed the investigation, which
Speaker 4: I know. I actually still a couple of questions about
Speaker 4: Otani's involvement that will communiately never hear anything about ever again.
Speaker 4: But yeah, So this is the first suspension for gambling
Speaker 4: at related reasons since Pete Rose, who also was alleged
Speaker 4: to have bet on his own team. Now, Marcano, from
Speaker 4: what I read, has not planned to appeal, at least
Speaker 4: not for right now. In fairness to him, there is
Speaker 4: a somewhat mitigating circumstance, which is that when he was
Speaker 4: making these bets, he was injured, not actively playing for
Speaker 4: the Pirates. But still, the theory of the case is
Speaker 4: that even if you're betting on your own team. You
Speaker 4: still have inside information that's valuable. Right if you know
Speaker 4: that a certain player is healthy and therefore likely to play,
Speaker 4: Right if you know that the team was up all
Speaker 4: night at the strip club, maybe you'd choose not to
Speaker 4: bet that game, for example. So, and this is like
Speaker 4: literally a rule posted in every Major League Baseball clubhouse.
Speaker 4: You bet on games involving your own team, you are
Speaker 4: suspended for life. It is one of the least ambuist
Speaker 4: rules in all of Baseball's rule book.
Speaker 3: Yeah, and I think that it's a rule that makes
Speaker 3: complete sense, right, because if you're betting on your own
Speaker 3: team or providing information, I mean that is like, that's
Speaker 3: a different kind of inside baseball, right, that is not
Speaker 3: the good kind. And I think that when we see
Speaker 3: suspensions like this, I think it's really important. As the
Speaker 3: ubiquity of sports betting goes up, as we have these
Speaker 3: apps everywhere, as it's possible to do all these crazy
Speaker 3: parlay bets, as it's possible to bet while events are
Speaker 3: actually going on, all of these new capabilities that haven't
Speaker 3: existed in the past, I think it's incredibly important to
Speaker 3: be strict about this. By the way, I also think
Speaker 3: it's kind of hilarious in a way. Hilarious might be
Speaker 3: the wrong word. But how bad Marcano still was. I mean,
Speaker 3: I think he won just over four percent.
Speaker 1: Well that's a little So this is.
Speaker 3: Something that there's spin involved here.
Speaker 4: I mean, so peason he's winning four percent of his
Speaker 4: bets is because he's beending multi leg parlays, right, see,
Speaker 4: but on the pirates to win, and you bet on
Speaker 4: five other teams to win, and therefore, you know, take
Speaker 4: like two to the fifth power if they're all fifty
Speaker 4: to fifty bets, and so so he's doing multi team
Speaker 4: parlays where you usually lose, but like when you win,
Speaker 4: you win a lot. So the four percent is kind
Speaker 4: of misleading. That might be the expected value in terms
Speaker 4: of how often he's supposed to win. There is one irony, though,
Speaker 4: which is that like he was apparently using one of
Speaker 4: the legal sports books that like tipped off major League Baseball.
Speaker 4: So yeah, these guys, will you know, squeal on you
Speaker 4: if you're a Major League Baseball player you decide to
Speaker 4: bet on games. They are they have incentives though, to
Speaker 4: be concerned about about action that could compromise their deal
Speaker 4: with the leagues. They have concerns about game integrity two.
Speaker 4: In some ways, I've been surprised there hasn't been even
Speaker 4: more of a backlash. But look, if you're a major
Speaker 4: League Baseball player, my advice to you is do not
Speaker 4: use like DraftKings or fan duel or a partner that's
Speaker 4: in bed with Major League Baseball. Right use some offshore
Speaker 4: illegal betting website. There's less likelihood of being detected.
Speaker 3: Like Epei Mezuhara did for seventeen million dollars.
Speaker 4: Yeah, at least at least Epe gave himself a chance, right.
Speaker 4: Epe was smart enough to know you're not going to
Speaker 4: fucking bet on fan duel, then you're drawing dead.
Speaker 3: By the way it is, I think it's interesting to
Speaker 3: note when I was saying that it's it's crucial that
Speaker 3: people are being caught, that the four players who were
Speaker 3: suspended for a year, they all bet just a few
Speaker 3: hundred dollars, right like that was. They didn't make big bets,
Speaker 3: they made tiny bets, and they were still suspended. So
Speaker 3: I think that that's actually a really important hardline to
Speaker 3: draw that it doesn't have to be in the millions,
Speaker 3: it doesn't have to be in the hundreds of thousands.
Speaker 3: This was like one hundred bucks, two hundred bucks, you know,
Speaker 3: four hundred bucks.
Speaker 4: Yeah, and uh, you know, Marcano's bets were larger. The
Speaker 4: total some low six figures. But you know, I doubt
Speaker 4: that he is betting to make a profit, right. I mean,
Speaker 4: you take a bunch of competitive young men in any industry,
Speaker 4: there's a lot of DJM, as we would call it,
Speaker 4: a lot of degeneracy and things like poker. High six
Speaker 4: poker games are often played on the back of team
Speaker 4: planes and things like that.
Speaker 1: These people are.
Speaker 4: Around a lot of money all the time. The rookies
Speaker 4: are not making that much, but they're around people who
Speaker 4: are making lots and lots and lots of money.
Speaker 1: You know.
Speaker 4: The one case where there really was some kind of
Speaker 4: expected value for the person making the bets was the
Speaker 4: NBA player John tay Porter, who was apparently had been
Speaker 4: dealt in somehow to individual player parlays where why people
Speaker 4: were betting on this obscure player named John tay Porter
Speaker 4: is hard to know, but he basically intentionally tanked the game, right.
Speaker 4: He would intentionally make up a fake injury, allegedly, he
Speaker 4: would intentionally like not hustle after rebounds, allegedly so that
Speaker 4: his betters would achieve the under on like how many
Speaker 4: points that John tay Porter would receive, and that was
Speaker 4: very suspicious. I mean, I think the NBA got lucky
Speaker 4: that that scandal broke at about the same time as
Speaker 4: the Otani scandal broke, because that actually affected directly affected
Speaker 4: game integrity, and that's like a kind of deeper level
Speaker 4: of hell, I think than what Marcano did.
Speaker 3: I totally agree with you, and I'm really glad I
Speaker 3: was going to bring johntay Porter because I think that
Speaker 3: what is going on there is actually the bigger issue,
Speaker 3: because it's amazing that he was caught, and if you
Speaker 3: think about the fact that I think the much bigger
Speaker 3: issue isn't players like betting themselves because they'll get caught right,
Speaker 3: like you'll figure it out, But players giving other betters
Speaker 3: inside information and then actually affecting outcomes when they're in
Speaker 3: the games. That's much more difficult to police, especially if
Speaker 3: you're smart about it. Right, all of a sudden, if
Speaker 3: you see millions on this obscure player who's then pulling
Speaker 3: off some crazy shit that you know that you are
Speaker 3: thinking of, like what in the world that's a red flag?
Speaker 3: But imagine you're smarter about it, right, Imagine you're actually
Speaker 3: someone who kind is a better cheater, who kind of
Speaker 3: stays under the radar, who manages to do it a
Speaker 3: little bit less blatantly, less often fakes you know, doesn't
Speaker 3: fake injuries quite as much, doesn't throw games in quite
Speaker 3: as obvious a way, but does it anyway. And that
Speaker 3: to me is the much bigger and much scarier issue,
Speaker 3: because that can really affect game integrity, It can affect
Speaker 3: the entire kind of gaming community because it just goes
Speaker 3: against the heart of why people play games, why people
Speaker 3: watch games, you know, what this is all about. And
Speaker 3: I think that that's the much bigger thing we should
Speaker 3: be thinking about.
Speaker 4: Yeah, betting on individual accomplishments raises this risk a lot,
Speaker 4: Like you should not be taking that much action on
Speaker 4: anything involving John tay Porter, right, Like, who the fuck
Speaker 4: is going to bet that unless they have some type
Speaker 4: of inside angle. I mean, I wasn't like a Summer
Speaker 4: League game in Las Vegas about a year ago. Now
Speaker 4: Summer League coincides with the end of the World Series
Speaker 4: of Poker and watching the game and see like some
Speaker 4: team executive two rows in front of me and giant
Speaker 4: font on his cell phone is typing about how the
Speaker 4: New York Mexican a trade for og Ananobi which didn't
Speaker 4: happen then but did actually happen several months later. If
Speaker 4: I having not really it's not really inside information, I
Speaker 4: mean a public area of a stadium, right, But like
Speaker 4: information has a way of slipping out about injuries, about fatigue,
Speaker 4: you know, about like I know, you know, some people
Speaker 4: will hang around tennis tournaments, for example, and see which
Speaker 4: player is having like a cheating scandal with his girlfriend
Speaker 4: or or looks like they're coming in hungover and things
Speaker 4: like that. You know, information has.
Speaker 1: A way of getting out.
Speaker 4: And to limit your liability by focusing on more major
Speaker 4: and more robust wagering categories would be prudent, but you know,
Speaker 4: but look, it's a money grab. The long term sustainability
Speaker 4: of any of this, I think is not as assumed
Speaker 4: as some of the big sports betting companies would would
Speaker 4: right in their stock market and their ten k's and
Speaker 4: things like that. So but you know, at the very
Speaker 4: least they are smart enough to partner with the leagues
Speaker 4: when they detect activity that underminess gain and integrity, to
Speaker 4: at least tip them off to snitch on their customers.
Speaker 3: No, absolutely, And I think we're not just talking about
Speaker 3: US sports betting, US sportsbook. This is happening in sports
Speaker 3: all over the world, and some of the worst are
Speaker 3: actually in Europe and in places where there are lots
Speaker 3: of athletes who are not paid very well. And a
Speaker 3: lot of times they're young, right, they're teenagers. They're still
Speaker 3: developing their sense of self, their sense of kind of
Speaker 3: right and wrong and kind of gray areas and long
Speaker 3: term consequences isn't fully developed. Because, by the way, if
Speaker 3: you're like a seventeen year old guy, your prefrontal cortex
Speaker 3: ain't fully developed yet. Your ability to kind of think
Speaker 3: through long term decisions isn't fully developed. And if someone says,
Speaker 3: do you want to make you know, a quick ten grand?
Speaker 3: A quick you know quick this, You're like, okay, you know,
Speaker 3: this might not be a bad idea. All I have
Speaker 3: to do is, you know, if I'm a tennis player,
Speaker 3: I just serve a little bit off right, just one time.
Speaker 3: That's all it takes. I just lose one point. What's
Speaker 3: one point? You know? I just do this a few times,
Speaker 3: and all of a sudden I have money and you
Speaker 3: don't think, wait, if I'm caught, there goes my career
Speaker 3: and there goes kind of any chance I have of
Speaker 3: all these future earnings. You just don't make that math.
Speaker 3: You're thinking much more in the moment. You're thinking much
Speaker 3: more immediate gratification as opposed to kind of long term
Speaker 3: expected value. And I think that that is something that
Speaker 3: people just need to be aware of, need to be
Speaker 3: aware who the vulnerable players are. And I think that
Speaker 3: teams need to guard against that, need to train against that,
Speaker 3: need to kind of talk to them and explicitly say
Speaker 3: what the long term consequences are and remind them of it.
Speaker 3: I know you said in baseball, you know it can't
Speaker 3: be more explicit, but still like have more reminders, constantly,
Speaker 3: have these reminders of like this is what you don't
Speaker 3: want to do or else it's going to be bad.
Speaker 4: But in an environment that like encourages gambling, where there's
Speaker 4: like draft kings or fan duel or caesars ads on
Speaker 4: the outfield wall and poker games in the team plane,
Speaker 4: you're and never going to have some of this with
Speaker 4: with rich young men and not fully formed pre prefrontal cortexes.
Speaker 3: What is it called yep prefrontal cortex. Okay, yeah, yeah, no,
Speaker 3: I think that's I think that's exactly right. And if
Speaker 3: we if we want to give kind of a nod
Speaker 3: to the next layer, which is the Musuhara of it,
Speaker 3: all right, that you have you have also these situations
Speaker 3: where even if someone like Otani isn't cheating directly, isn't
Speaker 3: isn't sports betting, there are incentives for people close to
Speaker 3: these individuals to try to take advantage.
Speaker 4: Major League Baseball seem pretty excited about being able to
Speaker 4: wrap up that investigation. I mean, there's still a question
Speaker 4: about why didn't Otani notice seventeen million dollars missing from
Speaker 4: his account?
Speaker 1: Like, that's a pretty fucking good question. I think it is.
Speaker 3: It is, and we don't know, right, and but I
Speaker 3: think that it's important to just throw those questions out
Speaker 3: there because it is. Even though as someone who has
Speaker 3: seen a lot of victims of con artists, I'm very
Speaker 3: sympathetic to Otani if we look at it as a
Speaker 3: typical con situation that he was potentially conned my Musahara,
Speaker 3: you know, charmed by him. That Musahara is the one
Speaker 3: who had access to his bank accounts, got all the
Speaker 3: alerts et cetera, et cetera, et cetera. Like you can
Speaker 3: make excuses up to a point, but as you say,
Speaker 3: seventeen million dollars is a big number for anyone, and
Speaker 3: so you have to then ask, like was he knowingly
Speaker 3: looking the other way? Was he involved? Like what was
Speaker 3: going on? And I think these are questions that should
Speaker 3: be asked, but that won't be asked because the incentives
Speaker 3: are completely misaligned here because nobody wants Otani to be
Speaker 3: involved because he's the star, and we want the star
Speaker 3: to keep being an untarnished star, and we want this
Speaker 3: other guy to take the fall. And I do I
Speaker 3: do agree with you though that there are still some
Speaker 3: question marks, and unfortunately, I think that all we can
Speaker 3: do is speculate. We're never going to know, But I
Speaker 3: want to be careful and not to just say, oh,
Speaker 3: like this is a problem of modern sports books, because like,
Speaker 3: let's not forget you know, the Chicago Black Sox, like
Speaker 3: shit like this has been going on in sports for
Speaker 3: a very very long time before fan dual or DraftKings
Speaker 3: or any of these things, and so these are kind
Speaker 3: of these are problems and deep kind of issues of
Speaker 3: humanity that I think are never going to quite go
Speaker 3: away no matter what the regulations say.
Speaker 4: Yeah, look, there are two categories. One is there may
Speaker 4: be cases where it is in your financial interest to
Speaker 4: throw a game, right, one preventative measure is just paying
Speaker 4: everybody really well, including the umpires by the way, where
Speaker 4: it's kind of on the surface irrational for you to
Speaker 4: gamble at that point, although sometimes people gamble for irrational reasons.
Speaker 4: For me, one thing you always remind me of is
Speaker 4: that like most con artists are not motivated strictly by money.
Speaker 3: Yes, absolutely true. Something I also remind you of, Nate,
Speaker 3: is that even though most con artists are not motivated
Speaker 3: by money, most people are not con artists. And so
Speaker 3: I think that that's a more hopeful way to end
Speaker 3: this segment. That most athletes are also, you know, not
Speaker 3: degenerate gamblers, not con artists, and going to be in
Speaker 3: the sport for the right reason. They want to excel,
Speaker 3: they want to do well, they don't want to throw
Speaker 3: the game. We'll be back in a minute. So recently
Speaker 3: we've seen a resurgence of a stock that we haven't
Speaker 3: heard talked about for a few years now, game Stop
Speaker 3: because Roaring Kitty aka Keith Gill is back. And for
Speaker 3: those of you who followed the game Stop short squeeze
Speaker 3: several years ago, Roaring Kitty was kind of the big
Speaker 3: force that had game Stop just go on an unprecedented
Speaker 3: run and put some very famous hedge funds out of
Speaker 3: business and ended up, you know, having this just insane
Speaker 3: impact on the markets. And then Keith Gill Roaring Kitty
Speaker 3: went silent, and a few weeks ago, all of a sudden,
Speaker 3: for the first time, this dormant account started posting memes
Speaker 3: and what happened. Game Stop is back, Baby. The stock
Speaker 3: just went through the roof once again, and Roaring Kitty
Speaker 3: has since made more posts and shown his own holdings,
Speaker 3: including over one hundred million in game Stop stock. And
Speaker 3: the markets are reacting, and game Stop is reacting, the
Speaker 3: SEC is reacting, lots of players are reacting to this
Speaker 3: and trying to figure out what's going on. Is it legal?
Speaker 3: Kind of what are the repercussions of this? Nate, is
Speaker 3: this something that you've been following?
Speaker 4: I wrote about GameStop a little bit in my book
Speaker 4: from the standpoint of game theory. Actually, so, Maria, maybe
Speaker 4: we should actually talk about some of the game theory
Speaker 4: behind shit coins and meme stocks.
Speaker 3: Yeah, I think that's a great idea, Nate, because I
Speaker 3: do think that that's central to this conversation.
Speaker 4: And the meming part of it me is actually very
Speaker 4: central to how the game theory works, believe it or not.
Speaker 4: Like to simplify a bit, typically, what you have is,
Speaker 4: let's say you have like an overvalued asset. In principle,
Speaker 4: people who own that asset could sort of literally conspire
Speaker 4: or collude to keep the asset at an artificial value.
Speaker 4: As long as nobody sells, right, then it maintains at
Speaker 4: least nominally its value, or maybe it keeps going up
Speaker 4: if everyone is being like total hold on for dear
Speaker 4: life and wants to kind of boost the asset further.
Speaker 4: So the problem with that is that like you have,
Speaker 4: in game theory terms, a prisoner's dilemma where every party.
Speaker 1: Has a strong incentive to defect.
Speaker 4: Right if game Stop is priced at fifty dollars when
Speaker 4: the fundamentals price should be two dollars or something like that,
Speaker 4: a share, you really have a strong incentive to get
Speaker 4: out while you can and take your profits. That could
Speaker 4: trigger a collapse in the share price. However, due to
Speaker 4: the power of means a sort of coordination is possible
Speaker 4: in the prisoner's dilemma. This is what happens when Maria,
Speaker 4: let's say you and I commit a crime and we're
Speaker 4: in separate jail, says, I don't know what's the most
Speaker 4: likely crime we were to commit.
Speaker 3: I don't want to speculate on this night. You and
Speaker 3: I are complete. Maybe we're not going any crimes ever,
Speaker 3: So let's.
Speaker 4: Say we kidnapped Justice sonya sort of mayor okay, okay,
Speaker 4: that would be a pretty serious crimes. But let's say
Speaker 4: the government is having trouble proving it, and therefore we
Speaker 4: are in separate prison cells, and the government says, well,
Speaker 4: you can confess to the crime and get a lower sentence,
Speaker 4: or you can remain silent, and we'll see what happens.
Speaker 4: Right now, if neither of us were to confess the
Speaker 4: way this works, we would kind of get like a
Speaker 4: slap on the risk because the government can't really prove
Speaker 4: its case. But the game theory is such that not
Speaker 4: being able to coordinate on our strategy, we both wind
Speaker 4: up stitching on one another and wind up getting a
Speaker 4: worse sentence as a result. It's kind of the very simplified,
Speaker 4: podcast friendly version of the prisoner's dilemma if we could
Speaker 4: coordinate though. I went to a Prediction markets conference this
Speaker 4: weekend in California where a guy had a T shirt
Speaker 4: on saying I cooperate in the Prisoner's dilemma, meaning that
Speaker 4: if we can single to one another, that we are
Speaker 4: cooperating and this is great. Yeah, this is what happens
Speaker 4: in situations like the internet. Right, if you're like, we're
Speaker 4: all of this together against a stupid hedge fund, against
Speaker 4: Wall Street and inherently a stock like AMC Theaters or
Speaker 4: game Stop is like, it's kind of a joke, right,
Speaker 4: These are like kind of Blockbuster video dinosaur companies.
Speaker 1: It's kind of funny.
Speaker 4: And the fact that like that through Matt Levine, the
Speaker 4: economics writer for Bloomberg, calls it the meme theory of value.
Speaker 4: You are kind of literally creating something out of nothing.
Speaker 3: Yeah. So I think that we have some bigger questions
Speaker 3: here though, that are like much bigger than Roaring Kitty
Speaker 3: and is more about like the roaring kitties of the world. Right,
Speaker 3: so this you know, what happened in twenty twenty one,
Speaker 3: totally unprecedented. What's happening right now shows that this is
Speaker 3: a thing that might actually not be so one off, right,
Speaker 3: It might actually be repeating, and we might be in
Speaker 3: a position where kind of meme stocks, shit coins, these
Speaker 3: types of things really do have an impact on the
Speaker 3: broader financial markets that we see these degrees of irrationality
Speaker 3: or is it irrational that are playing out in the
Speaker 3: broader stock market, where people in kind of the traditional
Speaker 3: market analysis are going to have to look at this
Speaker 3: differently and try to figure out has the world changed?
Speaker 3: Do we need to change how we think about this?
Speaker 3: You know, do we need to change where we think
Speaker 3: the dumb money is or how it operates, or whether
Speaker 3: it's actually dumb? And I think that these are really
Speaker 3: important questions, especially as crypto becomes a much bigger world
Speaker 3: and memes are the universal language. In some ways, these
Speaker 3: are things that just did not exist in the stock
Speaker 3: market or in the financial markets in the past.
Speaker 4: Yeah, look, it's a little bit of a blow to
Speaker 4: kind of efficient market hypothesis. Clearly, stocks like AMC or
Speaker 4: GameStop are unmorried from any notion of kind of the
Speaker 4: fundamental values. Although with that said, like a lot of
Speaker 4: things are kind of in the eye of a beholder.
Speaker 1: You know why.
Speaker 4: Everyone thinks that, like a Picasso or a or a
Speaker 4: Keith Herring or whatever else. You know, why are those
Speaker 4: works of our valuable? I mean, often I think they
Speaker 4: do have esthetic value, but it's inherently kind of subjective.
Speaker 4: It speaks to, I think the kind of maybe inherent
Speaker 4: unpredictability of the modern world. It speaks a little bit
Speaker 4: to like the way that these kind of faceless, leaderless
Speaker 4: internet mobs, because royn Kitty is not like.
Speaker 1: Using explicit instructions.
Speaker 4: He's just kind of communicating through through memes and vibes
Speaker 4: and people kind of infer what he's saying, and it
Speaker 4: kind of starts to chain a momentum that kind of
Speaker 4: can sustain itself for some period of time. And can
Speaker 4: you time it well enough that you kind.
Speaker 1: Of get out before the bubble inevitably bursts?
Speaker 3: Yeah? And is this something that is going to be replicable? Right?
Speaker 3: I think that I think that that's another question because
Speaker 3: I think other people have tried to be Roaring Kitty
Speaker 3: and have failed. But I do think that, you know,
Speaker 3: there is irrationality in the stock markets in general, and
Speaker 3: always has been one of my favorite quotes from Daniel Konneman,
Speaker 3: who won the Nobel Prize in Economics for his work
Speaker 3: on kind of biases and irrationality. He consulted for a
Speaker 3: bunch of hedge funds and he came to the conclusion
Speaker 3: that basically traders were gambling. They were not playing poker.
Speaker 3: And he said that poker players are you know, much more,
Speaker 3: much more rational and can actually, you know, you can
Speaker 3: figure out who the winning players are, where the edge is,
Speaker 3: et cetera. Gambling. If you're just gambling in a casino,
Speaker 3: you can't. And he said, what you guys are doing
Speaker 3: is gambling. And no one listened to him, and they
Speaker 3: thought that he was, you know, just full of it,
Speaker 3: and so they didn't take any of his recommendations to heart.
Speaker 3: And but I think that that's a really kind of
Speaker 3: important insight that this is not necessarily counter to how
Speaker 3: a lot of decision making in the stock markets has
Speaker 3: worked in the past. It's just a new element, a
Speaker 3: new world, and kind of putting some of the stuff
Speaker 3: on steroids, right, blowing it up in a way that
Speaker 3: it hasn't been blown up before, and potentially kind of
Speaker 3: making that exponentially more powerful.
Speaker 4: Maria, I'm not I'm not one to like dispute too
Speaker 4: much the late Daniel Conneman.
Speaker 3: Right, Well, that's why that's why I consulted, right, Okay,
Speaker 3: that's why I couched my views with Danny Connoman, right,
Speaker 3: because I know that you can disagree with me, but
Speaker 3: he's he's harder to disagree with. Please continue.
Speaker 4: I don't know, like I, when you have like the
Speaker 4: practice of like actual traders betting millions of dollars versus academics,
Speaker 4: even academics as smart as Daniel Conneman, I'm not sure
Speaker 4: I take the academic side. I think it's really easy
Speaker 4: to like come to some theoical conclusion when you don't
Speaker 4: have skin in the game that might not be robust necessarily.
Speaker 4: I talked to a guy named John Coates for my book,
Speaker 4: who is a former trader turned neuroscientists, and he actually
Speaker 4: thought when he was working on desks at Wall Street
Speaker 4: that the traders didn't take enough risk. It's hard to
Speaker 4: get people to be properly, properly risk adjusted until they
Speaker 4: kind of had a winning streak. Then they got all
Speaker 4: this testosteron anotherchemicals run around the brain and come like
Speaker 4: feral animals and go kind of crazy, right, And that's
Speaker 4: kind of what can cause bubbles. But yeah, look, I
Speaker 4: mean because there's kind of two forms of efficient market hypothesis, right.
Speaker 4: There's kind of like the hard form that, yes, stocks
Speaker 4: actually do represent a probabilistic discounted projection of future corporate earnings,
Speaker 4: Like that's clearly not true when it comes to something
Speaker 4: like game stop. The softer form is just that, Okay,
Speaker 4: you think you can beat the market, go ahead and try.
Speaker 4: You might understand that like, yes, gamestopers over valued, but
Speaker 4: good luck in trying to time exactly kind of win
Speaker 4: that bubble bursts.
Speaker 3: Yeah, and I think that the bigger point here when
Speaker 3: you said that anyone can try, And something that I
Speaker 3: think Conoman was trying to get at is that, of
Speaker 3: course there are traders and there are certain investors who
Speaker 3: can beat the markets, right, there are people who are
Speaker 3: very good at this, who kind of understand, who analyze well,
Speaker 3: who have the right data, right approach, whatever it is.
Speaker 3: But that's not true for the majority. But if you
Speaker 3: talk to anyone individual, they always think that they're the
Speaker 3: ones who are who are actually more rational and can
Speaker 3: beat the markets and are making better decisions. And I
Speaker 3: think that that's just an overall human flaw.
Speaker 4: Yeah, Look, if ten percent of people in the world
Speaker 4: are the truly rational ones, there's no guarantee that you're
Speaker 4: in the ten percent. The correlation, like self perception and
Speaker 4: reality is probably probably fairly discordant sometimes.
Speaker 3: Yeah, and I think that that's just something that's very
Speaker 3: important to remember, whether you're a roaring kitty, whether you're
Speaker 3: one of the portfolio managers who is on the other
Speaker 3: side and short game stop, or whether you're someone who's
Speaker 3: just an outside observer thinking how do I get in
Speaker 3: on this in the future and make a killing. You
Speaker 3: and I have to totally switched positions this week, Knate,
Speaker 3: because last week when we were recording, I was in
Speaker 3: New Haven about to go to Ireland and you were
Speaker 3: deep in the World Series. And now I am finally
Speaker 3: back in Vegas and you are back in New York City,
Speaker 3: so we have swapped. And unfortunately I'm not making a
Speaker 3: deep run. I've played exactly one event since I've been
Speaker 3: back and I busted. So that didn't that didn't go
Speaker 3: according to plan, and I'll play again today. But you
Speaker 3: managed to go deep in a second event that was
Speaker 3: not the event that we were talking about, So congratulations.
Speaker 4: Thank you, although it ended in a very disappointing way.
Speaker 4: This was that five thousand dollars in a limit hold
Speaker 4: them event number sixteen.
Speaker 3: That's a big deal name.
Speaker 4: I finished in eighteenth place out of eight hundred and
Speaker 4: something runners.
Speaker 3: However, congratulations, thank you, Maria.
Speaker 4: I still am mildly heartbroken about it because.
Speaker 3: You wont dolences congratulate.
Speaker 4: Adolence is like the most common poker emotion basically, so
Speaker 4: I kind of lost on a bad beat, which I'm
Speaker 4: not gonna dwell on. I saw your new substack post
Speaker 4: Marie about like players complaining about bad beats. But basically
Speaker 4: I had pocket fives against jack ten offsuit on a
Speaker 4: board of jack ten five, So I had a set.
Speaker 4: My opponent had the kind of next best time that
Speaker 4: isn't a set, which is jack ten for two pair. Unfortunately,
Speaker 4: a jacket on the turn, and so this dude, by
Speaker 4: the way, won the fucking event. I think I deserved
Speaker 4: like half his prize pool.
Speaker 1: Basically, it was an.
Speaker 3: Awesome Nate, by the way, if it worked that way,
Speaker 3: that would be a great role.
Speaker 4: You like tag the chips that you have equity in.
Speaker 4: I'm not complaining about this past.
Speaker 3: Year, Yes, you are just just acknowledged that you're complaining
Speaker 3: about the bad beat and move on.
Speaker 4: We cover important news the worlds. There is a poker
Speaker 4: and part of the news is that a player who
Speaker 4: had a lot of chips was eliminated in eighteenth place,
Speaker 4: you know, conveying the news, all right, hows my reporting
Speaker 4: suggests player got very lucky at several earlier points in
Speaker 4: this tournament. For example, this player had pocket queens all
Speaker 4: against all against aces and and the queen's won. This
Speaker 4: player had pocket tens almost all all in against pocket
Speaker 4: kings and the tens one for example.
Speaker 3: So player mister Nathaniel Silver got got ridiculously lucky to
Speaker 3: even get to the point where his set could be cracked.
Speaker 3: All right, So so let's reframe that as god beats
Speaker 3: are good now, but you did you did bust in
Speaker 3: unfortunate circumstances.
Speaker 4: Uh, Maria, what about what about Europe? How's the series
Speaker 4: gone for you?
Speaker 1: So far?
Speaker 3: My update sucks?
Speaker 4: Oh no? Are you are you over? I?
Speaker 3: Well no, my first event I won the ten k bounties,
Speaker 3: so it's pretty good. Yeah, so together, but otherwise zero cashes.
Speaker 4: It's the line between successes and is soaked in in poker,
Speaker 4: by the way, because like the first week into it,
Speaker 4: I had like one mini cash out of and like, no,
Speaker 4: it's like, oh, I'm having a really great world series.
Speaker 4: You know, it's all pretty fucking arbitrary, and it all
Speaker 4: it all. I mean, it doesn't necessarily even out. It's
Speaker 4: like the Gambler's fallacy. But like over long rain.
Speaker 3: Thanks for reading my substeck Natee.
Speaker 4: Read Maria subsec she needs revenue now to make up
Speaker 4: for her poker losses.
Speaker 3: Folks, Yes, because the my update sucks is because the
Speaker 3: one event I played was a twenty five thousand dollars
Speaker 3: by an event and I did not cash in it.
Speaker 3: So I went from being flat for the World Series
Speaker 3: to being down twenty five thousand dollars.
Speaker 4: Maybe if you concentrated more on the poker or not
Speaker 4: your newsletter, Maria, you wouldn't have busted out.
Speaker 3: But I feel like I own it, owe it to
Speaker 3: my fans, and my newsletter is about all the things
Speaker 3: I did wrong or other people did wrong, so that
Speaker 3: I played better, And today is the day we change
Speaker 3: all of that so that next week when we're recording,
Speaker 3: we can talk about my deep run. How's that for optimism.
Speaker 3: It's a deal, all right, let's do it. That's it
Speaker 3: for today. We have already been getting some listener questions,
Speaker 3: which is amazing. Please keep them coming. We want to
Speaker 3: hear from you, and we will be addressing some of
Speaker 3: the questions in segments on our podcast going forward. We
Speaker 3: even have an email address for you to use. Now
Speaker 3: it's just Risky Business one word at pushkin dot fm.
Speaker 4: And don't forget to rate and review the show. We
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Speaker 4: you can probably infer which ones we like more.
Speaker 3: Risky Business is hosted by me Maria Kanakova and me
Speaker 3: Mate Silver. The show is a co production of Pushkin
Speaker 3: Industries and iHeartMedia. This episode was produced by Isabelle Carter.
Speaker 3: Our associate producer is Gabriel Hunter Chang. Our executive producer
Speaker 3: is Jacob Goldstein.
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