Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. Would you consider yourself
Speaker 1: a swifty? I think it's a scale, like oh, so
Speaker 1: many group chats. This week, I found myself talking with
Speaker 1: my coworkers about Taylor Swift.
Speaker 2: I like music, but I'm not like keeping up with
Speaker 2: every single thing she does with her life.
Speaker 1: That's Bloomberg's Personal Finance reporter Francesca Maglione. I am a
Speaker 1: big fan, and that's Annie Massa, a Bloomberg Wealth reporter.
Speaker 3: I am probably not all the way down the rabbit
Speaker 3: hole on every single development and every single Easter egg
Speaker 3: and every single song. But was I singing August in
Speaker 3: honor of my friend's birthday at a karaoke last week. Yes.
Speaker 1: Taylor Swift and NFL player Travis Kelce announced their engagement
Speaker 1: on Tuesday, and I wanted to talk to Francesca and
Speaker 1: Annie because there's one corner of the universe that's been
Speaker 1: turning their engagement into a money making event, the people
Speaker 1: making predictions and financial bets on where their relationship will
Speaker 1: go next.
Speaker 2: We had like a bet on our team, and people
Speaker 2: had to give their like what they thought was going
Speaker 2: to happen with them in twenty twenty five, and I
Speaker 2: had said that they were going to break up, so
Speaker 2: I think I was expecting that at all.
Speaker 1: Did you lose money on that bet?
Speaker 2: No? No, no money was involved, thankfully.
Speaker 1: The rise of legal online betting in the US over
Speaker 1: the last few years has ushered in all kinds of
Speaker 1: vets like bets on current events and pop culture made
Speaker 1: on prediction markets like Polymarket and call She.
Speaker 2: So far this year, both of these platforms have had
Speaker 2: more than a billion in trading volume, so they've become
Speaker 2: more significant as the years go by.
Speaker 1: Within hours of Tailor and Travis's announcement, gamblers on call
Speaker 1: She had placed about eighty thousand dollars worth of bets
Speaker 1: on the couple's wedding timeline, and by Thursday that number
Speaker 1: had doubled to around one hundred and sixty thousand dollars.
Speaker 3: Yes.
Speaker 1: By Thursday afternoon, the odds of Taylor and Travis getting
Speaker 1: married by the end of the year hovered at around
Speaker 1: seven percent.
Speaker 3: I was not placing any bets personally, but I was
Speaker 3: kind of bearish. So here we are and very happy
Speaker 3: for them, obviously.
Speaker 1: Yeah, bullish now on.
Speaker 3: Travis and Taylor one hundred percent.
Speaker 1: I'm Sarah Holder And this is the big take from
Speaker 1: Bloomberg News Today on the show, How prediction markets work,
Speaker 1: why they're exploding in popularity, and what this all means
Speaker 1: for the people and events they're betting on. Betting isn't new.
Speaker 1: Humans have been doing it for millennia, but online prediction
Speaker 1: markets like polymarket and call She have recently surged in
Speaker 1: popularity in the US. If I've never used polymarket before
Speaker 1: or call she. Is this like sports betting or is
Speaker 1: it different? How does it actually work?
Speaker 3: The easiest explanation would be, in the context of a
Speaker 3: presidential election, who will win Kamala Harris or Donald Trump?
Speaker 1: That's Bloomberg Wealth reporter Annie Massa.
Speaker 3: And you can bet on who will win. But now
Speaker 3: you're able to get odds effectively on all sorts of
Speaker 3: other different things. So will this event happen in the future?
Speaker 3: Yes or no? Will Taylor Swift release an album by
Speaker 3: the end of the year, Yes or no?
Speaker 1: And gods of that went up significantly?
Speaker 3: Yes, exactly, And you can watch in real time as
Speaker 3: these odds change based on who's placing bets for yes, no,
Speaker 3: or a range of other different outcomes for depending on
Speaker 3: the type of market it is.
Speaker 1: Polymarket was founded in twenty twenty and it's gotten major
Speaker 1: funding support from Peter Teel and Ethereum founder Vitolic Buterine.
Speaker 1: This year alone, it's nearly two hundred and thirty thousand
Speaker 1: monthly users have placed nearly sixteen billion dollars of bets
Speaker 1: on real world events. Here's Francesca Magleone, Bloomberg's Personal Finance reporter.
Speaker 2: Started around the presidential election, and it's kind of shifted
Speaker 2: just beyond politics and everything in pop culture when it
Speaker 2: comes to Taylor Swift in general, I think people are
Speaker 2: betting on things as she is she going to have
Speaker 2: a baby this year? Like when are they going to
Speaker 2: get engaged? Is the wedding going to happen this year?
Speaker 2: Like anything you could think of people are betting on.
Speaker 2: There's a market for that for.
Speaker 1: Sure, and what happens when you win and what happens
Speaker 1: when you lose, like how much money is on the
Speaker 1: line here.
Speaker 3: These markets have grown in size over time, but a
Speaker 3: basic example would be you bet a few cents on
Speaker 3: a yes or no and the market settles to a dollar,
Speaker 3: and so effectively you've put down a few cents to
Speaker 3: place the bet based on what the odds are and
Speaker 3: if you were correct, then that market settles to a dollar.
Speaker 1: This can all happen quickly. You type in your card
Speaker 1: info or hook up your crypto wallet and put some
Speaker 1: money on the odds of the Yankees winning tonight, or
Speaker 1: on Travis and Taylor tying the knot by the end
Speaker 1: of the year, depending on what you're wagering on. The
Speaker 1: market closes when in a ends, like after the last
Speaker 1: inning in a baseball game, or it could end at
Speaker 1: a preset cutoff time, and once the market closes, you
Speaker 1: either get your payout or you lose.
Speaker 2: There's been some studies that have said that Americans are
Speaker 2: taking money out of their brokerage accounts to fund some
Speaker 2: of these wages, and in extreme cases there's losses from
Speaker 2: gambling that can contribute to autolone delinquencies and bankruptcies.
Speaker 1: Is this part of a broader trend of online betting
Speaker 1: markets gaining popularity like DraftKings or other websites.
Speaker 2: Yeah, sports betting we've seen grow in popularity, and it's
Speaker 2: also interesting just culturally. Now people will go online to
Speaker 2: check what are the odds of this happening, So it's
Speaker 2: becoming kind of a cultural phenomenon or a place that
Speaker 2: people go to gut check anything that they're questioning or
Speaker 2: thinking about.
Speaker 1: What is a company like this worth.
Speaker 3: So actually, both Calshie and Polymarket have been fundraising, and
Speaker 3: Calsh's valued at two billion dollars now, Polymarket's valued at
Speaker 3: about a billion dollars now. The other thing is the
Speaker 3: intersection of the types of investors in these companies. You
Speaker 3: have an intersection of Silicon Valley and some more traditional
Speaker 3: Wall Street kind of firms. So Susquehanna, which is not
Speaker 3: maybe well known on Main Street, but very well known
Speaker 3: big Wall Street trading firm, is a big backer of Calshi.
Speaker 3: So again like a mix of both the more Silicon
Speaker 3: Valley side of things and the Wall Street side of things.
Speaker 3: And Founder's Fund is a big backer of poly.
Speaker 1: Market and some other notable backers like Donald Trump Junior.
Speaker 3: Donald Trump Junior has been taking on advisory roles at
Speaker 3: a whole bunch of different companies. That's included cryptocurrency realm,
Speaker 3: it's included firearms, all kinds of different companies. But he
Speaker 3: now has a pretty strong foothold in both major prediction
Speaker 3: markets in the US. In January, became an advisor to
Speaker 3: Calshy and just became an advisor to Polymarket, and he
Speaker 3: is a partner at this firm called seventeen eighty nine Capital,
Speaker 3: which invested in Polymarket.
Speaker 1: Why is he so interested in this company?
Speaker 3: He said when he took the role at Calshi that
Speaker 3: prediction markets allowed him and his family, when they were
Speaker 3: watching the returns for the twenty twenty four election at
Speaker 3: mar A Lago, to kind of have a better finger
Speaker 3: on the pulse of what was actually going to happen
Speaker 3: versus polls. Another thing that advocates of prediction markets say
Speaker 3: is that they're usually more accurate than polls, which you
Speaker 3: can debate, but that's what advocates say. And so he
Speaker 3: took the approach that, oh, you know, Calshi helped my
Speaker 3: family understand what was really going on. It's also very
Speaker 3: possible that he sees a lucrative business opportunity in advising
Speaker 3: both of these companies. Who's to say. And so, what's
Speaker 3: really happened is in the past year, and especially under
Speaker 3: the Trump administration, you've seen a more lax regulatory approach
Speaker 3: to policing some of these prediction markets, which have been
Speaker 3: very controversial over.
Speaker 1: Time, controversial, not only because of that murky regulatory landscape,
Speaker 1: but because of the real world implications of betting on
Speaker 1: real world events.
Speaker 3: You can look at it two ways. If you are
Speaker 3: an advocate for prediction markets, you might say, well, this
Speaker 3: is providing some kind of valuable information or wisdom of
Speaker 3: the crowds on anything that will happen next, even if
Speaker 3: a situation is tragic. If you're a detractor, you might say, well,
Speaker 3: you can come up with all kinds of twisted markets
Speaker 3: or sick markets on things, And is that really a
Speaker 3: good idea to start putting that out for people to
Speaker 3: win money on.
Speaker 1: Yeah, it's a really thorny ethical question. Yeah, prediction markets
Speaker 1: rocky road to regulation and how they're influencing the way
Speaker 1: we think about and experience current events. That's after the break.
Speaker 1: A few years after prediction markets hit the scene, the
Speaker 1: industry faced a major roadblock. People were flocking to sites
Speaker 1: like polymarket and call she, but the platforms were operating
Speaker 1: in a regulatory gray area, and Bloomberg reporter Annie Massa
Speaker 1: says they drew the attention of the Commodity Futures Trading Commission,
Speaker 1: or the CFTC. It's a federal agency that regulates the
Speaker 1: derivatives market, which, unlike traditional gambling, is not regulated by
Speaker 1: the States.
Speaker 3: The CFTC has taken a pretty stern approach in the
Speaker 3: past toward these contracts and basically said, if you're betting
Speaker 3: yes or no on the outcomes, if you have money
Speaker 3: on the line, that type of product is something that
Speaker 3: we regulate and we oversee. You need to register with us,
Speaker 3: and we are the watchdogs of this market. And both
Speaker 3: Calshi and Polymarke have had their own skirmishes in the
Speaker 3: regulatory arena.
Speaker 1: The CFTC first targeted call She back in twenty twenty three.
Speaker 1: The regulator claimed that the political betting the platform facilitated
Speaker 1: was illegal and ordered them to stop operating, but Call
Speaker 1: she sued and after a federal court battle, the CFTC
Speaker 1: dropped its appeal in May of this year.
Speaker 3: But the tension for Polymarket had to do with two
Speaker 3: separate inquiries. There was DOJ probe which resulted in this
Speaker 3: big FBI raid on the CEO's penthouse in Soho last year,
Speaker 3: and there was a separate inquiry from the CFTC. The
Speaker 3: CFTC fined them over a million dollars, saying you're allowing
Speaker 3: customers to bet on outcomes and trade contracts that are
Speaker 3: basically something that we should be regulating. You need to
Speaker 3: register with US.
Speaker 1: In twenty twenty two, the US banned Polymarket outright. That
Speaker 1: meant US based users weren't allowed to place bets on
Speaker 1: the site.
Speaker 3: Polymarket was almost an exile in some ways just for
Speaker 3: the US.
Speaker 1: That didn't stop the site from featuring bets about the US.
Speaker 1: In twenty twenty four, Polymarket hosted millions of dollars in
Speaker 1: bets about whether or not Donald Trump would win the
Speaker 1: presidential election. Spoiler alert, he won, just as Polymarket users
Speaker 1: had predicted. I remember that with the presidential election that
Speaker 1: was kind of like an informal poll that actually ended
Speaker 1: up being more accurate.
Speaker 2: Yeah, I have a friend that anytime something going on,
Speaker 2: she just goes on Calshien is like, yeah, no, we
Speaker 2: don't have to worry about this or low or whatever
Speaker 2: the case might be.
Speaker 1: Then in July of this year, the US government and
Speaker 1: Polymarket found a way to move forward. The US shut
Speaker 1: down the two federal probes opened under the Biden administration,
Speaker 1: and Polymarket bought a derivatives exchange and clearing house called QCX,
Speaker 1: which gave them stronger legal standing to operate in the US.
Speaker 1: You both mentioned how influential Polymarket and Calls's predictions have
Speaker 1: grown as a cultural force a political course. Where do
Speaker 1: you see that influence going next.
Speaker 2: I think in the future many people will turn to
Speaker 2: them to kind of gut check events or presidential races.
Speaker 2: They become really helpful to kind of see how people
Speaker 2: online are feeling, Like, will.
Speaker 3: Lisa Cook actually be removed would be an example. There
Speaker 3: are some controversial ones. Earlier in the year, when there
Speaker 3: were wildfires in Los Angeles, Polymarket had a market on
Speaker 3: the trajectory of the wildfires, which people found pretty un towered.
Speaker 3: So it can go all over the place. It's not
Speaker 3: just in the realm of politics or even pop culture.
Speaker 3: You can put odds on a lot of different things.
Speaker 1: Now, yeah, that's disturbing people betting on something that could
Speaker 1: destroy people's livelihoods or their lives. But I guess that
Speaker 1: once you open that door, anything can go on the platform.
Speaker 1: But Francesca says she's also looking at how the demographics
Speaker 1: of people using these platforms could shift over time and
Speaker 1: how that could influence the outcome of certain bets.
Speaker 2: Right now, mostly men are users, Maybe we see more
Speaker 2: women go on there and it become more popular, because
Speaker 2: I do think that it's pretty like the online bro
Speaker 2: crypto bro environment right now, but maybe moving forward it
Speaker 2: will become more mainstream and maybe more accurate in that
Speaker 2: way as well.
Speaker 1: What are the implications of the platform having a certain
Speaker 1: kind of better or a certain kind of user. How
Speaker 1: might that impact the kinds of predictions it will spit out,
Speaker 1: and how might that have an impact on real life.
Speaker 3: There were these markets on throwing things onto the court
Speaker 3: at WNBA games, and the critique there is you're almost
Speaker 3: encouraging certain behaviors by posting these certain markets.
Speaker 2: Yeah, there's some people that are worried that it might
Speaker 2: influence real life events because some people could say it's biased,
Speaker 2: and so that's dangerous in the sense that one opinion
Speaker 2: is getting kind of an advantage over another as more
Speaker 2: people kind of turn to Calci or polymarket, like I said,
Speaker 2: to gut check things, and if you're a gut checking
Speaker 2: against kind of a biased opinion, then that might influence
Speaker 2: real life events or the way that people think about
Speaker 2: races or things like that.
Speaker 1: Yeah, yeah, well, and that's famously one of the impacts
Speaker 1: of political polls.
Speaker 3: Right, if you see your.
Speaker 1: Candidate leading in the polls, maybe you're less likely to
Speaker 1: vote or more likely to switch candidates. Or there are
Speaker 1: impacts of seeing where the wisdom of the crowd is
Speaker 1: pointing and.
Speaker 2: People want to win, and so if you think that
Speaker 2: a outcome is going to go a certain way because
Speaker 2: you saw it on Calshi, then maybe that will make
Speaker 2: you go that way as well.
Speaker 3: Well.
Speaker 1: We've got to hope that Taylor was not influenced to
Speaker 1: get engaged by poly market. I'm sure there's more love.
Speaker 3: There, hope.
Speaker 1: This is the Big Take from Bloomberg News Sarah Holder.
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