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Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.

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Speaker 2: Hello and welcome to another episode of The Odd Lots Podcast.

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Speaker 2: I'm Tracy Alloway.

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Speaker 3: And I'm Joe Wisenthal.

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Speaker 4: Joe.

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Speaker 2: Prediction markets.

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Speaker 3: Yeah, I love them.

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Speaker 2: I know you do. I find them mostly entertaining versus insightful,

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Speaker 2: and I like looking up things that people are betting on.

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Speaker 2: So I saw today people are betting on the temperature

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Speaker 2: in New York. There's one pool for will Doge and

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Speaker 2: Elon Musk claim there's missing goal at Fort Knox before May.

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Speaker 2: There's political stuff obviously, like who will be the next

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Speaker 2: German Chancellor, But we haven't actually done that many prediction

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Speaker 2: markets episodes. We did one with Nate Silver late last year,

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Speaker 2: but we should talk about them more.

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Speaker 3: No, I totally agree, and I'll see two things in

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Speaker 3: their defense. One is, I to the point like it's

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Speaker 3: interesting to see what people are betting on. It's sort

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Speaker 3: of an interesting news filter in and of itself, because

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Speaker 3: I'll look at a polymarket and it's like I didn't

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Speaker 3: even know people were talking about this. Whatever it is

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Speaker 3: is someone going to have a baby, is so and so,

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Speaker 3: you know, gonna be with so and so on. Love

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Speaker 3: is blonde or whatever. Try don't watch, but you know

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Speaker 3: it like gives you a read on like, Okay, this

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Speaker 3: is interesting right now. And I do really think there's

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Speaker 3: something to be gleaned that's in the price that in

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Speaker 3: several of these And it's not that they're right or wrong.

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Speaker 3: And I've never thought about the usefulness of prediction markets

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Speaker 3: from a right or wrongs standpoint, but more like, you know,

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Speaker 3: if you have an opinion on something, how does it

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Speaker 3: differ from conventional wisdom right now? Is there a big

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Speaker 3: gap between your sense of something happening in the market

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Speaker 3: sense of something and so sort of taking the temperature

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Speaker 3: of the betting public, and it is a narrow slice.

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Speaker 3: You know, not everyone bets, but you know, generally speaking,

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Speaker 3: there isn't gold lying on the ground, right Like generally speaking,

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Speaker 3: there aren't tons of obvious opportunities to make money from

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Speaker 3: these markets.

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Speaker 2: So I will just say one of the big debates

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Speaker 2: is whether or not this has social value. If you

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Speaker 2: add financial incentives into betting the betting mix, do you

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Speaker 2: actually get better predictions? As you say, there tends to

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Speaker 2: be a certain type of person who is betting on

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Speaker 2: something like polymarket and Calshi, so maybe it's a good

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Speaker 2: thing for getting a read on a particular slice of

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Speaker 2: the population, but I definitely have questions Anyway, all of

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Speaker 2: it kind of got me thinking we've probably had some

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Speaker 2: form of early prediction market, way way back before we

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Speaker 2: had things like poly market and Calshi and I guess

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Speaker 2: getting philosophical. All markets are essentially prediction markets. People think

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Speaker 2: a company will do well or bad. But there must

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Speaker 2: be some early examples of people betting on very specific

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Speaker 2: social things. And it turns out there is one. There's

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Speaker 2: a really good example, and it is the PayPal prediction market.

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Speaker 3: This is crazy to me. I had no idea this existed.

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Speaker 2: Yeah, so in Renaissance Rome, betting on who would be

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Speaker 2: the next pope was a thing, and in fact, a

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Speaker 2: very interesting market was built around it. So we should

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Speaker 2: talk about that. And I'm glad to say we have

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Speaker 2: the perfect guest to talk papal prediction markets. We're going

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Speaker 2: to be speaking with Ryan Izako. He is the author

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Speaker 2: of the No Dumb Ideas sub stack. So Ryan, welcome

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Speaker 2: to the show.

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Speaker 4: I'm thrilled to be here.

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Speaker 2: Why did you decide to become an expert in Renaissance

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Speaker 2: papal betting? Markets.

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Speaker 4: It's a good question. It goes back to I was

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Speaker 4: writing a substack about prediction markets in general. I typically

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Speaker 4: write about economic or social ideas through the lens of

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Speaker 4: a business pitch, and I wrote one about the idea

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Speaker 4: of paying lobbyists through prediction market contracts, and that got

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Speaker 4: me onto poly market regularly to check what the latest

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Speaker 4: bets were. And I saw when the Pope was in

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Speaker 4: the hospital and I'm glad to say he's doing better

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Speaker 4: that one of the top markets.

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Speaker 3: Or recording this March eleventh, I could.

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Speaker 4: Go, yeah, one of the top one of the top

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Speaker 4: markets on polymarket was new Pope in twenty twenty five,

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Speaker 4: and that just seems so shocking to me. It's like

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Speaker 4: such an outrageous thing to bet on. And when I

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Speaker 4: went to the comments, which were a mix of compassionate

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Speaker 4: and tasteless, I saw this idea that you could be

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Speaker 4: excommunicated for gambling on this market, and while that's actually

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Speaker 4: no longer true, that led me down this rabbit hole

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Speaker 4: of trying to understand what were the dynamics around this,

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Speaker 4: why was this put into place, what did it mean?

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Speaker 4: And I started looking at the academic literature and I

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Speaker 4: saw there wasn't a lot of public facing writing that

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Speaker 4: went any deeper than this market existed, and you could

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Speaker 4: be excommunicated for it. And so I figured, if not me,

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Speaker 4: then who else that's warted writing about it?

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Speaker 2: All?

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Speaker 1: Right?

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Speaker 3: Keep going? So what years are we talking about? When?

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Speaker 3: At what point did the Catholic Church have a ban

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Speaker 3: on betting on the next pope?

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Speaker 4: Yeah, so the ban was put into place in fifteen

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Speaker 4: ninety one. It was called Colgetos. That's my attempt at Latin.

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Speaker 4: And this papal bowl was just sort of a decree

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Speaker 4: that has the rule of law in the Catholic Church.

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Speaker 4: Banned all forms of betting on cardinals' duration of a

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Speaker 4: pope's length, duration of a conclave, and who the next

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Speaker 4: pope would be. And in the bowl it had a

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Speaker 4: punishment of automatic excommunication. Is which the bowl b U

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Speaker 4: l L animal. It's like the animal. And so it's

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Speaker 4: a it's a papal decree that essentially has the rule

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Speaker 4: of law. And papal bulls made up a lot of

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Speaker 4: historical Catholic law until nineteen eighteen, which is when there

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Speaker 4: was a massive reform of the entire canon law, all

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Speaker 4: the law of the Catholic church, and the bowl was

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Speaker 4: not renewed as part of that that reform of the law.

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Speaker 2: So let's back up a bit and talk about early

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Speaker 2: fifteen hundreds. What was this market exactly and who were

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Speaker 2: the participants? Who was making the bets?

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Speaker 4: It's a great question. So there were three broad types

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Speaker 4: of groups that were making bets on these markets. The

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Speaker 4: first was what you might call gentlemen's bets, so aristocrats

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Speaker 4: cardinals would make side bets with each other. There's records

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Speaker 4: of cardinals betting things like gloves, jewelry over the outcome

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Speaker 4: of the conclave, and the conclave, just to take a

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Speaker 4: step back, is the process that happens where the new

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Speaker 4: pope is elected.

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Speaker 2: When I saw the movie good, yes, I still.

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Speaker 4: The movie is a pretty accurate representation of the process.

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Speaker 4: And so group one was just sort of you can

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Speaker 4: imagine it being kind of equivalent today and making a

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Speaker 4: bet with your friends over a sports game. The second

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Speaker 4: group was the biggest one, and this was a group

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Speaker 4: of brokers called sinsally who would take bets from all

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Speaker 4: social classes, from regular workers all the way up to

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Speaker 4: aristocrats and also cardinals sometimes and their attendants. And these

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Speaker 4: brokers were often people like cloth merchants, spice traders. They're

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Speaker 4: often tied to the Florentine financial industry, and they took

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Speaker 4: bets on everything, not just papal elections. It took bets

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Speaker 4: on the outcome of sports matches. The most popular games

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Speaker 4: in Renaissance Room was essentially kind of translated as boy

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Speaker 4: or girl. They would find a pregnant woman and they

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Speaker 4: would take bets on whether shoes and give birth to

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Speaker 4: a boy or a girl. Wow. And this was an

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Speaker 4: incredibly popular game. It was so popular that it actually

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Speaker 4: was banned in the late fifteen hundreds. And they took

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Speaker 4: bets on everything from will new cardinals be nominated? Who

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Speaker 4: will the new cardinals be? How long with the pope rain?

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Speaker 2: For?

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Speaker 4: How long will the conclave run? For? Who will the

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Speaker 4: new Pope be? And alongside these these market makers were

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Speaker 4: it was a whole information ecosystem. You had handwritten newsletters.

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Speaker 4: There was a lot of gossip going around, a lot

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Speaker 4: of room or spreading, and you can talk about that

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Speaker 4: in a minute. Maybe it's fascinating the rumors that went around.

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Speaker 4: And the last group was actually sort of an early

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Speaker 4: form of risk catching. So you had financial institutions banks

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Speaker 4: that would in the same ledger give updates on shipping

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Speaker 4: insurance that an investor had underwritten and the results of

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Speaker 4: their paper bets, and so these same institutions would actually do,

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Speaker 4: would actually offer both. There wasn't a clear distinction between

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Speaker 4: gambling and financial investments in some of these environments. And

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Speaker 4: you sort of think this is an early form of

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Speaker 4: political risk catching. Because in the fifteen hundreds, the pope

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Speaker 4: ran a major country, the Papal states, it was going

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Speaker 4: to think of it as covering a large part of

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Speaker 4: central Italy, and when a new pope came in, it

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Speaker 4: often meant it was a new family that had political influence.

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Speaker 4: It often meant that projects or taxation policy would change,

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Speaker 4: You might might might go to war, and so there

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Speaker 4: was really a big policy changes that would happen as

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Speaker 4: popes switched. And it makes sense that some investors might

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Speaker 4: want to hedge against that money real money.

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Speaker 3: There's so much meat here that's interesting. I mean, first

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Speaker 3: of all, you know, Tracy said in the beginning talk

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Speaker 3: about some of the social utility, there's certainly the disutility

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Speaker 3: when you mentioned Cardinal's betting, right, this is what we

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Speaker 3: worry about with modern prediction markets, that there are actors

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Speaker 3: who might try to influence the outcome of a specific

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Speaker 3: event that's being bet on to make their bet payoff.

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Speaker 3: And so that is one reason we might be concerned.

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Speaker 3: I'm just fascinated by the sheer proliferation because this is

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Speaker 3: the characterization of society right now, whether it's pure betting

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Speaker 3: on sports, something that's a little then crypto, and then

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Speaker 3: you get a little closer to the spectrum of like

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Speaker 3: real trading or something options and then stocks. We have

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Speaker 3: this incredible spectrum of opportunities to bet or trade.

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Speaker 2: That distingmbling culture is I would call it.

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Speaker 3: Yeah, we live in a clear gambling culture. Talk to

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Speaker 3: us more just about that gambling culture that proliferated. Why

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Speaker 3: was it so big? What was going on?

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Speaker 4: Yeah, I mean gambling goes back historically in Rome, all

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Speaker 4: the way back to the Roman Empire. There's lots of

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Speaker 4: stories and lots of media about gambling on gladiator games,

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Speaker 4: around the outcome of wars, and in Rome there were

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Speaker 4: two big drivers of it. When was this this historical

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Speaker 4: culture of of gambling. The second was that it was

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Speaker 4: a center of politics and intrigue, and so a lot

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Speaker 4: of our information on the odds throughout the conclaves, and

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Speaker 4: the fifteen hundreds comes from ambassadors from Venice, from France,

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Speaker 4: from Genoa. And because there was all this interest among

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Speaker 4: all these other foreign powers, there was a lot of

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Speaker 4: information that leaked out of the conclave. And so when

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Speaker 4: there's a lot of information and there's a market where

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Speaker 4: you can try to make money off at information, you

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Speaker 4: can sort of see how the incentives aligned to drive

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Speaker 4: a lot of interest in the market, and because sew

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Speaker 4: the incentives align to try to do market manipulation. So

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Speaker 4: one of the more interesting stories was in fifteen to

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Speaker 4: fifty five, I believe it was Cardinal Carraffa, who was

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Speaker 4: one of the favorites to when about seventy percent odds

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Speaker 4: to when a rumor went out after he missed Mass

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Speaker 4: that morning that he had died, and his odds dropped

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Speaker 4: down to thirty percent. People who clearly didn't fully believe

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Speaker 4: that he had died, but there was enough to see

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Speaker 4: some change in the odds, and it turned out he

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Speaker 4: was very much alive. He was elected pope, And you

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Speaker 4: have to imagine that there were some unscrupulous brokers and

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Speaker 4: rumor spreaders who made a lot of money off of

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Speaker 4: the shifting odds there.

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Speaker 2: That reminds me how did bookies actually make odds, because

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Speaker 2: I will admit I don't really understand how bookies make

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Speaker 2: odds nowadays on sports games and things like that, But

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Speaker 2: for something like who the new Pope will be that

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Speaker 2: seems even more complicated, especially when we're talking about the

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Speaker 2: fifteen hundreds, where presumably information flow is not as fast

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Speaker 2: or as heavy as it is now.

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Speaker 4: Yeah, it's it's a interesting point. So I think there

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Speaker 4: were two big drivers what I've been able to uncover.

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Speaker 4: The first one is that there was a lot of

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Speaker 4: insider information, not just cardinals but also their attendance. People

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Speaker 4: involved with bringing in food or wine. They would bring

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Speaker 4: back information on what had happened, and so bookies had

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Speaker 4: some level of information on what was happening in the conclave.

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Speaker 4: These are also really politically. There's contentious elections, and there

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Speaker 4: were factions, and so if you know all the players

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Speaker 4: and you know the dynamics with foreign powers, you have

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Speaker 4: some indication of which alliances of factions might come together

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Speaker 4: to elect of pope and who the kind of logical

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Speaker 4: compromise candidates would be. There was an idea, and I'm

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Speaker 4: going to butcher it at the Italian Papa Belli. I

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Speaker 4: think of this person who was sort of seen as

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Speaker 4: a potential future pope, and so the people who were

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Speaker 4: candidates who were likely to be chosen were already sort

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Speaker 4: of identified in the public sphere. And then the last

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Speaker 4: dynamic that would drive odds was money flow. So if

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Speaker 4: you set odds and you started getting a ton of

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Speaker 4: bat on those odds you set, that would create pressure

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Speaker 4: to lower those odds and to make to basically protect

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Speaker 4: yourself from offering two good of odds on a candidate

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Speaker 4: who might win. And so there was a direct flow

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Speaker 4: of that, where you know, people would adjust their odds

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Speaker 4: based off of the flow of wages. There is also

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Speaker 4: sort of a proto secondary market. We have some records

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Speaker 4: of people saying they sold their ticket after the odds changed,

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Speaker 4: so sort of like a prediction market, right, you buy

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Speaker 4: it at ten cents, you sell it at fifty cents.

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Speaker 4: People would sell their tickets that were at one hundred

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Speaker 4: to one odds when they went up to ten to

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Speaker 4: one and lock in their gains. And so that's that

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Speaker 4: also I've made, but I didn't cover exactly how prevalent

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Speaker 4: that was. But that also could have been a driver

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Speaker 4: of setting prices for these different candidates.

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Speaker 3: One of the things that you mentioned is that there

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Speaker 3: were real stakes involved for some of the participants by

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Speaker 3: who the next pope was going to be, because major

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Speaker 3: policies could change, because you know, there was geopolitical consequence

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Speaker 3: of this, and so therefore there is you know, what

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Speaker 3: they would say, real money at stake, and then you

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Speaker 3: can obviously have people ride along that who have nothing

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Speaker 3: really at stake, but they just want to bet, which

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Speaker 3: is characteristic of all markets today, including the popular prediction markets.

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Speaker 3: Some of the prediction markets like so and so going

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Speaker 3: to get pregnant, there probably isn't the real money. You

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Speaker 3: probably don't really see much activity there, but you know

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Speaker 3: a lot of things certainly areas like presidential elections or

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Speaker 3: midterm elections. It's some of both. But the other thing

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Speaker 3: I'm really interested in is, you know, Tracy and I

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Speaker 3: work on financial media, which is subsidized by people who

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Speaker 3: want to sell access to investment products, and these days

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Speaker 3: it's more ETFs, but et cetera. This idea that like

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Speaker 3: betting has always been a subsidy. Betting or investing or

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Speaker 3: gambling has always been a part of what subsidizes the

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Speaker 3: existence of news media.

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Speaker 4: Yeah, one hundred percent. I mean, it's interesting because there's

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Speaker 4: a mix of the idea and then the proliferation of it.

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Speaker 4: So the idea of these newsletters was really common. This again,

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Speaker 4: this is a longstanding Roman culture. If you ever look

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Speaker 4: up Roman graffiti, you'll see this. There's a long history

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Speaker 4: of spreading rumors and spreading ideas in Rome. But you're

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Speaker 4: right that the demand for these newsletters was shot through

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Speaker 4: the roof because of a financial incentive. And there wasn't

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Speaker 4: just it wasn't just the newsletters that spread information. There

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Speaker 4: was also taverns people would spread rumors and share information,

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Speaker 4: and caverns. So there's a statue called the Pekino which

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Speaker 4: has been for hundreds of years, this place where people

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Speaker 4: would leave anonymous notes to spread information. And so those

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Speaker 4: notes often had information on what was happening inside of

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Speaker 4: the conclave. And the other piece that it was interesting

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Speaker 4: was that the diplomats, the foreign diplomats who were in

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Speaker 4: Rome would report back to their kings, monarchs, whoever, whoever,

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Speaker 4: the leaders on what was happening inside the conclave. And

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Speaker 4: so that definitely created a lot of demand for getting

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Speaker 4: that initial firsthand information which presumably was passed off informally.

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Speaker 4: And one other piece that set odds your question earlier.

303
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Speaker 4: Another piece that set odds was if a certain person

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Speaker 4: who was considered in the know would make bets. So

305
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Speaker 4: you had certain people like if a Venetian ambassador made

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Speaker 4: a major bet, that would be a strong signal that

307
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Speaker 4: person had some insider information and that they this person

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Speaker 4: was likely to win.

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Speaker 2: So, Joe, I don't know if you've ever looked at

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Speaker 2: the comments section on something like polymarkets.

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Speaker 3: Yeah, definitely, it's I don't.

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Speaker 2: Know how to describe it, a bit of a mess maybe,

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Speaker 2: But one thing that does happen there is everyone talks

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Speaker 2: their own book, right, Everyone is trying to sway the

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Speaker 2: odds and get their prediction right. Did we see that

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Speaker 2: in Rome as well?

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Speaker 4: Yeah, you did see a little bit of that. So

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Speaker 4: you definitely saw people hype up their their candidates and

319
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Speaker 4: even saw people try to force the hand. So just

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Speaker 4: take a step back. The way a papal election works

321
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Speaker 4: is up two hundred and twenty cardinals go into a

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Speaker 4: locked room. They swear not to share any information, which

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Speaker 4: I think is better in force today than it was

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Speaker 4: back then, and they vote up to four times a day,

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Speaker 4: and every time they vote, if there's no if no

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Speaker 4: one has a two thirds majority, they burn the ballots

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Speaker 4: this black smoke, oh yeah, yeah, famous, the famous black smoke.

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Speaker 4: And they try again up to three more times that day.

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Speaker 4: And some of these conclaves were on for months. They

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Speaker 4: were conclaves where they had odds and how long the

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Speaker 4: conclave would go for, and there was a ten percent

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Speaker 4: actually implied odds of never in one of the conclaves

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Speaker 4: that they would never pick up hope, and so they

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Speaker 4: this is also a piece with these rumors could try

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Speaker 4: to force the hand of these these cardinals. So in

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Speaker 4: fifteen ninety Paliotti was considered one of the cardinal Palioti

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Speaker 4: was considered one of the favorites to become the next pope,

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Speaker 4: and he's about seventy percent chance, and someone put out

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Speaker 4: a rumor that he had actually already been elected, and

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Speaker 4: the rumor spread so rapidly that the city started to

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Speaker 4: put up his coat of arms. He started to set

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Speaker 4: up as if he had won. If they sent guards

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Speaker 4: to protect his house, because typically after pope was elected,

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Speaker 4: they people would go and raid their house. It's an

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Speaker 4: interesting cultural norm and it turned out he hadn't won,

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Speaker 4: he hadn't gotten two thirds, and so there's an implication

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Speaker 4: that that was done in part to try to pressure

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Speaker 4: the last few cardinals to make that yeah, make that

349
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Speaker 4: bet and acclaim him. Didn't work, did not work. Instead,

350
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Speaker 4: we got Pope Gregory the thirteenth, who started the crackdown

351
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Speaker 4: in earnest on some of the paper gambling that was happening.

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Speaker 3: Did the premature victory like turn people against him, like

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Speaker 3: would he have probably one had it not been for

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Speaker 3: or do we not know?

355
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Speaker 4: It's a good question. I don't know for sure, all right,

356
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Speaker 4: but you can imagine for sure.

357
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Speaker 2: So this brings me to a very important idea, which

358
00:18:02,560 --> 00:18:06,800
Speaker 2: is did all this betting actually have an impact on

359
00:18:06,920 --> 00:18:10,760
Speaker 2: the church in the sense of, you know, I imagine

360
00:18:10,960 --> 00:18:14,359
Speaker 2: the Catholic Church isn't a big fan of betting, and

361
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Speaker 2: you have this huge betting culture that's pegged to the

362
00:18:17,480 --> 00:18:21,160
Speaker 2: internal political dynamics of the church. Did it change people's

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Speaker 2: perception of the Catholic Church.

364
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Speaker 4: It's a really good question in terms of the perception

365
00:18:26,760 --> 00:18:29,520
Speaker 4: of the Catholic Church. I'm not as sure. The Catholic

366
00:18:29,600 --> 00:18:32,600
Speaker 4: Church certainly felt threatened by it, and so the Catholic Church,

367
00:18:32,640 --> 00:18:36,399
Speaker 4: starting even before the hammer really came down, had tried

368
00:18:36,440 --> 00:18:39,240
Speaker 4: to ban these types of bets from happening, and so

369
00:18:39,280 --> 00:18:42,080
Speaker 4: they had issued bans, they'd sent police freights out, but

370
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Speaker 4: they were never rigorously enforced because there was enough intermixing

371
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Speaker 4: between the betters and people in the Vatican that there

372
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Speaker 4: was there wasn't a lot of impetus for aggressive enforcement.

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Speaker 4: But when we as you get to the late fifteen

374
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Speaker 4: eighties and into the early fifteen nineties, you started to

375
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Speaker 4: see popes do really really aggressive crackdowns, and the level

376
00:19:00,560 --> 00:19:02,359
Speaker 4: of aggression implies that there was a real threat to

377
00:19:02,440 --> 00:19:06,080
Speaker 4: the church, and so they would they would raid broker

378
00:19:06,200 --> 00:19:08,400
Speaker 4: shops and arrest everybody in torture them to find out

379
00:19:08,400 --> 00:19:11,760
Speaker 4: who had place bets. They set up a system of

380
00:19:11,760 --> 00:19:14,600
Speaker 4: thirty if proved brokers that were allowed to take bets

381
00:19:14,920 --> 00:19:17,320
Speaker 4: on some things, not on the election of cardinals, not

382
00:19:17,520 --> 00:19:22,040
Speaker 4: on the boy er girl, bets for pregnant women, and

383
00:19:22,240 --> 00:19:24,679
Speaker 4: if you if you made bets outside of those thirty groups,

384
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Speaker 4: the punishment was five hundred scooty, which I did a

385
00:19:27,560 --> 00:19:29,680
Speaker 4: little bit of calculation, I think it's about seventy five

386
00:19:29,720 --> 00:19:33,280
Speaker 4: hundred dollars, which a year's wage for a rural work

387
00:19:33,400 --> 00:19:35,600
Speaker 4: was about fifty scooty, so ten times the wage of

388
00:19:35,640 --> 00:19:38,159
Speaker 4: an average worker. And you can even be sentenced to

389
00:19:38,240 --> 00:19:41,000
Speaker 4: serve on the galleys, so being kind of conscripted into

390
00:19:41,040 --> 00:19:44,800
Speaker 4: the military for being caught on this. But the real

391
00:19:45,160 --> 00:19:48,080
Speaker 4: crackdown came with Kogetos, which is the Papal Bowl, banning it.

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Speaker 4: And I actually brought a copy with me from the

393
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Speaker 4: from the Yale Binding Key ra Book Library.

394
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Speaker 3: What is this amazing old document.

395
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Speaker 4: Yeah, so when this was issued, this Papal Bowl was

396
00:19:57,240 --> 00:20:01,360
Speaker 4: translated into Italian, posted around the city, hosted on tavern

397
00:20:01,440 --> 00:20:05,280
Speaker 4: city gates, given to all of the bishops and priests

398
00:20:05,280 --> 00:20:09,240
Speaker 4: around Europe, particularly in Italy. And if you read the translation,

399
00:20:09,600 --> 00:20:12,360
Speaker 4: you actually see that a lot of the it kind

400
00:20:12,359 --> 00:20:14,000
Speaker 4: of implies what some of the issues might have been.

401
00:20:14,359 --> 00:20:17,320
Speaker 4: And if I can read it, individuals driven by greed

402
00:20:17,359 --> 00:20:20,080
Speaker 4: or fear of loss improperly seek to influence, obstruct, or

403
00:20:20,080 --> 00:20:22,640
Speaker 4: delay these sacred elections and promotions through illicit means, either

404
00:20:22,640 --> 00:20:26,120
Speaker 4: directly or indirectly, all those emotioniously the fame rous slander candidates,

405
00:20:26,200 --> 00:20:29,639
Speaker 4: undermining the dignity and reputation of those involved. Such actions

406
00:20:29,640 --> 00:20:32,240
Speaker 4: as distract and cool the sincere prayers and devotions of Christians,

407
00:20:32,640 --> 00:20:36,480
Speaker 4: and then instead many individuals pursue temporal profit or personal

408
00:20:36,560 --> 00:20:39,480
Speaker 4: gain rather than selecting candidates based solely on merit, employing

409
00:20:39,560 --> 00:20:43,719
Speaker 4: numerous fraudulent schemes lie succeed in manipulations. There's also pieces

410
00:20:43,720 --> 00:20:47,160
Speaker 4: here where they say people are trying to forbidden arts

411
00:20:47,160 --> 00:20:51,159
Speaker 4: like divination or invoking the demount of assistance, driven by

412
00:20:51,200 --> 00:20:54,000
Speaker 4: desperation and greed to figure out who who is going

413
00:20:54,080 --> 00:20:57,800
Speaker 4: to win, and so the bowl is really strict. It

414
00:20:57,840 --> 00:21:00,359
Speaker 4: says they permanently forbid all forms of wagering, betting, or

415
00:21:00,359 --> 00:21:05,280
Speaker 4: speculation regarding papal elections, the promotion of cardinals. It nulls

416
00:21:05,359 --> 00:21:08,880
Speaker 4: and nullifies any existing bets or elections that have already sorry,

417
00:21:08,920 --> 00:21:12,040
Speaker 4: any existing bets or wages that have already happened. They

418
00:21:12,119 --> 00:21:16,480
Speaker 4: declare all future agreements null, void and invalid. Any any

419
00:21:16,520 --> 00:21:19,040
Speaker 4: funds or valuables involved in those should be given to

420
00:21:19,119 --> 00:21:23,640
Speaker 4: charitable institutions with no allowances, and anyone who does this

421
00:21:23,920 --> 00:21:26,680
Speaker 4: is automatically excommunicated from the church.

422
00:21:27,480 --> 00:21:28,320
Speaker 2: Which was a big deal.

423
00:21:28,520 --> 00:21:31,959
Speaker 4: Was a big deal, so it wasn't just about obviously

424
00:21:32,000 --> 00:21:34,000
Speaker 4: today it's still a massive deal to be excommunicated. But

425
00:21:34,040 --> 00:21:38,520
Speaker 4: from a religious perspective back then, ex communication could be

426
00:21:38,520 --> 00:21:40,399
Speaker 4: an austivisation. You could kicked out of your community, they

427
00:21:40,400 --> 00:21:43,160
Speaker 4: could seize your property. Occasionally, you could even be killed

428
00:21:43,560 --> 00:21:47,560
Speaker 4: for being excommunicated. And so your protections, especially in the

429
00:21:47,400 --> 00:21:50,119
Speaker 4: in the in the papal states, mostly went away if

430
00:21:50,119 --> 00:21:53,119
Speaker 4: you're excommunicated. And then one of the piece that's really

431
00:21:53,160 --> 00:21:56,399
Speaker 4: fascinating is that any clergy or figures who violate the

432
00:21:56,400 --> 00:21:59,879
Speaker 4: decree are immediately stripped of their office and are incapable

433
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Speaker 4: of being reassigned. And so think about the intensity of it.

434
00:22:03,640 --> 00:22:05,399
Speaker 4: You can sort of see, you can sort of infer

435
00:22:05,600 --> 00:22:08,080
Speaker 4: some of the feelings that church had about the effect

436
00:22:08,080 --> 00:22:10,639
Speaker 4: this was having on these processes over time.

437
00:22:10,880 --> 00:22:13,119
Speaker 3: I'm actually there are a lot of obviously sort of

438
00:22:13,160 --> 00:22:16,960
Speaker 3: negative aspects of it. It is interesting this idea that

439
00:22:17,280 --> 00:22:21,639
Speaker 3: gambling drives people towards mystical divination. There's some other that

440
00:22:21,680 --> 00:22:24,920
Speaker 3: there's some other spiritual forces out the world that could

441
00:22:25,000 --> 00:22:28,960
Speaker 3: reveal information other than the church. The Church losing its

442
00:22:29,000 --> 00:22:33,399
Speaker 3: monopoly on the sort of understanding of the cosmos. Like

443
00:22:33,480 --> 00:22:35,080
Speaker 3: it's a mid feels like a minor thing, but it's

444
00:22:35,080 --> 00:22:37,160
Speaker 3: also like a sort of fascinating thing, and of course

445
00:22:37,200 --> 00:22:39,480
Speaker 3: that is what gambling drives people to do. And lucky

446
00:22:39,560 --> 00:22:43,240
Speaker 3: numbers blowing on the dice, like all these things that

447
00:22:43,720 --> 00:22:48,520
Speaker 3: reveal a certain metaphysical reality other than the one prescribed

448
00:22:48,560 --> 00:22:51,280
Speaker 3: by the church super instant to talk to us about, like,

449
00:22:52,160 --> 00:22:53,880
Speaker 3: I don't know how we got from there to where

450
00:22:53,880 --> 00:22:56,280
Speaker 3: we are today through line.

451
00:22:56,440 --> 00:22:56,640
Speaker 1: Yeah.

452
00:22:56,720 --> 00:22:59,439
Speaker 4: So after this, after this paper bowl came out, the

453
00:22:59,440 --> 00:23:02,679
Speaker 4: public a markets mostly went away. We still have some

454
00:23:02,720 --> 00:23:04,880
Speaker 4: evidence that people were gambling kind of on the black

455
00:23:04,880 --> 00:23:06,840
Speaker 4: market of the gray market over time, but it was

456
00:23:06,880 --> 00:23:08,719
Speaker 4: not as anywhere near as widespread as it had been

457
00:23:08,800 --> 00:23:10,840
Speaker 4: as you get into the eighteen seventies. So the papal

458
00:23:10,840 --> 00:23:13,359
Speaker 4: states ceased to exist in eighteen seventy Italy was unified

459
00:23:13,400 --> 00:23:16,560
Speaker 4: as one country. And the eighteen seventy eight election is

460
00:23:16,600 --> 00:23:18,360
Speaker 4: one where we have New York Times reports that there's

461
00:23:18,400 --> 00:23:21,399
Speaker 4: this massive gambling on the new pope in the next election,

462
00:23:22,000 --> 00:23:24,960
Speaker 4: and so you can start to see that the spiritual

463
00:23:25,000 --> 00:23:28,040
Speaker 4: authority by itself was not enough to stop this gambling.

464
00:23:28,080 --> 00:23:32,200
Speaker 4: After several hundred years of success, and as you move

465
00:23:32,240 --> 00:23:35,119
Speaker 4: through the twentieth century, the next big milestone was nineteen

466
00:23:35,160 --> 00:23:37,119
Speaker 4: seventy eight, which is with the first time that the

467
00:23:37,200 --> 00:23:40,159
Speaker 4: UK bet makers offered odds on the next pope. And

468
00:23:40,160 --> 00:23:42,120
Speaker 4: what's interesting is that if you talk about prediction markets

469
00:23:42,160 --> 00:23:45,080
Speaker 4: as a way of seeing the future, they weren't very effective.

470
00:23:45,200 --> 00:23:47,760
Speaker 4: John Paul the first and second weren't offered odds at

471
00:23:47,760 --> 00:23:50,840
Speaker 4: all in that year, and so that implies that it

472
00:23:50,880 --> 00:23:53,880
Speaker 4: actually was not very good at picking candidates who are

473
00:23:53,880 --> 00:23:57,199
Speaker 4: not expected right. John Paul the Second especially was not

474
00:23:57,200 --> 00:24:00,760
Speaker 4: expected to become Pope going into the conclave. And then

475
00:24:00,840 --> 00:24:02,359
Speaker 4: as we go through the rest of the twentieth century,

476
00:24:02,400 --> 00:24:04,399
Speaker 4: two thousand and five, I sort of remember this when

477
00:24:04,400 --> 00:24:06,000
Speaker 4: I was pretty young, but I sort of remember in

478
00:24:06,000 --> 00:24:08,919
Speaker 4: two thousand and five kind of scandalized press about Patty

479
00:24:08,960 --> 00:24:11,600
Speaker 4: Power offering odds on the pope, and I looked it

480
00:24:11,640 --> 00:24:13,000
Speaker 4: up before I came in here. It was about four

481
00:24:13,040 --> 00:24:16,080
Speaker 4: hundred thousand dollars was bet just through Patty Power on

482
00:24:16,119 --> 00:24:17,760
Speaker 4: who the next Pope would be in two thousand and five.

483
00:24:17,800 --> 00:24:20,240
Speaker 4: That was Pope Benedict, and that actually was fairly accurate.

484
00:24:20,280 --> 00:24:21,879
Speaker 4: It was three to one odds that Benedict would win.

485
00:24:22,720 --> 00:24:25,679
Speaker 4: Twenty thirteen, Pope Francis, the current pope, was about a

486
00:24:25,680 --> 00:24:28,480
Speaker 4: seven million dollar market through patty power alone, and so

487
00:24:28,520 --> 00:24:31,240
Speaker 4: you can see it's already growing exponentially. And I remember

488
00:24:31,400 --> 00:24:34,560
Speaker 4: very scandalized press about this. And what's interesting is that

489
00:24:34,680 --> 00:24:37,000
Speaker 4: the current Pope Francis started off at fifty fifty five

490
00:24:37,040 --> 00:24:39,560
Speaker 4: to one odds and never did better than thirty two

491
00:24:39,640 --> 00:24:43,200
Speaker 4: to one. And so for these closed door decisions where

492
00:24:43,320 --> 00:24:46,879
Speaker 4: like like Supreme Court decisions, papal conclaves, things where the

493
00:24:46,920 --> 00:24:49,639
Speaker 4: public information is much more limited than say an election,

494
00:24:50,640 --> 00:24:53,840
Speaker 4: the prediction markets have a very mixed record of accuracy

495
00:24:54,560 --> 00:24:57,320
Speaker 4: and talking about the through line of some of these

496
00:24:57,359 --> 00:25:02,560
Speaker 4: same dynamics, Vatican Insider that the current Pope Francis was

497
00:25:02,760 --> 00:25:06,400
Speaker 4: starting to get momentum in the conclave and they didn't

498
00:25:06,400 --> 00:25:08,280
Speaker 4: really move the market very much. And it's one of

499
00:25:08,280 --> 00:25:12,080
Speaker 4: those interesting things with closed door decisions where insider information,

500
00:25:12,200 --> 00:25:16,000
Speaker 4: especially when people aren't familiar with the dynamics around the decision,

501
00:25:16,800 --> 00:25:18,919
Speaker 4: it's hard for outsiders to get a good sense of

502
00:25:19,080 --> 00:25:20,440
Speaker 4: is the information actionable or not.

503
00:25:36,040 --> 00:25:40,680
Speaker 3: Tracy, it's interesting thinking back to Pope Francis's election and

504
00:25:40,760 --> 00:25:45,040
Speaker 3: the relationship between the winning candidate and the time of

505
00:25:45,200 --> 00:25:48,920
Speaker 3: the conclave. As another derivative bet that you can make

506
00:25:49,119 --> 00:25:51,280
Speaker 3: because I do remember one thing that was going on

507
00:25:51,359 --> 00:25:54,000
Speaker 3: at the time. There was some interest in whether or

508
00:25:54,040 --> 00:25:59,280
Speaker 3: not they would pick an Italian and because obviously, you know,

509
00:25:59,359 --> 00:26:03,280
Speaker 3: the prior Poe had been German Retzinger, and prior Pope

510
00:26:03,320 --> 00:26:06,280
Speaker 3: to that had been Polish, and so this idea is like, oh,

511
00:26:06,280 --> 00:26:08,520
Speaker 3: and so the fact that it went a long time,

512
00:26:08,560 --> 00:26:10,600
Speaker 3: I remember some people were saying, oh, maybe this means

513
00:26:10,640 --> 00:26:13,320
Speaker 3: they haven't settled on an Italian and so you could

514
00:26:13,359 --> 00:26:16,720
Speaker 3: sort of see, you know, how people try to relate

515
00:26:16,920 --> 00:26:18,760
Speaker 3: conclave duration with outcome.

516
00:26:19,080 --> 00:26:22,440
Speaker 2: Yeah, I remember that debate. Okay, So, speaking of Pope Francis,

517
00:26:22,560 --> 00:26:26,399
Speaker 2: looking on polymarket right now, the odds are currently forty

518
00:26:26,440 --> 00:26:29,280
Speaker 2: two percent for a new pope in twenty twenty five.

519
00:26:29,960 --> 00:26:33,160
Speaker 2: Obviously we don't know if that's going to be right

520
00:26:33,520 --> 00:26:37,840
Speaker 2: or not. But do you get a sense perhaps that

521
00:26:37,880 --> 00:26:43,639
Speaker 2: the modern papal prediction market is somewhat improved in terms

522
00:26:43,680 --> 00:26:46,879
Speaker 2: of its predictive power? Is there, for instance, more liquidity?

523
00:26:46,960 --> 00:26:49,960
Speaker 2: There must be more people betting in general than there

524
00:26:50,000 --> 00:26:52,960
Speaker 2: were like when Patty Power started doing this.

525
00:26:53,720 --> 00:26:56,119
Speaker 4: Yeah, I think not yet. I have to imagine that

526
00:26:56,160 --> 00:26:59,600
Speaker 4: when if a conclave does start whenever that happens, it's

527
00:26:59,640 --> 00:27:03,160
Speaker 4: going to be the biggest one ever. And seven million

528
00:27:03,200 --> 00:27:05,720
Speaker 4: dollars is the goal to beat the twenty twenty four

529
00:27:05,920 --> 00:27:07,959
Speaker 4: presidential election I think was three and a half billion,

530
00:27:08,760 --> 00:27:11,760
Speaker 4: and so I in terms of accuracy, though if you

531
00:27:11,760 --> 00:27:13,800
Speaker 4: look at the comments, I don't know happypore are betting.

532
00:27:14,119 --> 00:27:17,200
Speaker 4: The comments are almost entirely based off of Vatican news releases.

533
00:27:18,040 --> 00:27:20,239
Speaker 4: And I do think that there's this dynamic that's going

534
00:27:20,280 --> 00:27:22,920
Speaker 4: to start happening more and more, where like you said,

535
00:27:22,920 --> 00:27:26,240
Speaker 4: we've gone into a gambling culture again today, and pretty rapidly.

536
00:27:26,240 --> 00:27:28,840
Speaker 4: I mean it's ten years ago. I think online gamps

537
00:27:29,080 --> 00:27:32,520
Speaker 4: poker was had the big landmark case that made it illegal,

538
00:27:33,320 --> 00:27:35,600
Speaker 4: and we're seeing prediction markets, which used to be capped

539
00:27:35,600 --> 00:27:39,359
Speaker 4: as academic academic tools set eight hundred and fifty dollars,

540
00:27:39,760 --> 00:27:44,000
Speaker 4: are starting to become unrestricted crypto lets. People bet on

541
00:27:44,040 --> 00:27:46,399
Speaker 4: poly market internationally, even if it's illegal in the US.

542
00:27:47,400 --> 00:27:50,200
Speaker 4: And I think that we've you know, in nineteen eighteen,

543
00:27:50,320 --> 00:27:51,920
Speaker 4: part of the reason why it wasn't written into the

544
00:27:51,920 --> 00:27:53,760
Speaker 4: new Canon law is that it hadn't been a problem.

545
00:27:54,080 --> 00:27:57,280
Speaker 4: The papabull had done its job in stamping this out

546
00:27:57,320 --> 00:28:01,040
Speaker 4: as an activity. And I do think there's going to

547
00:28:01,080 --> 00:28:03,960
Speaker 4: be a big social discussion of do we want this

548
00:28:04,040 --> 00:28:07,239
Speaker 4: type of market for everything? And where where does it

549
00:28:07,240 --> 00:28:11,080
Speaker 4: become an issue of taste, morality or other pieces. And

550
00:28:11,720 --> 00:28:14,040
Speaker 4: it is interesting because I think it's I think society

551
00:28:14,080 --> 00:28:16,639
Speaker 4: is largely agreed. We're okay with sports betting, We're okay

552
00:28:16,680 --> 00:28:19,879
Speaker 4: with even political betting. Where casinos are being legalized in

553
00:28:19,920 --> 00:28:22,600
Speaker 4: more and more places, is generally and moved towards gambling

554
00:28:22,640 --> 00:28:25,439
Speaker 4: culture as a as a rule, and I think we

555
00:28:25,440 --> 00:28:27,760
Speaker 4: haven't quite found the limits of where wept we're willing

556
00:28:27,800 --> 00:28:30,479
Speaker 4: to accept it. And I wouldn't be surprised if in

557
00:28:30,520 --> 00:28:33,320
Speaker 4: the next couple of years, if not this something else

558
00:28:33,359 --> 00:28:36,200
Speaker 4: starts that conversation of what's what's the limit of where

559
00:28:36,200 --> 00:28:37,800
Speaker 4: we're willing to let these markets run.

560
00:28:38,000 --> 00:28:40,600
Speaker 3: I mean two things stand out here. One is that

561
00:28:40,720 --> 00:28:44,640
Speaker 3: at this point, any poly market bet that exists, I

562
00:28:44,680 --> 00:28:47,640
Speaker 3: mean it's more just you know, it's macab but it's

563
00:28:47,680 --> 00:28:50,040
Speaker 3: a bet on the health of Pope Frances more than

564
00:28:50,080 --> 00:28:55,520
Speaker 3: any informed insight and his age and so forth, and so'll.

565
00:28:55,640 --> 00:29:00,160
Speaker 3: The sort of more interesting question will be, whenever there

566
00:29:00,200 --> 00:29:02,560
Speaker 3: is time to select a new pope, what those odds

567
00:29:02,600 --> 00:29:05,640
Speaker 3: look like for the conclave itself and the names and

568
00:29:05,680 --> 00:29:09,440
Speaker 3: the candidates that come up. You know, obviously the sort

569
00:29:09,480 --> 00:29:12,240
Speaker 3: of real money economic stakes don't exist in the same

570
00:29:12,280 --> 00:29:14,719
Speaker 3: way that they used to, so to be pure speculative.

571
00:29:15,120 --> 00:29:18,440
Speaker 3: In the end, there's nothing that governments can do to

572
00:29:18,480 --> 00:29:22,120
Speaker 3: crack down on sort of offshore, crypto based prediction markets

573
00:29:22,120 --> 00:29:26,000
Speaker 3: that are decentralized. The Catholic Church itself can come up

574
00:29:26,040 --> 00:29:30,000
Speaker 3: with a new ball that statements that its adherents are,

575
00:29:30,160 --> 00:29:33,440
Speaker 3: you know, choose to either abide by or not. But

576
00:29:33,560 --> 00:29:35,760
Speaker 3: you know, it is interesting, just to your point about

577
00:29:35,760 --> 00:29:38,960
Speaker 3: the limits, Like you know, it's weird because even with

578
00:29:39,120 --> 00:29:43,720
Speaker 3: sports gambling, we find ourselves in this simultaneous, simultaneous moment

579
00:29:43,760 --> 00:29:47,320
Speaker 3: where we've accepted there's nothing we can do. It's legalized,

580
00:29:47,360 --> 00:29:51,400
Speaker 3: this just exists. At the same time that many people

581
00:29:51,760 --> 00:29:54,880
Speaker 3: are disgusted and disturbed by the numbers that come out

582
00:29:54,920 --> 00:29:58,440
Speaker 3: about gambling addiction and ruined lives and so forth, And

583
00:29:58,520 --> 00:30:01,480
Speaker 3: yet there's this feeling of societ little helplessness that well,

584
00:30:01,520 --> 00:30:03,800
Speaker 3: this is just what it is. We culturize it, and

585
00:30:03,800 --> 00:30:06,280
Speaker 3: it's the culture. And so I do find that to

586
00:30:06,320 --> 00:30:09,120
Speaker 3: be a sort of fascinating thing that many people across

587
00:30:09,520 --> 00:30:13,200
Speaker 3: ideological realms, across power can say this is terrible and

588
00:30:13,320 --> 00:30:15,600
Speaker 3: yet at the same time feel like and yet there's

589
00:30:15,640 --> 00:30:19,000
Speaker 3: nothing we can do about it legally. It's just a

590
00:30:19,120 --> 00:30:20,120
Speaker 3: very strange dynamic.

591
00:30:20,240 --> 00:30:22,120
Speaker 4: It's extremely strange, and that you know, if you think

592
00:30:22,400 --> 00:30:24,480
Speaker 4: ten years ago, you had to go to Vegas, yeah

593
00:30:24,520 --> 00:30:26,280
Speaker 4: to do it, and there was some level of inconvenience

594
00:30:26,320 --> 00:30:29,520
Speaker 4: involved with it. And I saw last last year that

595
00:30:29,600 --> 00:30:32,280
Speaker 4: Robin Hood was trying to put prediction markets into their

596
00:30:32,560 --> 00:30:36,360
Speaker 4: into their app. And so it's interesting because the it's

597
00:30:36,360 --> 00:30:38,680
Speaker 4: not just a matter of legalization as a binary yes

598
00:30:38,760 --> 00:30:42,800
Speaker 4: or no. It's also questions of social social stigma, and

599
00:30:42,840 --> 00:30:46,400
Speaker 4: then also questions of access and ease of access. It

600
00:30:46,440 --> 00:30:49,520
Speaker 4: being in your pockets obviously is significantly different thing than

601
00:30:50,400 --> 00:30:52,920
Speaker 4: having to fly somewhere to make a bet like that.

602
00:30:53,880 --> 00:30:57,640
Speaker 2: So speaking of social consequences, there is an argument that

603
00:30:57,720 --> 00:31:01,440
Speaker 2: people make. Joe kind of made it earlier in the intro.

604
00:31:02,200 --> 00:31:05,800
Speaker 2: The argument is predictions are useful, right, and getting a

605
00:31:05,840 --> 00:31:08,240
Speaker 2: sense of what will happen, or at the very least

606
00:31:08,320 --> 00:31:12,719
Speaker 2: what people think will happen, might have some social value.

607
00:31:12,760 --> 00:31:15,120
Speaker 2: In fact, I've seen people take this so far that

608
00:31:15,160 --> 00:31:19,200
Speaker 2: They argue that insider trading is good for prediction markets, right,

609
00:31:19,200 --> 00:31:23,040
Speaker 2: because you want more accurate predictions, and so if people

610
00:31:23,080 --> 00:31:26,800
Speaker 2: have insider info, that's one way of potentially getting there.

611
00:31:27,000 --> 00:31:30,760
Speaker 2: But do you see any social benefit to these types

612
00:31:30,800 --> 00:31:33,880
Speaker 2: of platforms. What would be the social benefit of, for instance,

613
00:31:34,000 --> 00:31:36,160
Speaker 2: betting on whether we'll have a new pope?

614
00:31:37,480 --> 00:31:40,720
Speaker 4: It's a good I think. My personal answer is I

615
00:31:40,720 --> 00:31:42,400
Speaker 4: think there's not a lot of social benefit to it,

616
00:31:42,560 --> 00:31:45,120
Speaker 4: but I think that people will find social benefit and

617
00:31:45,160 --> 00:31:48,720
Speaker 4: the sense that a prediction bet is both a money

618
00:31:48,720 --> 00:31:51,280
Speaker 4: making endeavor, but it's also a way of signaling that

619
00:31:51,320 --> 00:31:53,680
Speaker 4: you believe a certain outcome is likely. And so I

620
00:31:53,680 --> 00:31:56,120
Speaker 4: remember in the twenty twenty four election, people would make

621
00:31:56,240 --> 00:31:58,160
Speaker 4: ideological bets on Trump whether or not they thought he

622
00:31:58,200 --> 00:32:00,000
Speaker 4: was going to win or not, and same with Kama,

623
00:32:00,200 --> 00:32:02,480
Speaker 4: and there were arguments that when the odds were mismatched

624
00:32:02,480 --> 00:32:04,360
Speaker 4: in one way or the other, that there was market manipulation.

625
00:32:04,760 --> 00:32:07,040
Speaker 4: And these prediction markets become part of the narrative of

626
00:32:07,080 --> 00:32:11,200
Speaker 4: what's happening. And so I wouldn't be surprised if in

627
00:32:11,240 --> 00:32:15,760
Speaker 4: the next conclave you see public figures, politicians and strangers

628
00:32:16,040 --> 00:32:19,600
Speaker 4: on Twitter start to endorse certain candidates for ideological reasons

629
00:32:19,760 --> 00:32:21,719
Speaker 4: and then place bats as a way of showing of

630
00:32:21,720 --> 00:32:25,120
Speaker 4: signaling that they support that particular outcome. And I think

631
00:32:25,200 --> 00:32:29,320
Speaker 4: that gets into really uncharted territory, or at least uncharted

632
00:32:29,360 --> 00:32:30,880
Speaker 4: since in the last five hundred years.

633
00:32:31,120 --> 00:32:34,440
Speaker 3: Yeah, I mean, I do like the idea of I

634
00:32:34,520 --> 00:32:37,520
Speaker 3: think Tyler Kawn has called it like a BS tax.

635
00:32:37,840 --> 00:32:41,360
Speaker 3: So I say something like, oh AI is coming for

636
00:32:41,400 --> 00:32:43,720
Speaker 3: your jobs and if you have a t you know,

637
00:32:43,760 --> 00:32:46,040
Speaker 3: if you have a computer job, then you're going to

638
00:32:46,080 --> 00:32:48,480
Speaker 3: be unemployed of the next two years. And that's a

639
00:32:48,520 --> 00:32:51,760
Speaker 3: great way to get engagement on Twitter. But like, if

640
00:32:51,760 --> 00:32:54,040
Speaker 3: I don't indicate that I've put any stakes at all

641
00:32:54,040 --> 00:32:56,480
Speaker 3: behind it, the problem is I like that idea in

642
00:32:56,600 --> 00:32:59,640
Speaker 3: theory because I like the idea of Okay, put some

643
00:32:59,680 --> 00:33:01,800
Speaker 3: money where your mouth is before you say this stuff,

644
00:33:01,840 --> 00:33:04,080
Speaker 3: because all you're doing is collecting the benefits of the

645
00:33:04,120 --> 00:33:07,120
Speaker 3: engagement without anything. But there's no way to enforce that.

646
00:33:07,320 --> 00:33:10,320
Speaker 3: There's no way to get someone to okay, fine, I

647
00:33:10,360 --> 00:33:12,280
Speaker 3: put up a ten dollars bit or whatever something this

648
00:33:12,400 --> 00:33:15,600
Speaker 3: phenomenal how to like actually like force the side. So

649
00:33:15,640 --> 00:33:18,600
Speaker 3: I like that in theory, but in practice I see

650
00:33:18,800 --> 00:33:22,680
Speaker 3: very little way to sort of enforce the BS tax.

651
00:33:23,120 --> 00:33:25,200
Speaker 4: That's a great point. I think that the liquidity is

652
00:33:25,240 --> 00:33:26,920
Speaker 4: a big part of this, right, it's this is a

653
00:33:26,920 --> 00:33:29,280
Speaker 4: reason why hedge funds don't buy prediction market contracts the

654
00:33:29,320 --> 00:33:32,680
Speaker 4: way the hedge against political political risk. They buy currency

655
00:33:32,680 --> 00:33:36,800
Speaker 4: swaps and to stay derivatives. And it's because the liquidity

656
00:33:36,800 --> 00:33:40,160
Speaker 4: in these prediction markets isn't high enough to actually make

657
00:33:40,280 --> 00:33:42,240
Speaker 4: major major bets on. If you put a million dollars

658
00:33:42,280 --> 00:33:44,440
Speaker 4: into a market, you're going to move it significantly for

659
00:33:44,520 --> 00:33:48,320
Speaker 4: most markets. And so there's sort of a paradoxical thing

660
00:33:48,360 --> 00:33:53,080
Speaker 4: where the scale will almost always be fairly small on

661
00:33:53,120 --> 00:33:55,680
Speaker 4: an individual level. Even on an agate level, it's large

662
00:33:55,960 --> 00:33:57,880
Speaker 4: until they reach a certain tipping point and he starts

663
00:33:57,880 --> 00:34:00,440
Speaker 4: to start to see big money coming in to based

664
00:34:00,440 --> 00:34:04,240
Speaker 4: off of trying to trying to make actual outsize returns.

665
00:34:04,600 --> 00:34:08,120
Speaker 2: Ryan, that was amazing, so fun to talk about a

666
00:34:08,160 --> 00:34:11,120
Speaker 2: prediction market that's like five hundred years old. Thank you

667
00:34:11,160 --> 00:34:12,799
Speaker 2: so much for coming on all thoughts.

668
00:34:12,560 --> 00:34:13,200
Speaker 4: Thanks for having me.

669
00:34:13,280 --> 00:34:14,879
Speaker 3: Yeah, that was great, Ryan, Thank you so much.

670
00:34:28,160 --> 00:34:28,440
Speaker 4: Joe.

671
00:34:28,800 --> 00:34:29,760
Speaker 2: That was a lot of fun.

672
00:34:29,920 --> 00:34:30,360
Speaker 3: Yeah.

673
00:34:30,400 --> 00:34:35,240
Speaker 2: I'm always I always enjoy financial history, financial market history,

674
00:34:35,280 --> 00:34:38,080
Speaker 2: and that was a really good example of it. One

675
00:34:38,120 --> 00:34:41,920
Speaker 2: thing that really struck me was this idea of predictions

676
00:34:42,000 --> 00:34:45,440
Speaker 2: as they become, As prediction markets become more prevalent in

677
00:34:45,520 --> 00:34:49,520
Speaker 2: the world, the predictions, the actual predictions become part of

678
00:34:49,640 --> 00:34:53,080
Speaker 2: the narrative of what's happening. And I think to Ryan's point,

679
00:34:53,280 --> 00:34:56,480
Speaker 2: the twenty twenty four election was a really good example

680
00:34:56,560 --> 00:34:59,919
Speaker 2: of that. The official polls showed something different versus one

681
00:35:00,200 --> 00:35:02,920
Speaker 2: on poly market, and then as we got closer and

682
00:35:02,920 --> 00:35:05,640
Speaker 2: closer to the election, there was this sort of idea

683
00:35:05,719 --> 00:35:09,000
Speaker 2: that maybe the prediction markets were getting it right, maybe

684
00:35:09,040 --> 00:35:13,719
Speaker 2: they tapped into a certain demographic of the US which

685
00:35:13,800 --> 00:35:17,200
Speaker 2: actually turned out to be pretty important in the actual

686
00:35:17,280 --> 00:35:20,439
Speaker 2: voting process. So young men, lots of young men on

687
00:35:20,640 --> 00:35:24,000
Speaker 2: these platforms, and they all turned out and voted. So

688
00:35:24,360 --> 00:35:26,919
Speaker 2: in that particular instance, it was a really good read

689
00:35:27,080 --> 00:35:30,080
Speaker 2: on the outcome and it also became part of the store.

690
00:35:30,400 --> 00:35:32,760
Speaker 3: You know what's interesting though about the twenty twenty election

691
00:35:32,840 --> 00:35:36,240
Speaker 3: that people don't talk about go on the prediction markets

692
00:35:36,239 --> 00:35:38,560
Speaker 3: got it wrong on the popular vote. No one talks

693
00:35:38,600 --> 00:35:38,960
Speaker 3: about this.

694
00:35:39,120 --> 00:35:39,719
Speaker 2: Yeah, that's true.

695
00:35:39,760 --> 00:35:43,080
Speaker 3: So like it is true that according to the you know,

696
00:35:43,320 --> 00:35:45,799
Speaker 3: you could say, okay, the polls were very closed. Some

697
00:35:45,840 --> 00:35:48,319
Speaker 3: of them had you know, it's very close, and then

698
00:35:48,520 --> 00:35:51,239
Speaker 3: the prediction markets got it right. I'm not really clear

699
00:35:51,239 --> 00:35:54,800
Speaker 3: that twenty twenty four was this unherlded success because whatever

700
00:35:54,840 --> 00:35:58,359
Speaker 3: the betters in their aggregate had in mind clearly had

701
00:35:58,360 --> 00:36:01,480
Speaker 3: Trump winning the electoral vote vote through some you know,

702
00:36:01,960 --> 00:36:04,800
Speaker 3: through some narrow case, but he won the popular vote.

703
00:36:05,480 --> 00:36:07,759
Speaker 2: Narrowcase is a very diplomatic way of putting it.

704
00:36:08,040 --> 00:36:10,719
Speaker 3: Well, some narrow route through the map, right, some narrow

705
00:36:10,880 --> 00:36:13,680
Speaker 3: victory where he wins you know, the key states in

706
00:36:13,680 --> 00:36:17,080
Speaker 3: the upper Midwest or whatever. He won the popular vote,

707
00:36:17,160 --> 00:36:19,759
Speaker 3: but he was not winning the popular vote in the

708
00:36:19,800 --> 00:36:23,640
Speaker 3: polymarket contract, and no one ever talked about that. They're like, oh,

709
00:36:23,680 --> 00:36:26,360
Speaker 3: this great prediction market success in twenty twenty four. It

710
00:36:26,360 --> 00:36:28,920
Speaker 3: got showed that the polls are wrong, blah blah blah.

711
00:36:28,960 --> 00:36:31,400
Speaker 3: So I feel like there's no one we you know,

712
00:36:31,440 --> 00:36:33,800
Speaker 3: at some point people have to reckon with actually what happened.

713
00:36:33,800 --> 00:36:36,520
Speaker 3: How good were the prediction markets in twenty twenty four.

714
00:36:36,520 --> 00:36:39,480
Speaker 3: I would say maybe not as great as they immediately

715
00:36:39,719 --> 00:36:42,239
Speaker 3: got credit for. Anyway, all that said, I didn't think

716
00:36:42,239 --> 00:36:45,200
Speaker 3: this was an excellent episode. It's interesting, Ryan said he

717
00:36:45,280 --> 00:36:48,359
Speaker 3: got interested in this because the idea of paying lobbyists

718
00:36:48,400 --> 00:36:51,959
Speaker 3: in prediction market contracts, which I've wondered about this too,

719
00:36:52,040 --> 00:36:55,560
Speaker 3: Like could you have presidential campaigns in which part of

720
00:36:55,640 --> 00:36:59,040
Speaker 3: the staff's pay was contracts. So it's like, if you're

721
00:36:59,040 --> 00:37:02,840
Speaker 3: on the Kamala campaign, you get a certain share of

722
00:37:02,880 --> 00:37:08,279
Speaker 3: your salary in long coma futures. Therefore you have a

723
00:37:08,320 --> 00:37:11,760
Speaker 3: greater incentive to win, kind of like stock options, et cetera.

724
00:37:11,960 --> 00:37:14,400
Speaker 3: I've never heard of that happening, but you could imagine

725
00:37:14,440 --> 00:37:17,960
Speaker 3: campaign saying part of your salary is in these contracts

726
00:37:18,000 --> 00:37:20,240
Speaker 3: to create an outcome incentive for victory.

727
00:37:20,520 --> 00:37:20,920
Speaker 1: I don't know.

728
00:37:20,960 --> 00:37:23,799
Speaker 2: I never really got the skin in the game arguments

729
00:37:23,840 --> 00:37:28,120
Speaker 2: for these types of financial incentives, like the BS engagement

730
00:37:28,160 --> 00:37:30,520
Speaker 2: that you were talking about earlier. If you're a pundit

731
00:37:30,719 --> 00:37:33,560
Speaker 2: or if your job is to lobby for something or

732
00:37:33,640 --> 00:37:37,719
Speaker 2: to influence something, then surely, like the incentive for you

733
00:37:37,840 --> 00:37:41,040
Speaker 2: to do it is your job. People aren't going to

734
00:37:41,120 --> 00:37:43,600
Speaker 2: listen to you online if you're consistently wrong.

735
00:37:44,080 --> 00:37:46,719
Speaker 3: I like, say, no evidence that that's the case. I've

736
00:37:46,760 --> 00:37:50,719
Speaker 3: never seen everything that that's the case. You Like, have

737
00:37:50,760 --> 00:37:53,680
Speaker 3: you seen evidence that like, you can be wrong online

738
00:37:53,719 --> 00:37:55,400
Speaker 3: for a long time, and that hurts your career.

739
00:37:56,680 --> 00:37:57,560
Speaker 4: Yes, you have.

740
00:37:57,920 --> 00:38:00,000
Speaker 3: Yeah, there's so many.

741
00:38:00,680 --> 00:38:03,879
Speaker 2: At the very least people will point out how many

742
00:38:03,920 --> 00:38:06,840
Speaker 2: times you've been wrong. At a minimum, that does happen

743
00:38:07,360 --> 00:38:07,640
Speaker 2: to me.

744
00:38:08,360 --> 00:38:12,120
Speaker 3: One of the worst things about the contemporary discourse are

745
00:38:12,200 --> 00:38:16,800
Speaker 3: purveyors of garbage and cynicism, who say all kinds of

746
00:38:16,840 --> 00:38:21,799
Speaker 3: stuff just for engagement, who tear down institutions, who tear

747
00:38:21,840 --> 00:38:25,640
Speaker 3: down people, et cetera, with real decay, who pay no

748
00:38:25,760 --> 00:38:28,640
Speaker 3: who bear no cost for the actions of what they're doing.

749
00:38:28,719 --> 00:38:30,560
Speaker 3: I don't really know how to stop it, but the

750
00:38:30,640 --> 00:38:32,960
Speaker 3: idea that maybe like if they were forced to like

751
00:38:33,480 --> 00:38:36,160
Speaker 3: actually like bear the cost of the damage that they do,

752
00:38:36,239 --> 00:38:37,839
Speaker 3: would be good. I would love that. I don't see

753
00:38:37,880 --> 00:38:41,080
Speaker 3: it happening, but like, I would love that if there

754
00:38:41,120 --> 00:38:43,160
Speaker 3: was some way to enforce that. But there's like I

755
00:38:43,160 --> 00:38:44,719
Speaker 3: would love if there was at tax on it, like

756
00:38:44,760 --> 00:38:45,320
Speaker 3: the damage.

757
00:38:45,480 --> 00:38:48,160
Speaker 2: There's no way of enforcing it, Yeah, for sure. But

758
00:38:48,360 --> 00:38:52,640
Speaker 2: my point is more like, by creating these prediction markets,

759
00:38:53,200 --> 00:38:56,520
Speaker 2: it just feels like we're creating another way for people

760
00:38:56,640 --> 00:38:59,719
Speaker 2: to like mess around with dodgy narratives. That's what it

761
00:38:59,719 --> 00:39:02,799
Speaker 2: feels like. Even though it might be tied to financial incentives.

762
00:39:03,120 --> 00:39:05,879
Speaker 2: We have no idea if the financial incentive is big

763
00:39:05,960 --> 00:39:09,120
Speaker 2: enough to actually make people act seriously right.

764
00:39:09,160 --> 00:39:11,560
Speaker 3: Totally, it doesn't work in practice. The idea of like

765
00:39:11,840 --> 00:39:14,880
Speaker 3: putting your money with where your mouth is so that

766
00:39:15,120 --> 00:39:18,600
Speaker 3: you don't build a career just on making outlandish things

767
00:39:18,680 --> 00:39:21,920
Speaker 3: and like riling people up intuitively appeals to me.

768
00:39:22,480 --> 00:39:24,799
Speaker 2: All right, we could go on about this for a

769
00:39:24,840 --> 00:39:26,040
Speaker 2: long time, but shall we leave it there.

770
00:39:26,080 --> 00:39:26,759
Speaker 3: Let's leave it there.

771
00:39:26,880 --> 00:39:29,520
Speaker 2: This has been another episode of the auth Loots podcast.

772
00:39:29,640 --> 00:39:32,520
Speaker 2: I'm Tracy Alloway. You can follow me at Tracy.

773
00:39:32,200 --> 00:39:35,000
Speaker 3: Alloway and I'm Joe Wisenthal. You can follow me at

774
00:39:35,040 --> 00:39:38,440
Speaker 3: the Stalwart. Follow Ryan is a co at his substack

775
00:39:38,560 --> 00:39:42,680
Speaker 3: No Dumb Ideas, It's No Dumbideas dot com. Follow our

776
00:39:42,719 --> 00:39:46,040
Speaker 3: producers Carmen Rodriguez at Carmen armand dash O Bennett at

777
00:39:46,120 --> 00:39:49,840
Speaker 3: Dashbot and Kelbrooks at Calebrooks. More odd laws content go

778
00:39:49,920 --> 00:39:52,120
Speaker 3: to Bloomberg dot com slash odd Lots, where you can

779
00:39:52,120 --> 00:39:54,680
Speaker 3: find all of our episodes, as well as a daily

780
00:39:54,719 --> 00:39:57,439
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781
00:39:57,480 --> 00:40:00,440
Speaker 3: about all of these topics, including prediction markets in our

782
00:40:00,520 --> 00:40:02,959
Speaker 3: discord dot gg slash.

783
00:40:02,800 --> 00:40:05,320
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784
00:40:05,400 --> 00:40:07,960
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785
00:40:08,040 --> 00:40:11,080
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786
00:40:11,160 --> 00:40:14,160
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787
00:40:14,520 --> 00:40:17,399
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788
00:40:17,440 --> 00:40:20,799
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789
00:40:20,800 --> 00:40:22,840
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790
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791
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