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