WEBVTT - The WSJ On Polymarket's Questionable Ads 0:00:02.360 --> 0:00:07.080 Also media, Hello and welcome to Better Offline. I am, 0:00:07.120 --> 0:00:21.360 of course your host ed zetron. Also today, I am 0:00:21.480 --> 0:00:24.239 joined by two incredible reports from the Wall Street Journal, 0:00:24.320 --> 0:00:27.639 Katherine Long and Kaitlyn Ostrov, who just published an incredible 0:00:27.720 --> 0:00:31.440 and truly horrible story about poly Market and they're extremely 0:00:31.480 --> 0:00:35.120 questionable influence marketing campaigns. Katheryne Caitlyn, thanks for joining me. 0:00:35.680 --> 0:00:38.040 So happy with me here, thanks for having us said. 0:00:38.640 --> 0:00:42.080 Okay, so walk me through exactly what poly market was 0:00:42.360 --> 0:00:45.159 doing with these influencers and social media. What were they 0:00:45.240 --> 0:00:47.000 paying for? What was then end result? 0:00:48.360 --> 0:00:52.440 So the end result was an onslaught of videos that 0:00:52.600 --> 0:00:57.280 appeared to show college age social media creators betting and 0:00:57.320 --> 0:01:01.440 winning large amounts of money online. But what we found 0:01:01.680 --> 0:01:05.319 is that all of those bets were actually fake. They 0:01:05.440 --> 0:01:09.840 were placed on a dummy platform that Polymarket built to 0:01:10.200 --> 0:01:15.520 almost exactly, but not precisely, resemble the website, and some 0:01:15.600 --> 0:01:19.080 of the wins that the influencers showed themselves having were 0:01:19.160 --> 0:01:22.080 faked as well. The creators were using things like outdated 0:01:22.120 --> 0:01:26.160 footage or altered headlines to suggest that they won really 0:01:26.240 --> 0:01:28.760 lucrative vets, when in fact they would have lost. 0:01:29.600 --> 0:01:32.640 Right so just to be cleared, So the bets were fake, 0:01:33.120 --> 0:01:36.160 the website was fake. But also the bets would have 0:01:36.240 --> 0:01:38.280 lost a. 0:01:38.240 --> 0:01:41.240 Lot of them, would have not every single one, but 0:01:41.360 --> 0:01:45.840 the majority of the videos where bets were placed would 0:01:45.880 --> 0:01:48.080 have actually lost in real life, but they were depicted 0:01:48.080 --> 0:01:48.520 as winning. 0:01:49.240 --> 0:01:53.040 That's truly awful. I thought Polymarket was illegal in America 0:01:53.080 --> 0:01:54.200 as well. 0:01:54.320 --> 0:01:55.400 You would be right about that. 0:01:55.480 --> 0:01:59.440 Polymarket entered a settlement with federal regulators back in twenty 0:01:59.440 --> 0:02:03.320 twenty two in which they agreed to stop offering their 0:02:03.440 --> 0:02:07.560 platform to US traders. But as anybody who's used a 0:02:07.600 --> 0:02:12.079 VPN knows, it's pretty trivial to get around things like 0:02:12.760 --> 0:02:16.079 that kind of geofencing. Anybody with a VPN has been 0:02:16.120 --> 0:02:18.239 able to access poly Market, even if they're based in 0:02:18.280 --> 0:02:20.560 the US or other countries where poly Market is banned. 0:02:21.160 --> 0:02:24.320 And so these influences, they're American based, right. 0:02:24.880 --> 0:02:27.560 So it's a mix. Some are based in Canada, some 0:02:27.680 --> 0:02:31.640 are based in the US, and then you know they's 0:02:31.800 --> 0:02:34.160 likely creators and other jurisdictions as well. But that was 0:02:34.160 --> 0:02:37.000 one of the mixed that we looked at in our corpus. 0:02:37.000 --> 0:02:39.680 And so it looks like he was about eleven hundred videos. 0:02:39.680 --> 0:02:44.440 You went over so that's truly it's truly a massive 0:02:44.480 --> 0:02:46.440 scale operation. But do you think it's bigger than the 0:02:46.480 --> 0:02:49.880 ones you saw or is it just it? Like? Did 0:02:49.880 --> 0:02:51.760 you get any idea of the total scale? 0:02:52.680 --> 0:02:56.359 Yeah, So we reviewed eleven hundred videos that had been 0:02:56.400 --> 0:03:00.959 posted between late December correct Primaron Kaitlyn was a little 0:03:00.960 --> 0:03:03.880 it's never late November, late last year, late twenty twenty 0:03:03.880 --> 0:03:07.280 five by all accounts, late twenty twenty five and mid 0:03:07.320 --> 0:03:10.320 May of this year. So eleven hundred videos, ten creators. 0:03:11.480 --> 0:03:15.400 My impression and belief for my reporting and Caitlin's reporting 0:03:15.560 --> 0:03:17.400 and the reporting of our other colleagues is that this 0:03:17.560 --> 0:03:19.080 is just the tip of the iceberg as far as 0:03:19.120 --> 0:03:23.040 poly markets marketing operation. We identified dozens of other creators 0:03:23.080 --> 0:03:26.600 who were posting videos in similar formats. We didn't scrape 0:03:26.600 --> 0:03:30.760 their videos, but we thought our sample size was sufficient. 0:03:31.480 --> 0:03:35.360 That's crazy, So walk me through the exact stage. So 0:03:36.280 --> 0:03:39.480 you have a video of a guy based guessing whether 0:03:39.800 --> 0:03:42.520 Trump will say in shah a Lah. I think was 0:03:42.560 --> 0:03:44.640 one of probably not in your but like Trump will 0:03:44.640 --> 0:03:47.160 say burger or something, and then they're staring at the 0:03:47.200 --> 0:03:50.240 TV and then they go always said burger, but the 0:03:50.280 --> 0:03:52.760 website they were making the bet home was just completely fake. 0:03:54.720 --> 0:03:59.880 Yes, so yeah, so yeah. So in these videos, when 0:03:59.880 --> 0:04:04.280 you watch them, you will often see a college age 0:04:04.280 --> 0:04:06.920 student kind of go in with like this hook phrase, 0:04:06.960 --> 0:04:10.400 but they'll say throw what or wait what, and then 0:04:10.600 --> 0:04:13.360 they will be like, oh, I can, like I can 0:04:13.400 --> 0:04:15.960 bet on this market, and they'll depict the market, and 0:04:16.000 --> 0:04:20.480 then sometimes it will show essentially what the outcome is 0:04:20.560 --> 0:04:23.640 of that market. They'll cut to video of Trump saying 0:04:24.600 --> 0:04:27.080 a certain word or phrase, and then they'll jump up 0:04:27.120 --> 0:04:29.600 and down and sort of give the impression that they've won. 0:04:30.600 --> 0:04:34.359 And this is targeting children, So college age kids like that, 0:04:34.480 --> 0:04:36.720 it's explicitly targeting young people. 0:04:37.120 --> 0:04:39.280 Well, I wouldn't go that far as to say it's 0:04:39.320 --> 0:04:42.000 explicitly targeting on people. But what we do know about 0:04:42.040 --> 0:04:46.800 who it's targeting is that it is targeting Americans. We 0:04:46.960 --> 0:04:52.360 looked at Polymarkets instructions to people who were paid to 0:04:52.839 --> 0:04:57.599 boost the reach of this campaign online. A third party 0:04:57.600 --> 0:04:59.880 contractor that Polymarket worked with to help manage the camp 0:05:00.320 --> 0:05:03.120 said we'll only pay you if at least sixty percent 0:05:03.279 --> 0:05:05.640 of your audience is based in the United States. And 0:05:05.680 --> 0:05:09.080 then two you know, as to the point you alluded to, yes, 0:05:09.160 --> 0:05:12.240 the creators who are making these videos, they are colleged 0:05:12.279 --> 0:05:15.279 aged college students, people in their early to mid twenties. 0:05:15.320 --> 0:05:21.160 Certainly, Jesus, it feels like introducing children to gambling on 0:05:21.160 --> 0:05:24.159 some level. I mean, maybe you can't say that, but 0:05:24.240 --> 0:05:26.680 I'm sent. I mean it seems like showing young people 0:05:27.120 --> 0:05:30.400 doing something and saying you can get bread, which is 0:05:30.400 --> 0:05:32.240 a young person's way of referring to money. For the 0:05:32.279 --> 0:05:35.400 old heads listening, I knew that one. I'm not that all, 0:05:35.520 --> 0:05:39.880 but it just it feels quite dystopian, is kind of 0:05:39.920 --> 0:05:40.640 what I'm getting at. 0:05:41.400 --> 0:05:45.200 It certainly is marketed to give the impression that this 0:05:45.400 --> 0:05:48.560 is a way to make money off of what you know. 0:05:48.720 --> 0:05:51.960 So the majority of the bets that we looked at, 0:05:52.279 --> 0:05:54.400 you know, they showed a trade being placed. Most didn't 0:05:54.440 --> 0:05:57.360 show an outcome, but for those that did, you know, 0:05:57.520 --> 0:06:00.840 almost all of them it was someone winning. I think 0:06:00.839 --> 0:06:03.520 there was like what four or five Catherine and the 0:06:03.520 --> 0:06:05.560 group that we looked at where someone was depicted as 0:06:05.640 --> 0:06:09.520 losing their bet. So the overarching message was you can 0:06:09.560 --> 0:06:10.120 make money. 0:06:11.000 --> 0:06:13.480 I kind of find it fascinating that there's one way 0:06:13.520 --> 0:06:14.680 they lost anyway, keep. 0:06:14.520 --> 0:06:19.120 Going, Yeah, I was just going to chime in and 0:06:19.200 --> 0:06:23.640 add that, you know, in addition to the creators showing 0:06:23.640 --> 0:06:27.240 themselves appearing to win money, they also implied that they 0:06:28.320 --> 0:06:32.680 were wealthy in other ways, including by showing account balances 0:06:32.720 --> 0:06:35.520 on this dummy website, where again no real money was 0:06:35.560 --> 0:06:39.240 being traded. These balances were fictitious, but the videos showed 0:06:39.240 --> 0:06:41.400 their account balances on poly market and the tens of 0:06:41.440 --> 0:06:44.359 thousands of dollars. Some even had balances over one hundred 0:06:44.360 --> 0:06:49.200 thousand dollars. And one of the creators whose videos we reviewed, 0:06:50.240 --> 0:06:54.919 she shows herself placing bets from San Francisco bedroom, and 0:06:54.960 --> 0:06:59.440 then she'll have a video where she's showing herself dancing 0:06:59.480 --> 0:07:01.680 on a beach in front of the Golden gate Bridge 0:07:01.680 --> 0:07:04.000 and she says poly Market funds my life, and there's 0:07:04.040 --> 0:07:05.840 a Hello Kitty sticker in the corner that. 0:07:05.800 --> 0:07:07.120 Says I am unemployed. 0:07:07.160 --> 0:07:10.080 So the impression is certainly that, you know, these people 0:07:10.160 --> 0:07:14.640 are are making enough money off of polymarket to support 0:07:14.680 --> 0:07:17.240 themselves and support themselves in fairly high style. 0:07:18.040 --> 0:07:21.560 And it sounds like kind of like a real operation here, 0:07:21.600 --> 0:07:24.560 like in the sense that there is like they're building 0:07:24.800 --> 0:07:27.760 functional dummy websites because looking I'm as we speak I 0:07:27.800 --> 0:07:30.640 have the the anime gifts from the Peace up and 0:07:30.720 --> 0:07:35.520 it's these seem quite intricate. These perhaps their vibe code 0:07:35.520 --> 0:07:37.440 and it doesn't really matter because no payment rails are 0:07:37.480 --> 0:07:39.440 in there, but these seem like they are built to 0:07:39.520 --> 0:07:40.760 look identical. 0:07:41.480 --> 0:07:45.360 They are extremely convincing. Catherine and I and our colleagues 0:07:45.400 --> 0:07:47.920 were looking at these for about two weeks before our 0:07:47.960 --> 0:07:51.200 colleague Neil meta Or realized that like, this is not 0:07:51.320 --> 0:07:54.960 poly market. Like we started off firmly believing that this 0:07:55.120 --> 0:07:57.000 was poly market. 0:07:57.160 --> 0:07:59.640 Right, Well, when you say that, so this is the 0:07:59.720 --> 0:08:03.880 p oh iy market website. When you say it, believe 0:08:04.040 --> 0:08:05.960 you believed it was polymarket, What did you think the 0:08:06.000 --> 0:08:08.360 purpose was when you found it? 0:08:09.240 --> 0:08:12.360 We thought these were just videos that you know, people 0:08:12.400 --> 0:08:16.640 were making, showing themselves placing actual trades on poly market. 0:08:16.720 --> 0:08:18.760 I don't think we had a theory at the onset 0:08:18.760 --> 0:08:21.360 as to why they were doing this, but we came 0:08:21.360 --> 0:08:24.640 across a bunch of these videos and we were curious 0:08:24.680 --> 0:08:27.880 to understand, you know, what was happening, like who these 0:08:27.920 --> 0:08:30.960 people were, how they were making money. And so we 0:08:31.040 --> 0:08:33.920 have this database of all of the polymarket trades that 0:08:34.080 --> 0:08:37.960 we had been building over the past several months, and 0:08:38.120 --> 0:08:41.600 we started off trying to trace these trades. We wanted 0:08:41.600 --> 0:08:45.000 to understand, you know, what bets were happening, who was 0:08:45.040 --> 0:08:47.720 making these, and we want to go about finding those 0:08:47.800 --> 0:08:51.400 because all of Polymarket's data is public, and we very 0:08:51.480 --> 0:08:54.680 quickly realized that we could not figure out like we 0:08:54.679 --> 0:08:57.440 couldn't place these trades, we could not find the actual 0:08:57.480 --> 0:08:59.880 trades shown in the video, and it took us and 0:09:00.080 --> 0:09:05.400 minute to realize that this was not actually happening on polymarket. 0:09:05.760 --> 0:09:08.679 And the red flag for that ended up being that 0:09:08.760 --> 0:09:13.560 website poi y Market, which our colleague Neil Metta saw 0:09:13.760 --> 0:09:14.680 and flagged to us. 0:09:15.480 --> 0:09:18.880 Hell yeah, good work, Neil. 0:09:19.080 --> 0:09:20.400 Yeah, major shout out to Neil. 0:09:21.200 --> 0:09:24.600 Here's the thing though, so wait, maybe I'm misunderstanding this. 0:09:25.240 --> 0:09:28.200 So the not only did the trades, did some of 0:09:28.240 --> 0:09:30.680 the trades never exist, like it was never possible to 0:09:30.760 --> 0:09:32.520 bet on that particular outcome. 0:09:34.120 --> 0:09:38.120 All of the markets that we saw did exist. And 0:09:38.160 --> 0:09:39.760 that's one of the reasons why it took us so 0:09:39.920 --> 0:09:43.160 long to understand that we were looking at a fake website. 0:09:43.240 --> 0:09:46.040 I mean, we were cambing through this database. Caitlin has 0:09:46.080 --> 0:09:49.640 been painstakingly building over months of every single trade on 0:09:49.760 --> 0:09:52.880 polly Market, which you know is accessible to us because 0:09:52.920 --> 0:09:57.360 Polymarket is a is a blockchain based system, so everything 0:09:57.400 --> 0:10:00.480 is public. And you know, we were looking for these 0:10:00.520 --> 0:10:02.960 trades that appeared to have taken place, right we saw 0:10:02.960 --> 0:10:05.160 a video of it taking place, and it just didn't 0:10:05.160 --> 0:10:08.200 seem to exist in this database. And at that point 0:10:09.040 --> 0:10:13.160 we you know, thanks to Neil's eagle eyes showing that 0:10:13.480 --> 0:10:15.600 you know, one of these creators had seemingly made a 0:10:15.640 --> 0:10:19.440 mistake and accidentally left the URL of this fake site 0:10:19.559 --> 0:10:25.360 poi Market, poi y Market. Yeah, that poly market had 0:10:25.400 --> 0:10:28.520 built in his video, And it was only because of 0:10:28.559 --> 0:10:31.800 that clue that we started being able to unravel that 0:10:31.960 --> 0:10:33.719 all of these videos that we were looking at were 0:10:33.760 --> 0:10:37.520 actually being placed on fake websites, which, as we've mentioned, 0:10:37.640 --> 0:10:42.320 the fake websites were almost identical to the real poly market. 0:10:42.360 --> 0:10:45.600 But you know, once we started looking for some more 0:10:45.600 --> 0:10:48.480 of these clues, once we knew that the website was fake, 0:10:48.520 --> 0:10:52.319 we were able to distinguish various ways in which to 0:10:52.840 --> 0:11:04.280 tell the fake website from the real website. 0:11:06.920 --> 0:11:10.840 So was was it just poimarket or whether like multiple 0:11:10.840 --> 0:11:12.240 other fake websites as well. 0:11:12.960 --> 0:11:16.000 I mean, we like, once we started looking for other 0:11:16.440 --> 0:11:20.840 like simulated polymarket websites. We did find a couple of others, 0:11:20.840 --> 0:11:23.360 but the I think all of the ones that like 0:11:23.440 --> 0:11:27.080 we were able to identify specifically what the website was 0:11:27.080 --> 0:11:30.080 was Poimarket. There was one other where it was like 0:11:30.200 --> 0:11:34.240 this developer link that appeared in a handful of videos 0:11:34.960 --> 0:11:39.520 where it was like one of the like polymarket developers 0:11:40.200 --> 0:11:44.240 dot like their name dot dev dot polymarket, dot dev. 0:11:44.920 --> 0:11:47.920 And so it was like this internal development site that 0:11:48.040 --> 0:11:51.080 appeared in a couple of the videos that also seemed 0:11:51.120 --> 0:11:53.640 like it was being used. So we weren't always certain 0:11:53.840 --> 0:11:57.520 like which simulated platform the trade was happening on, in 0:11:57.559 --> 0:12:01.360 part because we heard from creating part of the instruction 0:12:01.480 --> 0:12:04.280 that they got in making these videos was to not 0:12:04.360 --> 0:12:07.520 make it obvious that it was on a simulated website. 0:12:07.720 --> 0:12:11.920 So if you were on a poiy market, you might 0:12:12.040 --> 0:12:15.920 uppercase the I to make it appear like polly Market. 0:12:16.360 --> 0:12:18.960 And so you know, we came across a handful of these, 0:12:19.000 --> 0:12:21.960 but I don't think we are exactly certain of how 0:12:22.080 --> 0:12:23.640 much each one was used. 0:12:24.480 --> 0:12:27.920 That's it's so strange. How is this not illegal? I mean, 0:12:27.920 --> 0:12:30.800 I guess if the website itself is illegal then illegally 0:12:31.200 --> 0:12:34.319 advertising the illegal website is kind of just a just 0:12:34.400 --> 0:12:36.720 kind of doubling down at that point, doesn't really matter. Like, 0:12:37.360 --> 0:12:39.680 has the government shown I saw that there was some 0:12:39.720 --> 0:12:42.720 sort of federal inquiry into Pollymarket. Was it related to 0:12:42.760 --> 0:12:44.440 this story? 0:12:44.559 --> 0:12:47.640 We are not sure if the precise parameters or subject 0:12:47.760 --> 0:12:52.200 of the federal inquiry you're referring I assume to CFTC 0:12:52.400 --> 0:12:57.160 investigation that we reported on last week. Yeah, the contours 0:12:57.160 --> 0:13:01.280 of that investigation are as yet unclear. You know, I 0:13:01.400 --> 0:13:05.719 know that it is ongoing and extensive, according to a 0:13:06.480 --> 0:13:09.360 person familiar with the investigation. You know, I should add 0:13:09.440 --> 0:13:12.720 as well that the CFTC, the Commodity Futures Trading Commission, 0:13:12.720 --> 0:13:15.840 the agency conducting this investigation. A spokesperson for that agency 0:13:17.160 --> 0:13:19.920 declined to comment on the existence of an investigation, citing 0:13:20.040 --> 0:13:20.680 HC policy. 0:13:20.920 --> 0:13:25.120 Yeah. That is just so strange because I've I don't 0:13:25.160 --> 0:13:27.840 think I've seen anything like this in tech outside of crypto, 0:13:27.920 --> 0:13:30.600 which I know is I know that crypto is kind 0:13:30.600 --> 0:13:33.680 of the is I think polymarket is a crypto product, right, 0:13:33.800 --> 0:13:36.040 it's a blockchain one, Yeah, it is. They moved on 0:13:36.080 --> 0:13:39.280 from that crap, that crap referring to a comment that 0:13:39.320 --> 0:13:40.440 I'm making, not the journalist in. 0:13:40.480 --> 0:13:44.400 Questions, No, it is a is a crypto, is a crypto, 0:13:44.960 --> 0:13:47.720 it's it's on it's on crypto rails, as they would say, Yes. 0:13:48.320 --> 0:13:53.000 That's so strange. What differentiates this from calshe because I 0:13:53.040 --> 0:13:56.040 basically consider them the same website at this point, but 0:13:56.320 --> 0:13:57.960 I guess they're different somehow. 0:13:58.960 --> 0:14:02.560 So we like again, our social media feeds are just 0:14:02.640 --> 0:14:08.000 full with videos for different platforms. You know, we we 0:14:08.040 --> 0:14:11.600 came across the poly Market videos of them placing these trades. 0:14:12.400 --> 0:14:15.920 We've certainly come across a lot of videos of you know, 0:14:16.120 --> 0:14:21.120 people promoting call She, but we haven't come across anything 0:14:21.440 --> 0:14:24.600 similar in the sense of you know, poly Market was 0:14:25.240 --> 0:14:29.000 you know, telling people use to simulate it website, create 0:14:29.080 --> 0:14:33.600 these bets and do not disclose that you have any affiliation. 0:14:34.920 --> 0:14:37.120 We are always looking to see what we might be 0:14:37.160 --> 0:14:40.480 missing in coverage of this piece, but you know, call 0:14:40.560 --> 0:14:43.160 She is. I guess one difference between it in Polymarket 0:14:43.240 --> 0:14:47.840 is also that it is regulated by CFTC. Polymarket has 0:14:47.880 --> 0:14:51.440 a new US product launched late last year that is 0:14:51.640 --> 0:14:56.200 CFTC regulated, but the broader platform is still offshore. So 0:14:56.720 --> 0:14:59.400 you know, we we try to look to see what 0:14:59.440 --> 0:15:01.880 we might be miss sing in this phase. But the 0:15:02.200 --> 0:15:04.120 poly market videos kind of stuck out to us as 0:15:04.120 --> 0:15:06.400 we were going through our own social media feeds just 0:15:06.440 --> 0:15:09.320 trying to understand, you know, why we were getting so 0:15:09.360 --> 0:15:12.040 many of these what was behind that? And we did 0:15:12.120 --> 0:15:14.840 not expect it to lead to these simulated bets. 0:15:15.400 --> 0:15:18.000 So are your algorithms? But so did you do this 0:15:18.160 --> 0:15:21.200 on your own phones or like a journal approof one, 0:15:21.280 --> 0:15:26.040 because I'm wondering all your algorithms ruined now? Oh yeah, cooked, 0:15:28.000 --> 0:15:31.360 just like in like eighteen year olds in kids telling 0:15:31.400 --> 0:15:33.120 you to gamble on the future. 0:15:33.480 --> 0:15:37.000 Always the arm prediction markets. I like, I see no 0:15:37.080 --> 0:15:38.560 other content at this point? 0:15:39.120 --> 0:15:41.000 Yes, yeah, that must be awful. 0:15:42.600 --> 0:15:46.560 We're keeping track of things. 0:15:44.280 --> 0:15:49.360 It's yeah, this is why you've just got to look 0:15:49.360 --> 0:15:52.160 at like lifting videos and palace cats. That's how I 0:15:52.200 --> 0:15:54.240 get around this, just like you just need to cleanse 0:15:54.280 --> 0:15:57.400 your feed every so often. But on a on a 0:15:57.520 --> 0:16:01.120 legal level, just like on a think what differentiates Like 0:16:01.200 --> 0:16:04.160 you said the poly market has a US approved product, 0:16:05.160 --> 0:16:08.120 is like, is that a prediction market? Is it something different? 0:16:08.200 --> 0:16:11.360 Why is Calshi able to operate legally but not poly market? 0:16:12.240 --> 0:16:12.640 Yeah? 0:16:12.680 --> 0:16:16.920 So taking a zooming out here a bit right. So 0:16:17.240 --> 0:16:21.200 Calshi poly Market's biggest competitor, Calci and poly market, they're 0:16:21.240 --> 0:16:22.360 both prediction markets. 0:16:22.560 --> 0:16:26.480 The biggest distinction between the two is that Calshi. 0:16:27.680 --> 0:16:31.080 Calshi made a huge bet that it could successfully achieve 0:16:31.680 --> 0:16:36.440 US regulated status, and poly Market conversely decided that it 0:16:36.520 --> 0:16:41.320 was okay operating offshore as an unregistered crypto entity that 0:16:41.440 --> 0:16:44.640 you know, people can access if they have a VPN, 0:16:44.880 --> 0:16:48.680 but you know they're not technically supposed to. So Calshi 0:16:48.800 --> 0:16:52.080 has not necessarily played nice with regulators. You know, it 0:16:52.400 --> 0:16:55.880 had a pretty significant legal battle early in its career 0:16:55.920 --> 0:16:59.240 over whether election markets would be allowed on the platform, 0:16:59.640 --> 0:17:02.040 but it did have success. It won that battle, and 0:17:02.080 --> 0:17:06.679 now Calshi is a US regulated prediction market, which it 0:17:06.720 --> 0:17:11.240 says is legally available in all fifty states, although there's 0:17:11.240 --> 0:17:14.120 currently some commotion over Nevada. 0:17:13.720 --> 0:17:14.200 Which. 0:17:15.480 --> 0:17:18.560 As a Vegas resident, you can't take up beautiful gambling 0:17:18.560 --> 0:17:21.760 away from Vegas residents exactly. 0:17:22.000 --> 0:17:26.800 So, as one might suspect, the gambling industry is extremely 0:17:26.840 --> 0:17:30.800 worried about the rise of prediction markets. You know, unlike 0:17:32.359 --> 0:17:37.040 online sports books or in person gambling. Calshi and other 0:17:37.160 --> 0:17:40.560 US regulated prediction markets have successfully up till now made 0:17:40.560 --> 0:17:45.480 the argument that they are federally regulated. That means that 0:17:45.680 --> 0:17:50.800 states cannot restrict their operations, So state gambling commissions can't say, 0:17:51.040 --> 0:17:54.160 can't impose conditions on how they operate. They also can't 0:17:54.240 --> 0:17:56.520 levy taxes on prediction markets. 0:17:58.160 --> 0:18:00.240 So Calshi has you. 0:18:00.240 --> 0:18:04.880 Know, fairly successfully been playing within this federal regulatory structure. 0:18:05.640 --> 0:18:08.679 Poly market has been playing outside of it. And for 0:18:08.720 --> 0:18:12.120 a while the two platforms seemed to be growing sort 0:18:12.160 --> 0:18:15.119 of in lockstep, you know. Poly Market started out with 0:18:15.160 --> 0:18:17.000 a bit of a lead. It got a huge amount 0:18:17.000 --> 0:18:20.120 of traction after the twenty twenty four presidential election, which 0:18:20.160 --> 0:18:21.879 is successfully called for Donald Trump. 0:18:22.280 --> 0:18:26.720 Cal She was a bit of a bit more. 0:18:27.240 --> 0:18:27.480 It was. 0:18:27.520 --> 0:18:29.439 It was a lesser known quantity at the time, I 0:18:29.480 --> 0:18:34.200 had less name recognition. But starting around late twenty twenty five, 0:18:34.280 --> 0:18:37.119 cal she actually started to eke ahead of poly market 0:18:37.119 --> 0:18:40.399 when it comes to a relative share of trading volume 0:18:40.440 --> 0:18:41.520 on prediction markets. 0:18:41.600 --> 0:18:43.600 And as of last month, cal. 0:18:43.560 --> 0:18:46.680 She was doing insanely more volume than poly market on 0:18:47.000 --> 0:18:49.720 poly markets offshore and US APP combined. 0:18:50.240 --> 0:18:54.359 And do you know what those volumes might be? Roughly, 0:18:56.400 --> 0:18:57.199 I'll have to go back to. 0:18:58.800 --> 0:19:00.000 Consult a chart in our. 0:19:01.640 --> 0:19:04.560 It was for the month of May twice the amount 0:19:04.600 --> 0:19:07.080 of volume almost twice, sorry, the amount of volume on 0:19:07.840 --> 0:19:09.480 col C versus polymarket. 0:19:10.400 --> 0:19:14.520 That's really worrying. I mean, I think so looking this up, 0:19:14.520 --> 0:19:16.480 it looks like seventeen billion dollars in the month of 0:19:16.520 --> 0:19:20.119 May alone. We live in a godless society. It's a 0:19:20.119 --> 0:19:23.800 statement I am saying, not the jeneralist in question. It's 0:19:23.960 --> 0:19:27.040 very worrying. I find this whole thing quite worrying, not 0:19:27.200 --> 0:19:31.240 just the gambling, but the financialization of everything. I don't 0:19:31.240 --> 0:19:33.840 think it's good to gamble on every outcome personally, and 0:19:33.880 --> 0:19:39.480 I worry. I worry about this spreading personally, and I 0:19:39.480 --> 0:19:43.720 don't like it. Feels like it needs regulation in an 0:19:43.720 --> 0:19:45.880 extreme way that basically doesn't exist yet. 0:19:46.560 --> 0:19:47.960 I mean, I can I can talk a little bit 0:19:47.960 --> 0:19:53.399 about my own experiences here. You know, I started covering 0:19:53.440 --> 0:19:55.320 Keilan's been covering this space a lot longer than I have. 0:19:55.480 --> 0:19:57.399 I sort of jumped into it at the beginning of 0:19:57.400 --> 0:20:01.439 this year, and as part of the process of growing 0:20:01.520 --> 0:20:07.119 familiar with how prediction markets operate, I decided to watch 0:20:07.200 --> 0:20:10.000 the state of the Union through the lens of a 0:20:10.160 --> 0:20:14.400 prediction market live streamer who is live streaming the State 0:20:14.440 --> 0:20:16.439 of the Union and talking about the bets that he 0:20:16.520 --> 0:20:20.240 was placing on what President Trump would say during that speech. 0:20:20.960 --> 0:20:22.240 And you know, I. 0:20:22.119 --> 0:20:25.880 Think similar to watching live sports on which you've wagered, 0:20:26.040 --> 0:20:32.440 it was simultaneously more exciting and I think also slightly 0:20:32.480 --> 0:20:37.760 concerning the way that instead of sort of listening for 0:20:37.840 --> 0:20:41.439 the content of the speech, very rapidly for me, turned 0:20:41.440 --> 0:20:46.720 into something closer to a game of sort of wondering 0:20:46.840 --> 0:20:49.400 what the next word is, like what is he going 0:20:49.440 --> 0:20:52.120 to say? And will it hit? Like will the bet hit? 0:20:52.320 --> 0:20:57.120 And so I understand where the concerns that you're describing 0:20:57.160 --> 0:20:59.760 emanate from. Certainly I would say also that you know, 0:20:59.800 --> 0:21:02.760 there's a lot of people who point to prediction markets 0:21:02.800 --> 0:21:06.240 as an extremely extremely legitimate financial tool and one that 0:21:06.640 --> 0:21:08.879 institutions can increasingly take advantage of. 0:21:24.560 --> 0:21:26.560 I mean, the only people I think that are taking 0:21:26.880 --> 0:21:29.480 I think the only advantage being taken is off the customers, 0:21:29.560 --> 0:21:32.719 because I have to wonder how many people win, and 0:21:33.000 --> 0:21:34.639 probably isn't very much. And the fact that they have 0:21:34.720 --> 0:21:37.040 to resort to the fact they have to resort to 0:21:37.080 --> 0:21:39.560 this kind of marketing suggests that the wins are not 0:21:39.640 --> 0:21:41.720 quite as common as they want you to believe. 0:21:42.480 --> 0:21:46.200 Well, and that's one of a previous story that Catherine 0:21:46.160 --> 0:21:48.919 and I worked on together basically analyzed just that how 0:21:48.960 --> 0:21:52.359 many people actually win on frediction markets, and what we 0:21:52.640 --> 0:21:55.439 found was that, you know, about seventy percent of people 0:21:55.800 --> 0:21:59.920 who had traded on polymarket lost money, and the losers 0:22:00.080 --> 0:22:03.280 to winners on Calci, you know, was about two point 0:22:03.359 --> 0:22:07.560 nine to one. And so you know, these while a 0:22:07.600 --> 0:22:11.080 lot of them marketing is centered around these are prediction 0:22:11.160 --> 0:22:13.879 markets where you can win money, in reality, most people 0:22:13.920 --> 0:22:14.919 do not win money. 0:22:15.760 --> 0:22:19.040 Kind of feels like the DraftKings stuff as well, the 0:22:19.080 --> 0:22:22.480 sportscam claim where it's like, oh, yeah, of course it's 0:22:22.520 --> 0:22:24.800 really easy to and this is not a statement I 0:22:24.920 --> 0:22:26.879 align with it. It's easy, you just bet on what 0:22:26.920 --> 0:22:29.560 the winning team will be. But the existence of spreads 0:22:29.680 --> 0:22:32.919 and also the existence of the weird nomenclature that the 0:22:32.960 --> 0:22:35.919 prediction markets use is how they get you. Like I 0:22:35.920 --> 0:22:38.520 remember with a camp I was talking about with Nick 0:22:38.560 --> 0:22:41.679 Devoor and Rebecca and Garena from Baron's and it was 0:22:41.840 --> 0:22:45.399 just like, yeah, the wording around Camone's potential death and 0:22:45.440 --> 0:22:48.160 then they just pulled the entire thing screwed a bunch 0:22:48.240 --> 0:22:51.760 of people over and how they design, how they design 0:22:51.800 --> 0:22:54.720 and they say what a win is seems to also 0:22:54.840 --> 0:22:57.119 undermine people, right. 0:22:57.040 --> 0:23:00.640 And we've we've previously reported that, you know, the warding 0:23:00.840 --> 0:23:03.960 for pretty much all of these prediction markets really matters. 0:23:04.240 --> 0:23:06.760