Prediction Markets Are Ruining the Finance Industry

0:00 prediction markets, the platforms for

0:02 betting on virtually anything.

0:04 Who wins the next NHL game?

0:06 How many tweets will

0:07 Elon Musk post in April?

0:08 Will Bitcoin be up in the next 5 minutes?

0:10 Can Iran and the US reach a nuclear deal?

0:12 Are aliens real?

0:13 Will Taylor Swift become pregnant

0:14 before marriage?

0:15 And will Jesus return

0:16 before 2027?

0:18 All things you can gamble,

0:20 I mean, trade on via platforms like

0:22 Kshi, the largest prediction market in

0:24 the US, and Poly Market, the largest

0:26 such platform globally.

0:28 legally ambiguous and outright outlawed in a

0:31 number of advanced economies.

0:32 Prediction markets have been absolutely thriving in

0:35 the United States.

0:37 All thanks to a legal

0:38 technicality.

0:39 Prediction markets for some reason don't count as gambling,

0:44 something that puts jurisdiction for the

0:45 platforms under the federal CFTC rather

0:49 than state gambling laws.

0:51 And everyone is rushing to take advantage.

0:53 Financial and gambling platforms alike are

0:55 launching their own offerings.

0:57 Traditional exchanges are investing in

0:58 the space.

0:59 CNN, Fox, CNBC, Google, the

1:02 MLB, UFC have all announced

1:04 partnerships.

1:05 Even Trump has announced

1:06 plans to launch his own prediction

1:08 market.

1:09 And it's easy to see why there's

1:10 been such a gold rush with the industry

1:12 turning the CEOs of Poly Market and

1:14 Kulshi and Kulshi's co-founder into some

1:17 of the youngest self-made billionaires.

1:20 Now, to many, these platforms amount to

1:22 little more than glorified casinos.

1:24 But founders will argue that they're much

1:26 more than that.

1:28 That they offer valuable

1:29 prediction data and news information, a

1:31 way for governments, corporations, and

1:33 individuals to hedge against risks, or a

1:36 method for users to trade off their

1:37 unique expertise to get ahead

1:40 financially.

1:41 Things that are all argued

1:42 to make prediction markets a net good

1:45 for society.

1:48 But what if the way these prediction

1:49 markets advertised themselves went

1:52 against all of that?

1:55 What if most users actually lost money

1:57 on these platforms?

1:59 Cali let you legally trade on anything.

2:01 What if prediction markets were prone to

2:03 abuse?

2:03 How many hurricanes do you think

2:05 we'll have this year?

2:06 What if ads specifically targeted

2:08 younger users to get them hooked with

2:10 promises of big winnings?

2:12 We're in Florida asking people what THEY

2:14 PUT THEIR MONEY ON.

2:15 Would all of that

2:17 still be a net good?

2:19 Well, that's what we're going to cover in today's video.

2:21 We've seen a lot of recent updates and

2:23 research come out on prediction markets

2:25 that I think warrants discussion.

2:27 But before we get into any of that, for

2:29 those who may not have been following

2:30 this whole kurfuffle, let's start at the

2:33 beginning.

2:35 How did we get here?

2:40 Prediction markets are platforms that

2:42 allow users to bet on the outcome of

2:44 virtually any future event.

2:46 Users can find a market that they want to bet on,

2:48 buy a contract according to how they

2:50 want to bet, sometimes represented by a

2:52 blockchain token depending on the

2:54 platform for a price that's based on the

2:56 odds of that event occurring that way,

2:59 and then either hold the contract until

3:00 the event is triggered and a payout is

3:02 made or sell the contract to another

3:04 user earlier with the price of the

3:06 contracts changing based on the evolving

3:08 odds of that event.

3:09 If you hold, however, the result is binary.

3:12 Either the contract hits and you earn a

3:14 predetermined return based on your entry

3:16 price or it doesn't and you lose at all.

3:19 Platforms like Khi and Poly Market

3:21 charge a small fee on each transaction

3:23 that can range anywhere from a few basis

3:25 points to over 3% based on the odds of

3:27 the contract, but they otherwise don't

3:29 partake in the bet themselves.

3:31 That distinction is important because while

3:33 traditional bookmakers often take the

3:34 other side of each bet with favored

3:36 odds, prediction markets argue that they

3:38 are merely facilitating bets and act

3:40 more as a derivatives exchange.

3:42 You see, these types of contracts known as event

3:45 contracts are nothing new.

3:47 The North American Derivatives Exchange, formerly

3:49 Head Street Inc., has been trading event

3:51 contracts, which are technically a type

3:53 of swap and sometimes referred to as

3:56 binary options because of their all or

3:58 nothing outcome since 2004.

4:01 But the events that these contracts cover is

4:03 what's really changed here.

4:05 Historically, the CFTC, the Commodity

4:07 Futures Trading Commission, has been

4:09 very restrictive in limiting what type

4:11 of events these contracts can be on.

4:13 In fact, back in 2012, they blocked the

4:16 NADX from listing their own elections

4:18 event contracts, deeming them a form of

4:21 gaming, something explicitly prohibited

4:23 under the Commodity Exchange Act.

4:25 Even the Iowa electronic market, which has

4:27 been permitted to trade election

4:29 contracts for a number of decades, was

4:31 only allowed to operate under strict

4:32 research focused non-commercial conditions.

4:35 And so originally Khi was

4:37 actually blocked too when it tried

4:40 listing event contracts on congressional

4:42 control in 2023.

4:44 This time around however Khi sued and a judge actually

4:48 ruled in the platform's favor arguing

4:50 that elections didn't constitute gaming

4:52 and that the CFTC's judgment on public

4:55 interest wasn't authorized by Congress.

4:58 And so the floodgates opened with

5:00 elections betting quickly sweeping

5:02 across the country.

5:03 But here you might

5:04 be drawing a few question marks given

5:05 that these platforms today have pushed

5:07 heavily into sports betting, which by

5:10 some definitions is a form of gaming.

5:14 So, as you'd expect, there's been a lot

5:16 of legal push back with a number of

5:18 states angry that they are missing out

5:19 on gambling tax revenue and arguing that

5:21 these platforms should fall under their

5:24 state gambling laws.

5:25 But under the new

5:26 Trumpappointed head of the CFTC, Michael

5:29 Celig, the institution has not only

5:31 allowed this activity for some reason,

5:34 it's vehematly defended it with the

5:36 group issuing public messages purporting

5:38 the value of these platforms and arguing

5:40 that the CFTC has sole jurisdiction over

5:44 these markets.

5:45 To those who seek to challenge our

5:47 authority in this space, let me be

5:50 clear.

5:51 We will see you in court.

5:53 And the institution has made true on that

5:55 promise with the CFTC suing states for

5:58 restricting prediction market activity,

6:00 filing an amicus brief in support of

6:02 Crypto.com in its dispute with the

6:04 Nevada Gaming Control Board, and even

6:06 getting a judge to temporarily drop

6:08 criminal charges brought on by Arizona

6:11 with the institution completely

6:13 abandoning the appeal it originally

6:15 filed against Kalshi's original

6:17 elections contracts.

6:19 And so that's how

6:19 we find ourselves today with our markets

6:22 on whether Justin Trudeau and Katy Perry

6:24 will break up by August.

6:25 Now, there do remain some limits on what these

6:27 contracts can involve.

6:28 The CMA explicitly outlaws contracts with

6:31 references to terrorism, assassination,

6:33 war, and unlawful activities.

6:36 But outside the CFTC just blindly ignoring

6:38 the gaming restrictions, even some of

6:40 those contracts are pretty easy to

6:42 access thanks to some markets, namely

6:45 Poly Market's main offering operating

6:47 offshore, meaning savvy users can still

6:50 largely access these types of bets.

6:52 But this is where executives will defend

6:53 these platforms.

6:54 While most people again

6:56 view prediction markets as just the

6:58 latest degenerate iteration of

7:00 investment gamification advocates including the CFTC I guess will argue

7:05 that they're much more than just

7:06 gambling platforms.

7:08 They're presented for one as an innovative way to hedge

7:11 risks.

7:11 Companies for example can

7:12 mitigate against an unfavorable

7:14 candidate winning an election by betting

7:17 accordingly.

7:17 And even for sports team

7:19 managers can bet in a way that mitigates

7:21 the downside of a loss for their team.

7:23 Then there's the data, that sweet, sweet

7:26 forecasting data that prediction markets

7:28 have become famous for.

7:30 You see, prediction markets tap into the

7:32 so-called wisdom of the crowds.

7:33 The idea that collectively society's estimates

7:36 are more accurate than those of

7:38 individual experts.

7:39 It's a concept similar to the efficient market

7:42 hypothesis for stock markets.

7:44 If markets have a lot of participants and low

7:47 friction, then the market's collective

7:49 buying and selling activity should

7:51 roughly bring the price of things close

7:54 to their true intrinsic value,

7:56 especially as experts take advantage of

7:58 any mispricings and arbitrage

8:00 opportunities and themselves contribute

8:02 to the price discovery for that thing.

8:05 So with prediction markets, the idea

8:07 goes that if people are allowed to bet

8:09 on it, the probabilities that surface

8:11 from the trading activity on the

8:12 platforms will reflect fairly accurate

8:15 forecasts.

8:16 And there is some truth to

8:18 that.

8:18 Poly market gained massive

8:20 publicity in the 2024 US presidential

8:22 election for showing Trump as the winner

8:24 weeks before professional polls did.

8:26 Even the Iowa electronic market

8:28 demonstrated back in the '90s the power

8:30 of market-based forecasts.

8:32 In comparison to more than 900 polls over the last two

8:35 decades, the IM has been closer to the

8:37 actual outcome 74% of the time with the

8:40 key argument being that betters aren't

8:42 influenced by the same bias that might

8:44 sway news outlets or polls.

8:46 It's also why many executives have argued that we

8:48 should try and financialize everything

8:50 because if we have people trading on it,

8:52 then we'll have a pretty good idea of

8:54 where it's going to go in the future

8:55 with the poly market CEO even arguing

8:57 that regarding war contracts, people in

8:59 the Middle East can use prediction

9:01 markets to decide quote whether we sleep

9:03 near the bomb shelter.

9:05 Now, just shoving our ethics to the side here for a sec,

9:08 if you squint your eyes just right, you

9:11 can see the argument.

9:12 And for individuals, prediction markets are

9:14 presented as a way to grow your money.

9:17 Traditional investments are plagued with

9:18 corruption.

9:19 But with prediction markets,

9:20 the layman can profit from their niche

9:23 expertise or unique insight, which for

9:25 anyone who's previously been unable to

9:27 monetize their 180 hours of counting the

9:29 cars that pass through a certain

9:30 intersection, probably sounds like a

9:33 dream come true.

9:35 Except that's not really what we see for most people.

9:42 When it comes to how much money users

9:43 actually make from prediction markets,

9:45 the odds aren't much better than what we

9:48 see for things like day trading, where

9:50 the vast majority of people lose money.

9:52 One recent analysis by Jordan Bender,

9:54 managing director of gaming equity

9:56 research with Citizens, found that the

9:57 median ROI for retail users of

9:59 prediction markets was negative8% from

10:02 July 2025 to March 2026.

10:05 In a separate independent blockchain analysis of Poly

10:08 Market by Andre Sergenov found that 84%

10:11 of Poly Market users have realized

10:13 losses with just 2% of the 2.5 million

10:17 participants having made more than

10:19 $1,000 over their trading history.

10:23 So you can see that despite how prediction

10:24 markets are presented, making money with

10:26 them is unlikely for most.

10:28 In fact, the median ROI from the citizens note was

10:31 worse than the median for legal US

10:34 sports betting which sat at 5%.

10:37 Now, there are of course examples of people

10:39 who have profited from their niche

10:41 experience, especially in the earlier

10:43 days of the markets when there was less

10:44 competition.

10:45 And there is some evidence

10:47 that select subsets are able to achieve

10:49 better returns.

10:50 The citizens analysis found that users trading over $500,000

10:55 saw their ROI improve to 2.6%.

10:57 6%.

10:58 But for anyone who's trading just a few

11:00 thousand or less, i.e.

11:02 most of the people the platform advertises to, the

11:05 average returns are all negative, which

11:07 seems to align with the idea that the

11:09 market's returns are largely captured by

11:11 a small cohort of professional users,

11:14 i.e.

11:14 those who exploit arbitrage

11:16 opportunities between platforms, marketmaking institutions, or groups

11:20 with the infrastructure to execute on

11:22 opportunities faster than others.

11:24 And while prediction markets argue that

11:26 they're from more than just sports

11:27 gambling, that's still their bread and

11:29 butter where the vast majority of their

11:31 revenues come from.

11:32 Khi, for example, holds a 90% share of the US prediction

11:36 market and sees a growing 13 billion in

11:39 monthly volume.

11:40 Roughly 79% of this is

11:42 strictly for sports betting.

11:44 The second largest category behind it, crypto,

11:47 which takes up twothirds of non-sports

11:49 betting categories, something we already

11:53 have markets for.

11:54 Now, beyond the concerns around the actual experience

11:57 users have on these platforms, there's

11:59 also the issue of how people abuse these

12:02 prediction markets and what that means

12:04 for other users.

12:05 For one, there's the

12:07 insider trading.

12:08 In financial markets, it's illegal to trade securities on

12:11 information that's not otherwise

12:13 available to the public since doing so

12:16 erodess trust in said markets.

12:18 It's why insiders are traditionally required to

12:20 publicly disclose their trades and their

12:23 positions.

12:24 But as you'd expect from a

12:26 platform that lets people bet on

12:28 literally anything, people have been

12:30 quick to abuse their privileged

12:31 information on literally whatever.

12:35 Poly Market, for example, saw a number of

12:37 users make substantial bets around the

12:39 war in Iran and America's military

12:41 actions in Venezuela days and even hours

12:44 before they occurred.

12:46 In fact, just this

12:46 week, an NPR analysis discovered a

12:49 trader who had made $300,000

12:51 betting on Joe Biden pardons.

12:53 Bets that for some were rapidly approaching 0%

12:57 odds.

12:58 There's also the risk of market

12:59 manipulation given how trivial some of

13:02 these markets are.

13:03 There are bets on

13:04 whether YouTuber Moist Critical will get

13:05 a haircut or what color Trump's tie will

13:08 be during the State of the Union

13:09 address.

13:10 And there have been numerous

13:11 accusations of people unfairly

13:13 influencing the outcome of these

13:15 markets.

13:15 Lord Miles is sending money to

13:18 the same address which is betting

13:20 against him.

13:20 This is something Trevor

13:21 Noah even poked fun of at the Grammy

13:23 Awards.

13:24 Potato.

13:25 If you had me saying potato on Py

13:27 Market, you just made a ton of money.

13:29 It goes to demonstrate how easily abused

13:31 these markets are.

13:32 even if it was a

13:33 joke.

13:34 The real contract didn't have the

13:35 word potato as an option.

13:37 Even around more serious news stories, we've seen

13:40 examples of people trying to influence

13:41 prediction market outcomes.

13:43 There have been examples of journalists threatened

13:45 for how they described a missile strike

13:48 because of its impact on a $23 million

13:50 polyarket market.

13:52 And there are Discord

13:52 communities allegedly discussing ways to

13:54 influence the interpretation of news

13:56 stories to help settle their online

13:59 bets.

13:59 Now, prediction market operators

14:01 do have the power to veto bets and ban

14:03 users, but they've been slow to enact

14:06 real changes around these risks.

14:08 For example, while both platforms recently

14:10 announced changes like preemptively

14:12 banning athletes from betting on their

14:14 own sport, this only came last month in

14:17 the face of proposed legislation to ban

14:20 sports prediction markets following a

14:22 series of insider trading scandals

14:24 around college and professional games.

14:27 And these late policy changes make sense

14:28 because in a way insider trading is good

14:32 for these platforms when it comes to

14:33 prediction data.

14:34 So it's clearly dangerous to assume that these platforms

14:37 will self-regulate.

14:38 And while the CFTC

14:39 is supposed to be the one policing this

14:41 activity and ensuring that insider

14:43 trading and market manipulation aren't

14:45 running rampant, it hasn't been doing

14:49 much to penalize abusers.

14:50 To date, there have only been two publicly reported

14:53 enforcement actions from the institution

14:56 regarding prediction market users.

14:58 One against a political candidate for

15:00 trading on their own candidacy and one

15:02 against an editor for Mr.

15:03 Beast for betting on his videos.

15:06 Both of which were actually referred by Kulshi.

15:08 In fact, the CFTC has taken more legal

15:11 action against states trying to ban

15:13 prediction markets than perpetrators of

15:16 these illegal activities.

15:18 Not to mention that regardless of how sophisticated the

15:21 tracking measures used by these

15:22 platforms might be for finding insiders

15:25 and trying to clear them out, it's just

15:27 not feasible to accurately identify

15:30 insiders and market manipulators across

15:32 the slew of markets available when you

15:35 allow people to bet on literally

15:38 anything.

15:39 So, you can see that there are

15:40 a lot of problems and risks that users

15:42 face when using prediction markets.

15:44 But executives for these companies have

15:46 arguments there as well.

15:48 For one, these issues are nothing new.

15:50 Even traditional markets see insider trading and market

15:53 manipulation.

15:54 And while yes, the

15:55 majority of the platform activity is

15:56 tied to sports betting.

15:58 Khi CEO Tar Mansour has argued that liquidity begets

16:02 liquidity.

16:02 Sports betting might not be

16:04 the most useful application of Kulchi

16:06 for society's sake, but that activity is

16:08 needed to attract other activity for the

16:11 more important stuff like economic and

16:13 political forecasts.

16:14 So, while people may use these markets to speculate just

16:17 as some do with stocks and options,

16:19 these platforms are ultimately just

16:21 another financial exchange.

16:23 And we've seen a lot of effort to legitimize that

16:25 side of the business with even FanDuel,

16:28 an actual gambling company, scoring a

16:30 partnership with CME Group, a

16:32 traditional derivatives marketplace, to

16:34 set up a prediction market, which is all

16:37 a bit awkward when we get to how these

16:39 platforms promote themselves.

16:45 As highlighted, prediction markets have

16:47 bent over backwards to argue in the

16:48 courts that they are not a casino.

16:51 But when it comes to how they advertise,

16:53 they certainly present themselves as

16:55 one.

16:56 In 2025, during the NBA Finals,

16:58 Koshi aired a completely AI generated ad

17:01 that feels like a cocaine induced fever

17:04 dream with people screaming, partying,

17:06 and of course, betting their money.

17:09 Will egg prices go up this month?

17:11 I think we'll hit $20.

17:13 Social media ads, meanwhile, showcase

17:14 users anxiously watching sports matches

17:17 and press releases, hoping for their

17:19 contracts to hit.

17:20 YES, A HERO.

17:24 WITH OTHERS flaunting the money they're

17:26 making.

17:26 Yo, you're 450 right now.

17:28 What?

17:29 Bro, I only use Koshi now.

17:31 This despite that not seemingly being

17:32 the typical experience.

17:34 And despite what CEOs have said about their value beyond

17:36 sports betting, a good chunk of their

17:38 ads still focus on just that, even

17:40 explicitly comparing prediction markets

17:42 to traditional sports books.

17:44 Now, to be fair, the companies have had efforts to

17:46 diversify beyond this activity,

17:48 especially because sports betting tends

17:50 to be a maledominated industry.

17:53 So, we've also seen a lot of ads targeted at

17:55 women, and the advertising there isn't

17:58 much better.

17:59 Do you think Kylie Jenner and Timothy

18:01 Shalomé will actually get engaged?

18:03 There's actually a great article from

18:04 The Atlantic that covers exactly this,

18:06 discussing how ads will use terms like

18:08 girl math, girl boss, and talk about

18:10 paying for their coffees with their

18:11 prediction market winnings.

18:13 Meanwhile, affiliated accounts like Call Shey

18:15 Culture and Poly Baddies post memes and

18:18 influencer style videos to promote the

18:20 platforms.

18:20 And a number of these ads

18:21 really blow out of proportion the upside

18:23 here.

18:24 One that later showed up in a

18:26 lawsuit even read, "I was about to be

18:28 unable to pay my rent, but I got 2 years

18:30 of rent through Khi's predictions." It's

18:33 amazing.

18:33 I also have to shout out Poly

18:35 Market's just awful social media

18:37 presence on X, where the company has

18:39 blatantly posted misinformation, conspiracies, and at times even racial

18:43 slurs to draw traffic to its website.

18:45 A bit ironic for a company that deems

18:47 itself a truth machine.

18:49 And these are just the direct marketing campaigns.

18:52 There's also, of course, the influencer

18:54 marketing that these platforms have

18:55 carried out, paying a slew of

18:57 celebrities and online personalities to

18:59 promote their offerings.

19:00 Some focus on sports.

19:01 A number try to legitimize the

19:03 economic and finance trading aspects.

19:06 Others not so much.

19:07 You're going to kiss Noah D.

19:09 There's a 69% chance it.

19:11 It's going Yeah, it's

19:12 like it's going up in the market right

19:14 now.

19:14 The cherry on top.

19:15 A good chunk of these

19:16 ads forget to disclose that they're paid

19:18 promotions.

19:19 So maybe they aren't.

19:20 Maybe this guy just really likes talking about

19:22 sophisticated trading patterns at the

19:24 beach.

19:25 Do you think uh P Diddy will be

19:27 sentenced to life in prison?

19:28 Oh, hell yeah.

19:29 And while I wish it

19:30 stopped there, Khi and Poly Market have

19:32 made what's probably a really smart

19:34 marketing move and introduced referral

19:36 programs whereby with Kchi, users can

19:39 get $25 for themselves and a referral

19:42 when their friend spends the same amount

19:43 on the platform.

19:44 And Poly Market actually providing a share of trading

19:48 revenues from your referrals when you

19:50 bring them to the platform if you

19:52 yourself have traded at least $10,000

19:55 worth of bets on Poly Market.

19:57 So, beyond the massive influencer marketing

20:00 budgets, we actually have users

20:01 incentivized to talk about how great the

20:03 platforms are so that they can help

20:05 onboard their friends and family and

20:07 start making money off of their betting

20:09 activity.

20:10 With some even utilizing their

20:11 own social media accounts and making

20:13 over-the-top claims about the upsides

20:15 without the same marketing guides to

20:17 hold back their messaging,

20:19 don't get a job, do this instead.

20:21 And then there's the ecosystem built around

20:24 prediction markets, the influencer

20:26 courses, tools, platforms, and

20:28 strategies that have everyone trying to

20:30 convince you that this is all more than

20:33 just gambling.

20:34 And hey, maybe in some

20:36 cases, for some specific users, it is.

20:39 It might be that there are people who

20:40 are really taking this seriously and

20:42 able to make a profit, but that's not

20:45 who the platforms are marketing to.

20:47 What's the payout?

20:48 Yo, 1,200 if I'm right, bro.

20:49 No.

20:51 And with such a heavy focus on the gambling

20:53 side of the business, there's one aspect

20:55 through all this that I find really

20:57 concerning.

20:58 If you haven't noticed, a

21:00 lot of these ads are specifically

21:01 targeting younger users.

21:03 The minimum age for using prediction markets is just 18.

21:07 Despite the fact that some gambling laws

21:08 push this number up to 21, and this has

21:11 led to a pretty young user base for

21:12 these platforms.

21:14 In fact, an estimated

21:15 24% of Kulchi users are under the age of

21:19 25, which compares to 7% for DraftKings

21:22 and FanDuel.

21:23 Which brings us to why

21:24 these platforms aren't just potentially

21:26 risky, they can also be outright

21:29 dangerous.

21:32 Gambling is incredibly pervasive in the

21:35 United States.

21:36 Online casinos and sports

21:38 betting is widely advertised in sports

21:40 games, podcasts, YouTube videos, and

21:43 with celebrity endorsements.

21:45 Even the White House has gotten in on the action

21:47 with Trump posting an ad for stake,

21:49 which itself offers offshore casinos and

21:52 has been accused of facilitating

21:54 underaged gambling.

21:55 It demonstrates just how much money and influence the

21:58 gambling industry has generated off of

22:01 its users.

22:02 It's also easier than ever to

22:03 gamble thanks to the gamlification of

22:05 everything with even video games making

22:07 up part of the online gambling ecosystem

22:10 and app development putting the power of

22:12 risking your life savings in the palm of

22:14 your hand.

22:15 But gambling addiction which

22:16 affects roughly 4% of the US adult

22:19 population is an incredibly dangerous

22:21 disorder.

22:22 It can of course contribute to

22:24 financial ruin.

22:25 A recent report by the

22:26 Federal Reserve Bank of New York found

22:28 that states with legalized mobile sports

22:31 gambling actually experience higher

22:33 consumer credit delinquencies with

22:35 spillover effects even impacting

22:37 neighboring non-legal gambling states.

22:40 Gambling also increases the likelihood

22:42 of alcohol or drug abuse, is correlated

22:44 with domestic violence, and carries the

22:46 highest suicide rate among addiction

22:49 categories.

22:50 And the issue is that young

22:51 adults, the very people these platforms

22:53 seem to be targeting, are the most

22:55 susceptible age demographic to the

22:57 disorder.

22:58 A recent poll from Fair

23:00 Dickinson noted that regarding men 30

23:01 and under who wager on sports, a group

23:03 that represents 25% of all men 30 and

23:06 under, a full 10% admitted to having a

23:10 gambling problem.

23:11 And this all exists

23:12 even when companies follow state

23:14 gambling laws.

23:15 when it's widely known

23:16 that gamblers on average lose money.

23:19 What happens when a platform or its avid

23:22 users convince people that this is

23:25 something different?

23:26 Financial nihilism is already a growing trend where younger

23:29 generations become disillusioned with

23:32 traditional financial strategies and

23:34 reject them in favor of riskier gamles

23:36 around crypto and the like.

23:38 What happens if prediction markets are themselves

23:41 presented as the alternative to

23:43 investing in stocks for the long term?

23:46 Stocks or bonds?

23:47 The weather.

23:48 Wait, you could trade on the weather?

23:49 Yeah, use Koshi.

23:50 What happens when these markets manage

23:52 to financialize everything and have

23:54 everyone trading in their garage as

23:56 executives would like to have them?

23:58 Will all of this still be good for society?

24:04 There's this idea in economics that

24:06 assigning a monetary value to something

24:09 can erode its social value.

24:12 There's an experiment carried out in Israel where

24:14 daycarees implemented a fine on parents

24:16 who were late picking up their children

24:18 only to see their late pickups double

24:21 with researchers suspecting that parents

24:23 had crowded out their social obligation

24:25 with a monetary fee thereby eliminating

24:28 the guilt they experienced from being a

24:30 burden to workers who had to stay late.

24:33 This is all highlighted in the book

24:35 values by Canadian Prime Minister Mark

24:37 Carney, which yes, I waited this long to

24:39 share that given that politics, I knew

24:41 I'd lose some of you.

24:42 But when we talk

24:43 about this idea of financializing

24:45 everything, the

24:46 long-term vision is to financialize

24:48 everything and create a tradable asset

24:50 out of any difference in opinion,

24:52 it's something worth considering.

24:54 executives have put out this goal of

24:55 getting everyone to trade.

24:57 Not just because it would make prediction markets

25:00 just so much money, but because of the

25:03 data it would offer.

25:04 But with the odds

25:05 being against the average user, that

25:07 just asks for widespread losses.

25:10 It is naturally a negative sum game when you

25:12 account for the fees charged by these

25:14 platforms.

25:15 There's no productive use of

25:16 these investments, no project that might

25:18 generate additional cash flows, just a

25:21 general redistribution of wealth between

25:22 average people and those with better or

25:25 potentially insider information and

25:28 better infrastructure.

25:29 Prediction markets also inherently come with moral

25:31 hazard, the idea of incentives leading

25:33 to riskier behaviors.

25:35 Because if there's a payout to be had, there's a cost or

25:38 risk someone's willing to take on to

25:41 make it happen.

25:42 We've even, for example,

25:44 had concerns raised over so-called death

25:46 contracts with both Poly Market and

25:48 Kolshi having run into criticism for

25:51 markets around the Iran war that

25:53 involved the survival or death of

25:55 specific individuals.

25:57 Now, can prediction markets be useful?

25:59 Certainly, there's an endless list of hypotheticals

26:01 that executives will draw attention to

26:03 on how prediction markets can be used.

26:05 And yes, there is value in the

26:07 prediction data offered by these

26:09 markets.

26:11 Maybe less so for contracts on which

26:12 streamer will cry this month.

26:15 But there is evidence that wisdom of the crowds

26:17 works.

26:18 But it brings us to the ultimate

26:20 question.

26:22 Is it worth it?

26:23 Is the cutting edge

26:24 prediction data worth the financial

26:26 losses, the proliferation of gambling

26:28 addiction, and all the other

26:30 implications for users when we talk

26:33 about prediction markets?

26:36 Well, it seems like that's what the

26:37 courts will be tasked with answering as

26:39 we go through the nearly 50 pending

26:41 lawsuits, some of which may very well

26:43 make their way up to the Supreme Court.

26:45 And it's worth noting that the CFTC is

26:47 supposedly putting together a framework

26:49 to crack down on insider trading.

26:51 So, we'll have to wait and see what that

26:53 ultimately looks like.

26:55 But given this administration's track record of

26:58 loosening financial regulations, pardoning people who have explicitly

27:01 worked against finance laws and

27:03 entwining themselves in every latest

27:05 finance trend, I wouldn't hold your

27:08 breath.

27:09 So, on that note, we'll be

27:10 taking wagers in the comment section

27:11 down below on which topics you think the

27:13 next plain bagel video will be on.

27:15 Yes, prediction markets are technically still

27:16 illegal where I live here in Canada, but

27:18 I'm sure we'll fix that sometime soon.

27:20 So, step right up, don't be shy.

27:21 Any and all wagers are welcomed.

27:23 Leave a like for your dealer if you'd like to leave a

27:24 tip.

27:25 And don't sweat it.

27:26 It's not gambling if there's no casino.