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Welcome back everyone. 
I am Cass PNC and I'm joined as 

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usual by my partner in crime, 
Mr. Bennett Tomlin. 

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How are you today? 
Well, I'm here. 

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How are you, Cass? 
Tired. 

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Tired. 
I don't know. 

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I don't know what else to say 
today. 

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We're talking about prediction 
markets now. 

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I think most of our viewers, 
most people who TuneIn probably 

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are aware of prediction markets.
I don't think we've spent a lot 

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of time talking about them in 
general, but I think it's a 

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really meaningful discussion to 
have right now because I think 

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they are a possible instrument 
that can be used against free 

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speech and against democratic 
values. 

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But before we get into that, I 
think it's worth talking about 

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what the difference is between 
prediction markets and many, 

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other many other, I don't know, 
like forms of I, I don't know 

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what to call it, right? 
There's gambling, there's sports

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betting, there's options 
trading. 

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So let's can we, can we help 
people understand what the 

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differences are between all of 
these things? 

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We can certainly try. 
Prediction markets at their most

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basic are a binary option. 
You are purchasing a financial 

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instrument for a certain amount 
of money that will either go to 

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100 or 0 at the time the 
contract concludes. 

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For most of these prediction 
markets with that looks like is 

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you buy a proposition like 
Donald Trump will say poop four 

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times within the first three 
months of his presidency. 

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And if Donald Trump does say 
poop four times, you get the 100

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and if he doesn't you get the 
zero. 

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This looks and feels a lot like 
other forms of gambling, 

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especially like prop bets and 
things like that. 

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The and again like in sports 
betting, it looks you can 

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achieve many of the same things 
you could with a bookie by 

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instead going to a prediction 
market. 

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The exact structure of your bet,
like if you were to break it 

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down as like a financial 
instrument, might sometimes look

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a little bit different, but 
practically it ends up working 

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out kind of the same. 
You put in a certain amount of 

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money and at the end if the 
event goes in your favor you get

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more money, or if the event goes
against you, you lose the money 

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you put in. 
Yeah. 

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I mean, that's, that's the 
basic, that's the basic idea. 

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But I think there's a lot of 
weird intricacies involved in 

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why these are classified 
differently, why some of these 

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are dealt with by very 
different, dealt with by very 

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different regulators and that's 
worth discussing. 

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I don't know. 
I don't know if that delineation

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is going to exist in a decade or
something, right. 

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But, but I, I I will say that 
for instance, Calci is 

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regulated, Calci is a prediction
market, Calci is regulated by 

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the CFTC. 
So is polymarket. 

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Sort of regardless, right. 
So those are they're, they're 

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looked at by the CFTC. 
But then when you have 

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DraftKings, there's a bunch of 
state gambling regulators that 

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are that are overseeing what 
they're doing and, and if they 

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mistreat a customer, what, what,
what have you. 

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And when it comes to options 
trading, it's also the CFTC. 

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So if you're trading, if you're 
trading options on Robin Hood or

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whatever you, you would, if you 
wanted to seek relief, you would

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talk to the CFTC. 
But those are, those are 

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completely different regulators.
And, and the main distinction I 

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noticed and you, you can get 
into this little get into the 

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weeds of this more if you want. 
But the main distinction I'm 

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seeing between something like 
DraftKings or FanDuel and 

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calcium polymarket are that 
there's the house, that's who 

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you're playing against when it 
when you're betting on 

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DraftKings, or there's market 
makers, which are who the the 

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people taking the risk to create
markets by putting liquidity in 

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it and basically getting more 
people to want to put money into

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these markets. 
Yeah. 

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And it's not like quite the 
convenient one to one there that

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we kind of wish it was like in a
lot of the market on something 

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like Polymarket or Kel, she may 
be dominated by a market maker 

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or something like that. 
But there is also still like 

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other retail traders in there 
who are participating in the 

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market, whereas like at a bookie
that your counterparty is always

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the bookie. 
Like the way a prediction market

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works. 
Like if you go on Poly market 

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right now and look at one of the
markets and it's trading at, say

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what? 
God, I hate that they put their 

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percentages a 32% chance. 
Generally that means you can 

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like buy that asset for like 
pretty close to $0.32 and sell 

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it for pretty close to $0.32. 
They're not always as close as 

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you might think. 
They have like up to a $0.10 

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disparity between bid and ask, 
and they'll still like just put 

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your price in between them. 
And so yeah, you get the asset 

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and then it either goes to 100 
or 0. 

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And like your counterparty could
be a market maker who originally

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sold you that, or it could be 
just some other person who 

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decided I've made enough for 
this bet is no longer favorable 

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and they exited their position. 
Yeah, I, it's, it's a topic 

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that's coming up a lot right now
because of commodities, another 

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CFTC regulated, another CFTC 
regulated group of assets. 

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And that seems to be an issue 
right now because silver and 

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gold have gone so, so high in 
value have gone up so quickly 

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that some people are having 
difficulty selling physical gold

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and silver in their local 
markets. 

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So liquidity plays a role in 
Almar, it's in stocks in all of 

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this stuff, right? 
Like liquidity is a real, we 

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used to see it a lot in crypto. 
Slippage was crazy in, in the 

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days when we were at the 
beginning of covering 

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cryptocurrency when we started 
in 20/17/2018. 

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So slippage is very real. 
And of course it's going to be 

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real in prediction markets and 
stuff. 

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And I, I want to talk about this
too, because some market makers 

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are, I, I, I don't know how to 
put this, but other than they 

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have more liquidity, but like 
market makers do market making 

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for many, they're different 
types of market makers and 

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there's different reasons to get
involved in it, right? 

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Like, yeah, can I like, can you 
expand on what, like what are 

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the differences? 
Why would someone like, I think 

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I was listening to a podcast 
today and the guy was, he was 

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basically describing all the 
different frauds he's 

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perpetrated on different 
prediction markets. 

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And it was like, OK, he was 
using very little money to 

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accomplish these, these gains 
that he would eventually 

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acquire. 
And this was not delta neutral 

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options trading. 
This was not a hedge, which you 

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can get into this, but it it was
a guy who was scalping off the 

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top because he knew he could do 
a specific arbitrage move to get

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money. 
And there are market makers who 

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operate that way, right? 
Yeah. 

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So there's probably a few 
different types of actors you're

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looking at in this space right 
now. 

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There are market makers who are 
like arbitraging between say 

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Poly Market and Kelschi and 
their primary goal is like when 

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they see a disparity between 
those markets that it's larger 

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than their transaction cost, 
they work to bring them up to 

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parity because then they can 
make the money on the difference

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there. 
The other type of like large 

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trader you're probably seeing a 
lot of is what I was describing 

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to you before we got on as the 
next Sam Bankman Freed, which is

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like someone who's got in 
overinflated sense of their edge

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and is willing to take large 
directional bets. 

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They're not remaining delta 
neutral. 

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They are directional one way and
are hoping that between that and

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the other providing liquidity 
activities still doing, they'll 

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end up ahead. 
And like in the case you're 

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talking about back in the old 
days, like with Predicted, which

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I used to gamble on a little bit
back when I was on college, back

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when I was in college, excuse 
me, Some of the people who would

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be trading that, their goal was 
to arbitrage it with like 

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Bovada, the offshore casino, 
because they would sometimes 

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have election markets and like 
the implied rate of return from 

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the odds on there would diverge 
from predicted. 

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And so you could like move one 
of those markets or move the 

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line and one of those until you 
were eventually back at parody. 

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There's some limits to how you 
can do that because you can't 

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exit a bet on an offshore casino
the way you can like exit a 

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position on a prediction market.
But like, there's a lot of those

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kind of strategies. 
So I think they're like 2 big 

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institutional actors you're 
seeing. 

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There probably are some people 
who try to stay mostly delta 

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neutral and are just providing 
liquidity via like limit orders 

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to these various markets. 
Then I think there's a bunch of 

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shops that think they have an 
edge and are trying to do prop 

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trading in these markets. 
Right, Yeah. 

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And I think a, a, a distinction 
I want to make between like 

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options trading is obviously 
dangerous. 

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If you don't know, if you don't 
know what you're doing, you 

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shouldn't get involved, period. 
If you think it's easy, you're 

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wrong. 
But I, I do think that there's a

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big, a big difference in so far 
as the institutions doing the 

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market making in the options 
market, they make mistakes and 

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some of them have blown up. 
But like it is generally not the

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case. 
Whereas I think the market 

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makers involved in a lot of 
these, these prediction markets 

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are relatively small fries in 
the scheme of things. 

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They are not dealing with 
billions of dollars. 

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They are not trying to 
necessarily remain delta 

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neutral. 
And I also think it's really 

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easy to in many ways game these 
markets. 

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I think that's a point we should
kind of sit on here for a minute

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is like the possibility to gain 
these markets like because 

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that's one of I think the 
societal harms that can come 

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from prediction markets. 
Besides, just whether or not 

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these markets function as 
advertised, is that like once 

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you have people who say, for 
example, start integrating 

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polymarket markets into their 
like political reporting and 

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treat the current clearing value
of that market as like a 

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probability a certain candidate 
will win, that ends up being 

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something where you can 
meaningfully affect like a 

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political race, right? 
You can suppress someone's 

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chances early in a campaign, 
like suppress their market early

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in a campaign so they get fewer 
donations and can never mount 

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the same kind of campaign closer
to an election date. 

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You might actually want to like 
show someone over performing 

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compared to polling because it 
might help suppress voters or 

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things like that. 
And like that gets at the 

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fundamental truth here, which is
that like, as much as these 

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markets want to say a thing is a
chance, like what they're 

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representing with these markets 
is a chance. 

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It's not really like often times
they are like the better 

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descriptor for what they are is 
like the a rough measure of the 

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belief of the current 
participants in that market as 

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to its final outcome, right? 
Like it's a limited set of 

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people with a limited set of 
information. 

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It is not a chance or 
probability in any meaningful 

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sense, regardless of what Polly 
Murkid and Kel she say. 

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And a really important point 
here is that it's not about like

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votes or something, right? 
It's not like the more people 

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that want to do this thing, the 
higher the odds are. 

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It is strictly monetary base so 
that if there's a billion 

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billionaire who wants to place a
billion dollar bet on something,

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they can and that will change 
the odds significantly. 

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And I think what I think related
to that, one of the most 

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troubling aspects about 
prediction markets, and it's one

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of the things that you hear 
their advocates like claim as a 

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strength is that prediction 
markets will tend to integrate 

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information that might not show 
up in other markets, AKA people 

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will insider trade. 
People with a real edge, real 

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information about what a certain
outcome will be or the ability 

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themselves to affect that 
outcome will participate in 

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these markets and in so doing be
able to extract money from every

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other participant in that 
market. 

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And I think that's the other 
thing that people aren't fully 

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appreciating. 
And like from that you lead into

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like the assassination markets 
and things like that. 

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But like, that's just one 
example of a market that like 

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someone can influence the 
outcome after having invested 

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in. 
It yeah, there there's also like

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there is an argument that people
make that we've heard a lot that

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all insider trading is good. 
Basically, it's getting the 

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information out there to retail 
traders and everyone else faster

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because you're moving the market
in a very significant way. 

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We saw this specifically with 
the Venezuela invasion. 

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00:14:18,880 --> 00:14:22,960
I think it was all over the news
about a specific bet made where 

228
00:14:23,840 --> 00:14:27,640
we don't know who it was, but 
the user had the last name 

229
00:14:27,840 --> 00:14:32,040
Witkoff so who knows that I like
that could be the. 

230
00:14:32,120 --> 00:14:35,920
User had an ENS handle with the 
name Witkoff in it. 

231
00:14:36,440 --> 00:14:39,800
It may not have been one of the 
world liberty founders who are 

232
00:14:39,800 --> 00:14:43,440
related to the Special Envoy for
Peace or whatever his fucking 

233
00:14:43,440 --> 00:14:46,600
title is. 
Could very well be anyone, but 

234
00:14:46,640 --> 00:14:52,640
apparently somebody figured this
out shortly before the invasion 

235
00:14:52,640 --> 00:14:55,400
happened, put a bunch of money 
on it, and made something like 

236
00:14:55,400 --> 00:15:00,720
500,000 dollars, $450,000. 
So we've seen this play out in 

237
00:15:00,800 --> 00:15:03,680
real time, and people will argue
that that is actually a good 

238
00:15:03,680 --> 00:15:07,360
thing, right? 
Yes, they absolutely will. 

239
00:15:07,360 --> 00:15:11,760
And I think the thing like this 
is especially asinine when 

240
00:15:11,760 --> 00:15:14,720
they're talking about prediction
markets on financial assets, 

241
00:15:14,960 --> 00:15:18,200
which exists like you can 
participate in a Poly market bet

242
00:15:18,200 --> 00:15:22,400
as to like whether or not 
Bitcoin will hit 150K by a 

243
00:15:22,400 --> 00:15:24,080
certain date or something like 
that. 

244
00:15:24,360 --> 00:15:28,440
Those markets exist. 
And like one of the arguments 

245
00:15:28,440 --> 00:15:30,840
that's been made about them is 
these markets will integrate 

246
00:15:30,840 --> 00:15:34,040
that information. 
But like the process of that 

247
00:15:34,040 --> 00:15:37,880
integration is a process of 
extraction from other traders 

248
00:15:38,080 --> 00:15:42,400
that benefits the person with 
the edge, even if in some sense 

249
00:15:42,400 --> 00:15:44,240
that information is revealed 
earlier. 

250
00:15:44,360 --> 00:15:47,960
The process by which it's 
revealed is a process of pure 

251
00:15:47,960 --> 00:15:51,840
extraction from the other 
participants in the market and 

252
00:15:51,840 --> 00:15:55,560
it only benefits the person who 
is using that non public 

253
00:15:55,560 --> 00:15:59,040
information. 
It in no way like obviates or 

254
00:15:59,040 --> 00:16:02,440
changes any of the like 
historical ethical arguments 

255
00:16:02,440 --> 00:16:06,640
around insider trading and is 
actually like it ties into the 

256
00:16:06,640 --> 00:16:09,800
same arguments as to why insider
trading was originally made 

257
00:16:09,800 --> 00:16:10,680
illegal. 
Right? 

258
00:16:10,680 --> 00:16:14,000
Like you are gaining an unfair 
benefit from information that 

259
00:16:14,000 --> 00:16:17,320
not all the participants have. 
That works as a descriptor just 

260
00:16:17,320 --> 00:16:20,200
as well in these prediction 
markets as any other, and the 

261
00:16:21,480 --> 00:16:26,080
asinine belief that the current 
clearing price of these markets 

262
00:16:26,080 --> 00:16:30,080
represents some kind of cosmic 
truth is warping the minds of 

263
00:16:30,080 --> 00:16:32,800
these simpletons. 
Well, it's not just simpletons. 

264
00:16:32,800 --> 00:16:37,360
I and I want to that there's so 
today Bloomberg put out a an 

265
00:16:37,360 --> 00:16:40,840
article that said Cal she Fed 
forecasts are as good as Wall 

266
00:16:40,840 --> 00:16:47,440
Street's. 
So the, the thinking here is 

267
00:16:47,440 --> 00:16:51,360
that just for anyone who's not 
following that headline, the the

268
00:16:51,480 --> 00:16:54,840
concept is they, they looked at 
all the different forecasts that

269
00:16:56,040 --> 00:17:01,640
people betting on Cal she have 
made for rate hikes or a rate 

270
00:17:01,640 --> 00:17:07,680
cuts on the Fed and they were 
about right as often or better 

271
00:17:08,000 --> 00:17:11,680
than Wall Street traders. 
I don't know if that's a 

272
00:17:11,680 --> 00:17:15,599
particularly good reputation 
because. 

273
00:17:16,200 --> 00:17:19,760
Well, and like, also like it's, 
it's, it's silly, right? 

274
00:17:19,760 --> 00:17:22,599
Like, of course they're going to
cluster near where the analysts 

275
00:17:22,599 --> 00:17:25,040
are predicting. 
They're reading the analysts, 

276
00:17:25,040 --> 00:17:28,040
you know, or they're reading an 
AI summary of the analysts 

277
00:17:28,040 --> 00:17:30,240
because some of the traders in 
these prediction markets are 

278
00:17:30,440 --> 00:17:32,800
borderline illiterate. 
But like, the point is still, 

279
00:17:32,800 --> 00:17:34,800
they're taking in that same set 
of information. 

280
00:17:34,800 --> 00:17:37,520
Of course they're going to come 
to roughly the same consensus. 

281
00:17:37,520 --> 00:17:41,520
Sure. 
The the idea also being that you

282
00:17:41,520 --> 00:17:46,400
know what, I I'm sure that in 
that Wall Street insiders are 

283
00:17:46,520 --> 00:17:49,480
better than 60% or something, 
right? 

284
00:17:50,280 --> 00:17:55,240
I like, OK, you know, I think 
that that's not 100% strike 

285
00:17:55,240 --> 00:18:03,160
rate. 
It's I, but yeah, I, I, I think 

286
00:18:03,160 --> 00:18:07,600
it's interesting that the, the 
real issue I'm seeing is not 

287
00:18:07,600 --> 00:18:11,040
just a consumer facing issue 
where I think a lot of consumers

288
00:18:11,040 --> 00:18:15,040
just see this as the truth. 
They see if the odds are 75%, 

289
00:18:15,040 --> 00:18:18,200
the odds must be 75% in real 
life that this thing is going to

290
00:18:18,200 --> 00:18:23,280
happen. 
But it is also a media problem 

291
00:18:23,280 --> 00:18:26,440
now. 
So that's been like one of the 

292
00:18:26,440 --> 00:18:31,000
scariest parts for me about it 
is how quickly so many outlets 

293
00:18:31,000 --> 00:18:34,800
have like integrated it into 
their political reporting. 

294
00:18:34,800 --> 00:18:38,560
How many like sports places have
polymarket things running in the

295
00:18:38,560 --> 00:18:45,680
Chiron? 
Like it is, people seem to have 

296
00:18:46,240 --> 00:18:49,480
including a lot of writers and 
journalists wholesale committed 

297
00:18:49,480 --> 00:18:53,760
to the idea that like, that 
number represents a chance, 

298
00:18:54,280 --> 00:18:57,800
which it doesn't really. 
And again, you can kind of see 

299
00:18:57,800 --> 00:19:00,920
this by like looking at the 
markets themselves, they're 

300
00:19:00,920 --> 00:19:03,800
highly volatile. 
Are you really saying that like 

301
00:19:03,800 --> 00:19:07,120
the chance this morning was 20 
and the chance tonight is 30? 

302
00:19:07,520 --> 00:19:11,520
Like that, the actual chance 
probably hasn't changed that 

303
00:19:11,520 --> 00:19:12,760
much. 
What you're looking at is like a

304
00:19:12,760 --> 00:19:16,160
consensus clearly. 
And like you can even kind of 

305
00:19:16,160 --> 00:19:20,560
see this in like, like if I flip
this coin right here and I were 

306
00:19:20,560 --> 00:19:23,360
to open a prediction market on 
it, it would probably pretty 

307
00:19:23,360 --> 00:19:26,800
quickly end up at about $0.50 as
to whether or not it's heads or 

308
00:19:26,800 --> 00:19:29,280
tails. 
But there's 100% chance this 

309
00:19:29,320 --> 00:19:31,880
penny is actually heads because 
that's where it had already 

310
00:19:31,880 --> 00:19:33,960
landed, right? 
Like there are certain things 

311
00:19:33,960 --> 00:19:35,840
that are already going to 
happen, are already committed. 

312
00:19:36,120 --> 00:19:38,840
And that helps you understand 
like probability wise, why this 

313
00:19:38,840 --> 00:19:41,760
isn't really like a chance or an
odd or something like that. 

314
00:19:42,000 --> 00:19:47,240
It is a market clearing price. 
Yeah, and and the reason I, I 

315
00:19:47,240 --> 00:19:51,560
guess the reason for me that 
it's so troubling and I and I 

316
00:19:51,560 --> 00:19:55,240
know we were early with Tether 
and stable coins which have 

317
00:19:55,240 --> 00:20:00,560
proven to be. 
Successful beyond our wildest 

318
00:20:00,560 --> 00:20:03,000
imaginings. 
Yes, but also more important in 

319
00:20:03,000 --> 00:20:05,920
the like we said it was an 
important thing to cover. 

320
00:20:06,200 --> 00:20:09,720
It was fascinating and it was 
only growing exponentially. 

321
00:20:09,720 --> 00:20:15,360
We said that and that played out
exactly as we said. 

322
00:20:15,640 --> 00:20:18,320
I think we were hoping for some 
sort of regulatory or law 

323
00:20:18,320 --> 00:20:21,040
enforcement action that never 
arrived. 

324
00:20:21,280 --> 00:20:23,360
Beautiful naivete. 
Yeah, yeah. 

325
00:20:23,560 --> 00:20:25,120
But we've been over that for 
several years now. 

326
00:20:25,120 --> 00:20:26,880
I think we've been over that for
three or four years. 

327
00:20:26,880 --> 00:20:32,040
So I'd like the the idea that 
that was troubling us and we 

328
00:20:32,040 --> 00:20:34,480
were concerned, so we wanted to 
talk about it early. 

329
00:20:34,720 --> 00:20:37,080
I'm seeing the same thing with 
these prediction markets. 

330
00:20:37,080 --> 00:20:41,120
But my fear is different than 
with stable coins, which stable 

331
00:20:41,120 --> 00:20:45,880
coins I largely see as serving 
sanctioned countries and 

332
00:20:45,880 --> 00:20:50,840
speculators and criminals. 
That's the main use case for 

333
00:20:50,840 --> 00:20:52,680
them. 
People who want dollars, but 

334
00:20:53,160 --> 00:20:55,920
where current financial 
regulations or norms prevent 

335
00:20:55,920 --> 00:20:57,600
them from getting dollars, which
we do. 

336
00:20:57,600 --> 00:21:00,200
For a reason, but if you want, 
if you think it's important that

337
00:21:00,200 --> 00:21:03,440
we don't do that, OK, that's, 
that's perfectly fine. 

338
00:21:04,520 --> 00:21:11,200
So I like there I, I, I see the 
issues financially with stable 

339
00:21:11,200 --> 00:21:15,160
coins. 
The issue for me with prediction

340
00:21:15,160 --> 00:21:19,240
markets is not that everyone is 
going to go broke, that everyone

341
00:21:19,240 --> 00:21:20,800
is going to become a gambling 
addict. 

342
00:21:21,120 --> 00:21:24,400
I think we'll hopefully be able 
to stop it before that happens. 

343
00:21:24,840 --> 00:21:30,800
My, my issue is that these 
markets damage, they truly do 

344
00:21:30,800 --> 00:21:33,960
damage democracy. 
They damage free speech, they 

345
00:21:33,960 --> 00:21:37,000
damage what good objective 
reporting looks like. 

346
00:21:38,640 --> 00:21:43,240
And that's because we are humans
and we, we seek new information 

347
00:21:43,240 --> 00:21:45,240
all the time and prediction 
markets do that. 

348
00:21:45,240 --> 00:21:48,080
They're constantly updated 
information, right. 

349
00:21:48,280 --> 00:21:51,640
So we are deeply attracted to 
that, but that doesn't make it 

350
00:21:51,640 --> 00:21:54,400
beneficial to society, and it 
certainly doesn't make it 

351
00:21:54,400 --> 00:21:58,120
beneficial to democratic ideals 
like freedom of speech or 

352
00:21:58,760 --> 00:22:04,240
freedom of press. 
Yeah, yeah. 

353
00:22:04,320 --> 00:22:08,760
Well, and one, I'm not convinced
that one of the end results of 

354
00:22:08,760 --> 00:22:12,360
this won't be a huge, like 
gambling epidemic where a huge 

355
00:22:12,360 --> 00:22:14,840
number of people become addicted
to gambling, right? 

356
00:22:14,840 --> 00:22:18,880
Like this is a really high 
availability and really high 

357
00:22:18,880 --> 00:22:21,760
prevalence of some of these 
things in like a way we kind of 

358
00:22:21,760 --> 00:22:24,680
haven't seen before or in a long
time. 

359
00:22:25,320 --> 00:22:31,520
And like, yeah, I think it is. 
There's this corrosive belief 

360
00:22:31,520 --> 00:22:35,720
among certain technologists, and
it appears more so in crypto 

361
00:22:35,720 --> 00:22:42,200
than in other places, that like,
the age of journalism is gone. 

362
00:22:42,840 --> 00:22:46,520
Information is now encoded in 
random social media posts and in

363
00:22:46,520 --> 00:22:49,640
the prediction markets that 
aggregate their insights, and 

364
00:22:49,640 --> 00:22:52,640
everything else is basically 
superfluous. 

365
00:22:53,080 --> 00:22:57,160
And I think that fundamentally 
misses like what makes 

366
00:22:57,680 --> 00:23:01,520
journalism and even punditry 
important, right? 

367
00:23:01,800 --> 00:23:06,720
It's like part of this sense 
making process wherein you have 

368
00:23:06,720 --> 00:23:11,160
to use like discernment, you 
have to think critically about a

369
00:23:11,160 --> 00:23:14,040
variety of pieces of information
and how they fit together, 

370
00:23:14,400 --> 00:23:19,480
whereas the prediction markets 
just try to distill that into a 

371
00:23:19,480 --> 00:23:24,320
single numerical value. 
There's a 67% chance Trump is 

372
00:23:24,320 --> 00:23:26,680
going to shit himself at 
inauguration or whatever, you 

373
00:23:26,680 --> 00:23:30,840
know, like whatever it is, it 
has reduced any meaning or 

374
00:23:30,840 --> 00:23:33,560
anything related to it and 
fundamentally financialized it 

375
00:23:33,560 --> 00:23:38,800
in a way that favors like it. 
It's favoring the simulacrum 

376
00:23:38,800 --> 00:23:42,000
over the real if you want to go 
like Baudrel art on it, you 

377
00:23:42,000 --> 00:23:46,560
know. 
Yeah, yeah, I, I, I guess I 

378
00:23:46,560 --> 00:23:51,880
don't know, part of part of the 
problem is that I think we often

379
00:23:51,880 --> 00:23:56,480
bring up these issues and for, 
for us, Tether was like, OK, 

380
00:23:56,480 --> 00:23:59,160
well, Tether and, and these 
other stable coins that sprung 

381
00:23:59,160 --> 00:24:05,040
up, Terra, whatever. 
Our general solution that we 

382
00:24:05,040 --> 00:24:07,840
provided for these problems was 
like, well, law enforcement and 

383
00:24:07,840 --> 00:24:11,680
regulators have to do something 
to, it doesn't mean stomp them 

384
00:24:11,680 --> 00:24:13,520
out. 
It just means do something to 

385
00:24:13,520 --> 00:24:18,480
change the status quo. 
And I think our lesson that we 

386
00:24:18,480 --> 00:24:21,960
learned was, well, that's not 
probably going to happen. 

387
00:24:22,080 --> 00:24:26,280
Like if you were relying on law 
enforcement to do something that

388
00:24:26,280 --> 00:24:28,600
you want them to do, they're 
probably not going to do it. 

389
00:24:28,600 --> 00:24:30,720
Instead, they're probably going 
to shoot civilians in the head 

390
00:24:31,720 --> 00:24:35,200
and and kidnap little kids like 
so. 

391
00:24:35,280 --> 00:24:38,400
So you if you can't rely on them
in the way that you want to, I 

392
00:24:38,400 --> 00:24:40,480
think it's really important if 
we're going to discuss these 

393
00:24:40,480 --> 00:24:43,760
problems and these fears that we
have for the future that we also

394
00:24:43,760 --> 00:24:46,920
try to think about what do you 
do though, right? 

395
00:24:46,920 --> 00:24:49,840
So if we're worried about a 
gambling problem being 

396
00:24:50,040 --> 00:24:54,400
preeminent in our country and 
Free Press and free speech 

397
00:24:54,400 --> 00:24:57,520
getting eaten away by prediction
markets, what do you do outside 

398
00:24:57,520 --> 00:25:00,840
of say, like, well, is the CFTC 
going to do anything? 

399
00:25:00,840 --> 00:25:02,600
Because that, that's very 
paralyzing. 

400
00:25:04,400 --> 00:25:06,640
I don't have a great answer for 
you. 

401
00:25:06,960 --> 00:25:10,640
Like, and it has scared me how 
rapidly these have been 

402
00:25:10,640 --> 00:25:14,080
integrated because it takes that
much more like political will or

403
00:25:14,080 --> 00:25:16,840
whatever to try to remove them 
after that. 

404
00:25:17,040 --> 00:25:19,320
Like we kind of talked about 
with Corey Frayer, regulation 

405
00:25:19,320 --> 00:25:22,600
tends to be a one way ratchet. 
It's easier to deregulate than 

406
00:25:22,600 --> 00:25:29,000
to regulate. 
And like the president's son is 

407
00:25:29,040 --> 00:25:33,240
invested via his venture capital
fund, 1789 Capital in 

408
00:25:33,240 --> 00:25:37,160
Polymarket. 
He is an advisor to Polymarket 

409
00:25:37,360 --> 00:25:40,280
and I think he's also a paid, I 
know he's an advisor to Kelshi 

410
00:25:40,280 --> 00:25:44,000
and I think he's a paid advisor 
to Kelshi too, which is an 

411
00:25:44,000 --> 00:25:48,240
absurd state of affairs. 
Like broadly, the norm used to 

412
00:25:48,240 --> 00:25:51,840
be that venture capitalist 
wouldn't even invest in like a 

413
00:25:51,840 --> 00:25:53,760
competitor company in the same 
niche. 

414
00:25:54,040 --> 00:25:57,480
And now what's supposedly 
happening here is not only did 

415
00:25:57,480 --> 00:26:00,080
this venture capitalist invest 
in one company in the niche, 

416
00:26:00,240 --> 00:26:03,960
he's providing strategic advice 
to another company in that same 

417
00:26:03,960 --> 00:26:08,200
niche about how to beat 
presumably the company he's 

418
00:26:08,200 --> 00:26:11,880
invested in. 
Like the that kind of self 

419
00:26:11,880 --> 00:26:15,800
dealing suggests to me that like
over the rest remaining period 

420
00:26:15,800 --> 00:26:19,680
of this administration, they 
want to make it very hard to 

421
00:26:19,680 --> 00:26:22,600
remove kind of people's 
expectations that they're going 

422
00:26:22,600 --> 00:26:27,360
to have access to this kind of 
gambling prediction market, this

423
00:26:27,360 --> 00:26:30,720
kind of financial market where 
they can predict the price of 

424
00:26:30,720 --> 00:26:34,960
eggs in a year without having to
go to the Chicago Mercantile 

425
00:26:34,960 --> 00:26:37,080
Exchange. 
And I don't. 

426
00:26:37,080 --> 00:26:41,160
I don't want to sound defeatist,
but perhaps perhaps the solution

427
00:26:41,160 --> 00:26:47,720
then is that these markets just 
need to eat themselves. 

428
00:26:47,720 --> 00:26:51,600
Like this just needs to be 
something where the liquidity 

429
00:26:51,600 --> 00:26:54,240
gobbles itself up. 
You know, like I'm sure that 

430
00:26:54,240 --> 00:26:58,960
prediction markets are stealing 
market share from, from option 

431
00:26:58,960 --> 00:27:01,000
trading houses. 
I'm sure they're, you know, from

432
00:27:01,000 --> 00:27:02,200
brokers and dealers. 
I like that. 

433
00:27:02,240 --> 00:27:05,120
I'm sure they are. 
And I'm, I'm sure that they're 

434
00:27:05,120 --> 00:27:09,600
also taking market share from 
DraftKings and taking market 

435
00:27:09,600 --> 00:27:12,320
share from FanDuel. 
And I'm sure FanDuel is taking 

436
00:27:12,320 --> 00:27:14,160
market share from them. 
And you know what I mean? 

437
00:27:14,160 --> 00:27:17,880
Like at a certain point it's a 
snake eating its tail and I, and

438
00:27:17,880 --> 00:27:20,360
we're seeing it in a lot of 
different industries right now. 

439
00:27:20,960 --> 00:27:24,680
When we recorded like 7 or 8 
months ago, I had a line in, I 

440
00:27:24,680 --> 00:27:26,800
think it was the Molly episode, 
but it might have been. 

441
00:27:26,800 --> 00:27:30,000
And we had an addition where I 
was like Vlad Tenev of Robin 

442
00:27:30,000 --> 00:27:32,960
Hood would stab 3 regulators in 
the heart if it meant he could 

443
00:27:32,960 --> 00:27:35,720
list binary options on like a 
presidential election. 

444
00:27:36,040 --> 00:27:39,000
And that we're kind of at the 
point where Vlad Tenev can list 

445
00:27:39,000 --> 00:27:42,240
binary options on a presidential
election if he so chooses, 

446
00:27:42,520 --> 00:27:44,440
right? 
Like these are going to be fully

447
00:27:44,440 --> 00:27:47,160
adopted by a bunch of brokers 
and by a bunch of institutions. 

448
00:27:47,160 --> 00:27:49,200
They're going to provide very 
little utility. 

449
00:27:49,400 --> 00:27:51,880
A lot of regular people are 
going to become addicted, lose 

450
00:27:51,880 --> 00:27:55,240
huge amounts of money, destroy 
their relationships, and the 

451
00:27:55,240 --> 00:28:00,640
overall benefit to society will 
be sometimes someone will be 

452
00:28:00,640 --> 00:28:06,120
motivated to commit murder. 
Or or inside trade, so you find 

453
00:28:06,120 --> 00:28:08,400
out about something before you 
would have found out about it 

454
00:28:08,400 --> 00:28:11,960
anyway. 
I like I those are I, I don't 

455
00:28:11,960 --> 00:28:15,480
know what to say about that. 
As a they'll say it's a truth. 

456
00:28:15,640 --> 00:28:20,240
Oracle, I think is the, the 
basic thing you hear from, from 

457
00:28:20,920 --> 00:28:24,040
prediction market advocates is 
that it, it's an Oracle of truth

458
00:28:24,320 --> 00:28:30,240
and it is doing everything to 
present objective truth to 

459
00:28:30,320 --> 00:28:35,760
everyone as quickly as possible.
And I don't know if that's 

460
00:28:35,800 --> 00:28:38,520
actually a good thing. 
There's other stuff we've done 

461
00:28:39,200 --> 00:28:42,840
in history where you could 
clearly look at it and be like, 

462
00:28:42,840 --> 00:28:46,160
yeah, there's going to be issues
with this, but at least there's 

463
00:28:46,160 --> 00:28:49,920
all these beneficial aspects to 
it, right? 

464
00:28:52,320 --> 00:28:59,160
This does feel a little bit like
we're back in 2018 and someone 

465
00:28:59,160 --> 00:29:02,320
is describing, which is funny 
because the first ever crypto 

466
00:29:02,320 --> 00:29:05,080
article I wrote was about a 
prediction market back then. 

467
00:29:05,440 --> 00:29:09,040
But more broadly, like it feels 
like we're listening to 

468
00:29:09,040 --> 00:29:13,280
advocates talk and we go to them
and we say, OK, is that a good 

469
00:29:13,280 --> 00:29:15,360
thing? 
What's the benefit of having 

470
00:29:15,360 --> 00:29:19,000
that thing you just described 
existing in the world whose life

471
00:29:19,000 --> 00:29:22,640
is made better besides your own 
and the money you got from A16Z 

472
00:29:23,040 --> 00:29:26,040
besides your own, whose life is 
made better by this product? 

473
00:29:26,240 --> 00:29:29,000
And in so many cases, it feels 
like prediction markets are 

474
00:29:29,000 --> 00:29:31,760
still one of those things that 
don't have a great answer to 

475
00:29:31,760 --> 00:29:34,360
that question. 
Yeah, yeah. 

476
00:29:34,400 --> 00:29:40,600
And and I like you, I think that
plenty of people can look at AAI

477
00:29:40,600 --> 00:29:45,800
and see actual productive use 
use cases for for them or for 

478
00:29:45,920 --> 00:29:48,640
LLMS. 
I think a lot of people can look

479
00:29:48,640 --> 00:29:58,640
at even the fact that like ETFs,
I like crypto currencies are 

480
00:29:58,640 --> 00:30:03,000
certainly, I don't know if it's 
necessarily good, but are 

481
00:30:03,000 --> 00:30:07,880
certainly opening up a lot of 
new, new people to financial 

482
00:30:07,880 --> 00:30:11,400
markets that comp generally 
complicated financial markets. 

483
00:30:11,640 --> 00:30:16,840
I like maybe that's it's not as 
clearly good or bad, but for me 

484
00:30:16,920 --> 00:30:21,720
these feel like it's very clear 
that unless they're super 

485
00:30:21,720 --> 00:30:27,760
regulated, there are mostly bad 
things that they present for 

486
00:30:27,760 --> 00:30:31,000
society and that we're just kind
of going to let that happen. 

487
00:30:31,200 --> 00:30:33,880
And if we are just going to let 
that happen, then I think that 

488
00:30:33,880 --> 00:30:38,840
is true that this has to just 
come to its its end. 

489
00:30:38,840 --> 00:30:41,280
However it will. 
I like, I wouldn't. 

490
00:30:41,800 --> 00:30:44,240
Be I'm going to be frank with 
you, I don't think it's going to

491
00:30:44,240 --> 00:30:46,640
end. 
Right, like crypto? 

492
00:30:47,000 --> 00:30:50,240
Like crypto? 
Yeah, I think, I think this will

493
00:30:50,560 --> 00:30:53,880
in many ways be more pervasive 
than the crypto we recognize 

494
00:30:53,880 --> 00:30:56,360
from our origin. 
I think there will be a larger 

495
00:30:56,360 --> 00:30:59,120
number of users for like most 
prediction markets than there 

496
00:30:59,120 --> 00:31:02,720
are people who have like a self 
custody Ethereum mullet, if not 

497
00:31:02,720 --> 00:31:06,760
yet within like five years. 
And like pretty soon after that 

498
00:31:06,760 --> 00:31:09,280
it'll pass up Bitcoin and 
there'll be more people 

499
00:31:09,280 --> 00:31:13,920
interacting with this instance 
of like semi regulated gambling 

500
00:31:13,920 --> 00:31:17,360
than there is with the like more
unregulated gambling of crypto 

501
00:31:17,360 --> 00:31:21,840
speculation. 
It's gone really far, really 

502
00:31:21,840 --> 00:31:26,400
fast and like the situations 
that would you would need like a

503
00:31:26,400 --> 00:31:30,680
really prominent assassination 
market that I think might 

504
00:31:30,680 --> 00:31:33,640
breakthrough to people. 
And like, that's why Polymarket 

505
00:31:33,640 --> 00:31:36,800
and Kelsey try to avoid having 
any like super obvious 

506
00:31:36,800 --> 00:31:39,080
assassination markets on their 
homepage, right? 

507
00:31:39,400 --> 00:31:41,920
Well, we've talked about this 
before, but I remember when they

508
00:31:43,240 --> 00:31:49,120
polymarket put up a, a market 
for whether the Pacific 

509
00:31:49,120 --> 00:31:52,600
Palisades fire was going to 
spread to Santa Monica by some 

510
00:31:52,600 --> 00:31:57,440
specific date, which to me is 
that's basically an 

511
00:31:57,440 --> 00:31:59,680
assassination market. 
You're basically asking people 

512
00:31:59,680 --> 00:32:04,680
to go set this fire because if 
somebody put enough money on no,

513
00:32:04,960 --> 00:32:08,400
then all you have to do is bet a
little bit set that fire and you

514
00:32:08,400 --> 00:32:09,880
just made millions of dollars, 
right. 

515
00:32:09,880 --> 00:32:13,720
So I like, I've seen them do 
pretty egregious stuff before 

516
00:32:13,720 --> 00:32:15,440
and it didn't result in 
anything. 

517
00:32:15,480 --> 00:32:18,560
So I don't necessarily think 
that I, like I said, I don't 

518
00:32:18,560 --> 00:32:23,120
think LE and regulators are 
worth putting any money on when 

519
00:32:23,120 --> 00:32:27,960
it comes to this bet. 
And for me, that does mean 

520
00:32:27,960 --> 00:32:32,200
though, this is something we 
talked about with Jim Chanos 

521
00:32:32,200 --> 00:32:37,240
too, I used to believe in like 
education being a great way for 

522
00:32:38,000 --> 00:32:43,880
possibly people to not get 
scammed and not fall victim to 

523
00:32:44,280 --> 00:32:47,800
just addiction in gambling and 
finance. 

524
00:32:48,640 --> 00:32:50,840
I don't think that's necessarily
true anymore. 

525
00:32:50,840 --> 00:32:53,640
But I also don't think Jim's 
answer, which is like, well, the

526
00:32:53,640 --> 00:32:56,520
way to learn is to have it 
happen to you and then you get, 

527
00:32:56,720 --> 00:32:58,760
you know, dust yourself off and 
don't do it again. 

528
00:32:59,000 --> 00:33:03,160
Is like, no, I think what 
happens is you, we see it people

529
00:33:03,160 --> 00:33:05,960
betting all their money on some 
prediction market or on 

530
00:33:05,960 --> 00:33:07,680
DraftKings. 
They lose everything. 

531
00:33:08,040 --> 00:33:10,320
And then when they get their 
next paycheck, they just do it 

532
00:33:10,320 --> 00:33:13,320
again. 
Yeah, we've seen that a lot in 

533
00:33:13,320 --> 00:33:15,720
crypto, right? 
In some sense, losing it all, 

534
00:33:15,720 --> 00:33:18,960
like there have been traders who
have described losing it all as 

535
00:33:18,960 --> 00:33:22,520
like the formative experience 
that makes a long term crypto 

536
00:33:22,520 --> 00:33:24,120
trader. 
Like if you're going to be 

537
00:33:24,120 --> 00:33:27,080
sticking around for more than 
one cycle, you need to like in 

538
00:33:27,080 --> 00:33:29,480
an embarrassing way, blow it and
lose it all. 

539
00:33:29,760 --> 00:33:32,240
And then like you're you're 
addicted. 

540
00:33:32,240 --> 00:33:34,680
You're in it because you've seen
other people make big money. 

541
00:33:34,680 --> 00:33:37,360
You yourself have like felt the 
sting of pain and probably 

542
00:33:37,640 --> 00:33:40,840
before the pain had a few brief 
moments where you were euphoric 

543
00:33:40,840 --> 00:33:44,320
as it was up and like that 
emotional high and low becomes 

544
00:33:44,320 --> 00:33:48,000
addictive. 
And so broadly, I think 

545
00:33:48,000 --> 00:33:51,360
prediction markets, along with 
the proliferation of gambling 

546
00:33:51,360 --> 00:33:56,720
and betting in general, is going
to be a corrosive element in 

547
00:33:56,720 --> 00:33:59,880
society that is going to 
continue to propagate for at 

548
00:33:59,880 --> 00:34:03,160
least the next decade. 
And it's going to be like a long

549
00:34:03,160 --> 00:34:05,800
time till we can develop 
political will to really grapple

550
00:34:05,800 --> 00:34:07,440
with the consequences of that 
action. 

551
00:34:07,720 --> 00:34:10,920
I think it's going to be net 
negative for society and I think

552
00:34:11,000 --> 00:34:13,679
our levers to affect it are 
pretty small. 

553
00:34:16,040 --> 00:34:19,639
All right. 
Well, I mean, I guess that's it.

554
00:34:19,880 --> 00:34:24,400
I I don't know what to say. 
I know that today is earnings 

555
00:34:24,400 --> 00:34:28,000
day, so most people are probably
paying attention to a whole 

556
00:34:28,000 --> 00:34:30,159
different set of circumstances. 
I know gold is like Tesla. 

557
00:34:30,280 --> 00:34:32,719
Missed 5 Tesla? 
It doesn't matter. 

558
00:34:32,719 --> 00:34:34,159
It's up. 
Tesla's up. 

559
00:34:34,239 --> 00:34:40,480
I know that it missed, as usual.
Also, they gave $2 billion to 

560
00:34:41,080 --> 00:34:44,920
XAI and so they're eating their 
own tail. 

561
00:34:44,920 --> 00:34:49,239
And also Microsoft, what was it 
like 45%? 

562
00:34:49,239 --> 00:34:53,040
45% of their growth came from 
open AI or something. 

563
00:34:53,080 --> 00:34:54,880
Like that. 
So they're also eating their own

564
00:34:54,880 --> 00:34:58,800
tail oracles, eating their own 
tail and all of these are the 

565
00:34:58,800 --> 00:35:01,960
companies that are producing all
the growth for the S&P 500 and 

566
00:35:02,240 --> 00:35:05,400
the Dow Jones industrial average
and all that. 

567
00:35:05,400 --> 00:35:09,960
So so it's happening everywhere 
I guess is the only thing I can 

568
00:35:09,960 --> 00:35:12,000
say that it's not even 
optimistic. 

569
00:35:12,000 --> 00:35:16,120
It's just realistic that I'm 
like, OK, we'll at least it 

570
00:35:16,120 --> 00:35:19,880
seems like liquidity is just 
drying up everywhere because 

571
00:35:19,880 --> 00:35:25,680
everything is eating itself. 
It is really hard not to embrace

572
00:35:25,680 --> 00:35:31,080
like a financial nihilism when 
you look around and see some of 

573
00:35:31,080 --> 00:35:34,360
these things and their 
proliferation and the 

574
00:35:34,360 --> 00:35:38,840
legalization and non enforcement
of every kind of fraud and scam 

575
00:35:38,840 --> 00:35:43,320
you can imagine. 
It is deeply corrosive, in my 

576
00:35:43,320 --> 00:35:48,720
opinion, to like the long term 
public's trust in finance, in 

577
00:35:48,720 --> 00:35:53,480
banking, in the economy as a 
whole, in the economic system as

578
00:35:53,480 --> 00:35:56,000
a whole. 
All of these things are like 

579
00:35:56,200 --> 00:36:00,000
rotting at the core of all of 
these core societal and 

580
00:36:00,520 --> 00:36:03,320
government things, and I don't 
know what to do about it. 

581
00:36:04,120 --> 00:36:07,000
Yeah, CAS Coin by CAS Coin. 
That's right.