Offline with Jon Favreau - What We Lose When We Bet On War

Episode Date: March 23, 2026

Life or death decisions are being gamified for profit on online prediction markets like Kalshi and Polymarket. But these platforms may also have the potential to create a modernized—if morally questionable—method of opinion polling. Politico Magazine's Nancy Scola joins Offline to explain the rise of these markets, the argument for them, and the people in D.C. who stand to gain the most. But first! Senator Chris Murphy stops by the show to break down the brand new BETS OFF Act, which bans wagering on government actions, terrorism, war, assassination, and events where an individual knows or controls the outcome. He and Jon discuss the bill's prospects for passing, and discuss what happens to us spiritually when every moral question becomes a market.

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executed by ice and border patrol. That is not a headline. That is a human life. And it is all happening right now. Do you worry about your own safety being involved in all this? Yes, but it doesn't really feel like there's another option, you know? And of course they use a five-year-old child as bait. And of course they're doing all these horrible, bad things because they don't know what they're doing. They've been told, that they're going to get rid of the worst of the worst, then they have absolute immunity.

And they've been told that nothing they do will they ever be held accountable for. On my show, Runaway Country, we go where the headlines hit home, from communities under threat to the people fighting to be heard. New episodes of Runaway Country drop every Thursday, subscribe wherever you get your podcasts or watch on YouTube. I did a wager for journalistic purposes on what Caroline Lever.

it would say during a White House press briefing. And it was around immigration, deportations, right? Serious real-life things. And I bought a $5 worth of contracts on that. But I'm listening to that as if it was a sports event, right? I'm not thinking anymore that somebody's life is at stake, or, you know, this is a big public policy question. It's absolutely gamified my thinking about those issues within minutes. I'm John Favro, and you just heard from this week's guest, journalist Nancy Scola, who writes about how technology shapes government, politics, and markets. More than a decade ago, Nancy wrote a piece for The Washington Post about a new online marketplace that would allow Americans to invest a small amount of money in the outcome of the upcoming

midterm elections in 2014. The company was called Predict It, and it capped your bet at $850. Fast forward 12 years later, and people are spending around $5 billion per week on political predictions that go way, way beyond elections. Just one example. A few weeks ago, on the night of February 28th, half a billion dollars was suddenly traded on polymarket over when the United States would strike Iran. Six new accounts made about a million dollars

when the bombs dropped that day. One trader, named Maga My Man, made half a million dollars alone. Over on Kalshi, the other major political prediction market, more than $54 million had been traded on a bet over when the Ayatollah Hamine would be ousted. The winners of that prediction got refunds instead of payouts, as Kalshi decided that maybe betting on someone losing their life isn't such a great idea. And then there was the most frightening example that's been generating quite a bit of attention this week.

At times of Israel reporter named Emmanuel Fabian received death threats from polymarket traders because he accurately reported on an Iranian missile-striking Israel, which cost traders who had bet it wouldn't happen on March 10th quite a bit of money. At first, Fabian got messages urging him to change his reporting to say that the damage was from interceptor fragments and not a missile. Then he was offered money to change his story. Then the death threats came, including one message that said, After you make us lose $900,000, we'll invest no less than that to finish you.

Not great. You'll be shocked to learn that the Trump administration has taken a hands-off approach to regulating these political prediction markets, as in there's basically no regulation whatsoever. And just for good measure, Don Jr. is on the board of Pauley Market and is also a strategic advisor for Kalshi. Meanwhile, any number of people in the Trump administration with inside information about everything from economic announcements to the timing of military strikes could be making a fortune right now, and we'd have no idea. All of this to say, it's time to start paying attention to political prediction markets and what happens when life or death decisions are gamified for profit. Nancy Scholar has been covering this topic ever since her first piece back in 2014, so I wanted to talk to her about the rise of these markets,

the arguments the proponents make for them, and the people in Washington who might be benefiting from it. But first, I also talked to our pal Senator Chris Murphy, who just this week introduced legislation with Congressman Greg Casar to ban wagering on government actions, terrorism, war, assassination, and events where an individual knows or controls the outcome. It's called the Betts Off Act. I wanted to know what he hopes to achieve with the bill, its prospects for passing, and get his thoughts on a question that he himself recently asked. What happens to us spiritually when every moral question becomes a market? Here's our

conversation. Senator, thanks for joining. Yeah, thanks for having me. We're doing an episode on political prediction markets this week. And as we were preparing for it, I noticed that you just introduced a bill that would ban wagering on government actions, terrorism, war assassination, and events where an individual knows or controls the outcome. Why this bill? Why now? It seems like a pretty urgent matter because it's another way that the Trump administration is engaging in mind-bending nuclear-grade corruption. You know, what happened right prior to the Iran war, which you may have already covered, is really stunning. It looks like people right before the war began a day before made these bets, specific bets that had not been made up until

that Friday that war was going to begin within 24 hours. I think it's just obvious that those were people close to the president. And, you know, that's disgusting and gross in and of itself, but it speaks to this broader corruption that affects everybody in that there are now people inside this White House and maybe future White Houses that are making bets, secret private bets on whether the United States goes to war or not, and then trying to influence events inside the situation room, not to the benefit of U.S. national security, but so that they can make a bunch of money. And so it just feels like this is happening, maybe at scale, inside the White House right now, and we should shut it down as quickly as possible. So my legislation, you know, is not a comprehensive

bill to regulate prediction markets, but it says you shouldn't be able to wager on government action. And frankly, you shouldn't probably be able to wager on anything in which there's one person who controls the decision, one person who knows the outcome. Those are all fundamentally corrupt and rigged. And we should be protecting the country and consumers from those kind of markets. In general, what about these political prediction markets do you think makes them distinct from sports gambling in terms of how they should be regulated, even beyond sort of the narrower set of reforms that you're pushing in that bill?

Yeah, again, if somebody inside a basketball game decides to, you know, miss a free throw intentionally to make money for a handful of people, that doesn't necessarily impact me. That sucks, but it does impact me if there's somebody inside the situation room who is pushing the president to drop bombs on a country, which ends up in my neighbors getting killed because of a bet that they made. But more broadly, John, I don't know if you're covering this in this episode, I think there's a real spiritual impact to the country when, you know, decisions that are fundamentally moral decisions like war or famine become monetized. And I think in a world today where a lot of people are giving up on government, they don't feel like they can

be powerful through traditional avenues, voting, volunteering. By betting on big questions like war, you have an illusion of having a stake in your government, having a connection to these big decisions, but you really don't. You're still a voyeur. And I think in a moment when we should be incentivizing people to repair what's wrong with our democracy, this allows for people to feel connected to their government, while actually having no impact at all. Yeah, the argument that you hear from the people who support political prediction markets is, well, it's more accurate than polls because if you put money behind it, if you have

some skin in the game, it's more likely to be accurate information, which I never quite understood because I think, I don't know why gambling is somehow more rational and thoughtful than just guessing, but also if there is information that someone knows that's going to make the betting more accurate, then that seems like it's insider information. Like, what do you think about the argument from the prediction markets that, like, this is going to make politics more transparent and accurate? But I mean, like, so what? Like, okay, like, maybe there's some merit to that argument

that you have, you know, better predictive information about future events. But, like, is that what we're missing from our politics? Right. Right? I mean, what we should be focusing on is the massive corruption that exists and not lighting it on fire through these prediction markets, but they also become circular, because if there are individuals who are making bets,

who are then pushing the action inside the decision-making rooms towards their bets, then it's not, I guess it's giving you accurate information, but for what purpose, it's ultimately just a whole bunch of people self-dealing, and the information you're getting is just giving you information about the self-dealing. Why is that a net positive for the country? Well, and you know, you mentioned government officials, but it goes beyond that. I'm sure you

probably heard the story this week about this journalist Emmanuel Fabian, who he got death threats because he accurately reported on an Iranian missile striking Israel, which cost people who bet that it wouldn't happen. And then they wanted him to change his reporting to say that it was interceptor fragments so that they could win their bet. And when he didn't do that, there's death threats. And, you know, that just opens up, first of all, that's harassment, death threats, but then, like, do journalists change their reporting because of betting? And then there's opportunities for a journalist like that, too, if they were, you know, had nefarious intents to sort of use insider information. So I wonder if these markets ultimately need to be regulated even more broadly. Yeah. And that's why I just think that you need to sort of wipe out these markets. There are other approaches in which, you know, you try to target. the corruption by saying people with inside information shouldn't be able to bet. But again, I can't figure out the net good of these markets. And so to me, it's just a lot simpler,

if you say for purposes of betting on government action, or for any instance where there's one person that knows the outcome or controls the outcome, the downside is just infinitely worse than the upside. So just like get them off the internet. you'll still have plenty of places to wager money. I mean, it's stunning how much more opportunity you have to wager if that's your thing today than 20 years ago. These prediction markets coming offline aren't going to affect your ability to engage in, you know, that pastime. Last question.

Do you see a sort of bipartisan path for this legislation and how much pushback do you think it would get from the prediction markets themselves like polymarket, Kalshi? So, you know, broadly I think that there is, you know, a realignment in this country available on a whole host of issues. And the commodification of everything is one of those things that just makes people feel super empty on both the right and the left. Everything in our economy has become commodified and now even government action is becoming commodified. So I do think there's absolutely potential for this to be an issue where you find right-left alignment, but not until Donald Trump is gone because Trump's family, as you've

like we talked about is deeply integrated into these markets. The sons are advisors, paid advisors to both the big betting prediction markets and the family is clearly making tons of money. And clearly lots of people in the White House are placing bets and making money off the inside information. So so long as Trump is there, this is just going to be a funnel for corruption, his employees, Republican senators and Republican congressmen are not going to move on this because they aren't given specific constructions to move on it. And so we're probably, you know, stuck with this mess for the next few years. But that doesn't mean that we can't try to build some consensus in the grassroots on the right and the left to do something about it once he's gone.

Yeah, good proposal to add to a broader reform agenda for sure. Chris Murphy, thank you so much for joining and thanks for introducing that legislation. Thanks, man. Take care. Up next, I'll put this all into context with journalist Nancy Scola. But first, just a reminder, if you haven't already, to consider becoming a subscriber to Cricket. Friends of the prod subscribers get all kinds of great stuff. You get our new weekly episode of Pod Save America called Pod Save America Only Friends. You get access to subscriber-only shows like Polar Coaster with Dan Fifer, which is excellent. You get access to our growing list of excellent substack newsletters, and you get ad-free episodes of all your favorite crooked shows.

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There's like a kid section. The kids can go and read. They play. Everyone hangs out during the weekends. It's great. We should have more independent bookstores. Yeah. I just finished reading in the Garden of Beasts by Eric Larson on my Eric Larson, which I got at a local bookshop in Los Velas. And awesome book. Incredible story about the ambassador to Germany in 1930s Germany. Fascinating. Cool. Fascinating. Sounds fascinating. Use code offline 10 to get 10% off your next order at bookshop.org. That's code offline 10 at bookshop.org. Offline is brought you by three-day blinds. At this point, we can shop for groceries, furniture, and even cars from home.

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Here's the lead of a Washington Post story you wrote on the topic. Just in time for Tuesday's midterm elections in the United States comes an online marketplace that allows U.S. residents to legally invest in the outcome of U.S. elections. And if all goes well, predict with precision who is likely to win races up and down the ballot. The date on that piece is November 4th, 2014. I need to get a new beat, huh? How did you first become interested in this topic all those years ago? In 2014, there was this discussion around political polling.

Political polling wasn't working very well anymore, in part because so many Americans were using cell phones as their primary phones. And pollsters hadn't really figured out how to reach folks who weren't answering their landline after dinner. And so prediction markets came up as this idea of a way of filling that information gap. I thought it was intriguing. And so I started digging in. For people who haven't used Kalshi or Polymarket or for people who've never even heard of them. What is a prediction market and how is it different from just betting? Okay. So prediction market is an online platform where you can go and buy a contract, they're called event contracts,

because it's on the likelihood that an event is going to happen or not happen. So it's generally a dollar contract. You buy that dollar contract at a discount is the idea. And then because you're betting that that event is going to actually happen. When that event happens, you cash out if the event kind of cashed out in your favor or resolved in your favor, or you can sell it before then, right? You're not betting on necessarily on the outcome of the event. You can sell the contract before the event happens. So the argument is that's one way in which it's not simply betting because you can trade back and forth before the event actually occurs.

Also, the argument that it's not betting is that you're not betting against the house. You're actually, actually, you know, transacting with another person on the site who's willing to take the other side of that contract. So what are some examples of predictions you can make on these sites that people would maybe be surprised by? It's interesting. I mean, the Calci is the big, you know, it's a big 22 billion. billion dollar business, which is amazing to me because it wasn't that long ago. This was a

Y Combinator project funded by about $20,000. But originally on CalShoot was you could bet on the outcome of Game of Thrones, like how the season finale was going to end up on Game of Thrones. You can bet on elections. You can bet on if the Federal Reserve is going to raise the interest rate or not, that sort of thing. And, you know, as I suspect we'll get to, there are some markets where you can actually bet on things like wars, the outcome of wars. Oh, yes. Yeah, we'll get to that. I mean, you mentioned briefly CalShe. Maybe you can walk us through just briefly a history of the two major platforms. Calshy's the newer and smaller one.

U.S. based and regulated requires an ID. Polymarket isn't U.S. based, relies on crypto more. Somehow Don Jr. is involved with both of them. Yes. How did these companies go from sort of the largely academic curiosity that you were writing about a decade ago to what they are today? Yeah, that's the idea. They were academic projects in the beginning.

some of them still technically are. Cali started, as I mentioned, as a Y Combinator project. There was two pretty much like finance geeks who thought it would be neat to apply event contracts that things beyond traditionally what event contracts were applied to, which was a lot of like agricultural futures, that sort of thing. And so they started that project. It took off at Y Combinator.

They got a bunch of high profile investors, Sam Altman, that sort of thing. And they went from there. Polymarket was, as you mentioned, not U.S.-based. It was actually banned in the United States after, in 2022 for operating without what regulators thought was the appropriate license. They since been welcomed back into the United States after President Trump took over. The Trump administration is very, very, very favorable towards these markets. As you mentioned, Donald Trump Jr., is on the deeply involved with the two biggest platforms,

which doesn't often happen that you have somebody. Competitors. Direct competitors. So it's strange times. But that's how they've gotten pretty big, pretty quickly. As I mentioned, Kelsey, yeah, yeah, went from almost nothing. Not that long ago to know this giant multi-billion dollar company. And how big has this become?

What is the overall market like right now? It's a very good question. I don't know the answer to it. We're still in the very early days of it. You couldn't bet on elections on Cali until very, very recently. So we're in the very early days. It's a great question.

I don't have a total size of the market. I mean, the founders of Cali when I've spoken with them, they said the reason they got into it is because they thought this was, you know, we're talking trillions, potentially. Like, you know, the name Calci is Lebanese Arabic Kelshi for everything. and the idea is let's bet on everything.

So there's almost no limit to what could be traded as an event contract. So it seems pretty big. And they've attracted a lot of investors who think that, you know, kind of agree with that premise. So I'll be honest, my initial reaction to the rise of political prediction markets has been quite negative based largely on, I think, the potential for abuse. Longer-term consequences of gamifying politics even more than it already is. But you've interviewed and profiled a lot of people who feel differently. some of whom I've worked with in past lives.

What is the sincere intellectual case that these markets are a net positive beyond just the money that people make? Yeah, the argument is that they're information surfacing tools, that there's a lot of knowledge that's out there in the world that lots of individual people hold. If they can enter into a market, put a little bit of skin in the game by putting money behind their predictions. We're going to surface the best possible forecast of what's actually going to happen. in the world. One of the reasons I'm intrigued by these markets is because I'd actually love to hear your perspective on decision-making in Washington. You could argue, and I've been here a long time, sometimes I think it's amazing that there's a few people get into a room and make a decision about what policy we should pursue and that sort of thing. So the idea would be, could we have

more brains working on these problems? And there's some academic literature that says, yeah, like when you have more people thinking about problems, we actually have a better sense of how they're actually going to turn out. I mean, the argument that people's predictions are more accurate because they put money behind them, I was sort of wondering about that because, like, what evidence is there that people who gamble are more rational and thoughtful than people who just, yes. Well, it's interesting. There's, you know, you mentioned I've written profiles of some of the folks that are involved in this field. And so I've gone to the meetups, the prediction market meetups here in D.C. And the original sort of user base was people were really into numbers, people who were willing

to spend a lot of time researching what might be happening in the world, thinking about probability, right? So not just this thing's going to happen, but this thing's going to happen and that's going to trigger the next thing, the next thing, the next thing. And they actually sit down and work out these predictions and then put a little bit of money to see, you know, whether they're right or not. The idea is if these platforms become, you know, just used by the masses, is that going to be minimized? Is that the sort of useful effect of surfacing good information going to be minimized? If it's just people, hey, I put $10 in to see if you can bet on what the White House press secretary is going to say in a press brief.

And I've done that just to try out the platforms. It's kind of fun, right? You win five bucks if Caroline Levitt says something. So as it gets more and more popular, you're going to see people just kind of wagering just as a goof. Yeah, no, I mean, I'm a former speechwriter. And so, and I know you can like bet on what the president or other politicians may say in speeches. I'm sure I could make a lot of money doing that for myself. I'm trying to think of like the value beyond that.

And one thing that would make people's predictions more accurate is if you have people in the betting markets who have insider information. So do the prediction market supporters and the people who do these platforms actually want to prevent this kind of market manipulation? Or do they feel like insiders who bet based on what they know is exactly what makes the markets more accurate? Both. Very much.

Right in the community, there are people who say, we want the best possible information. If the goal is really to service the best possible information, insiders are going to know more than anyone else what's going to happen. So let's cultivate them. Let's actively get people on the platform thinking through these problems and putting money behind them. And then there are people who say, absolutely not. That corrupts the platforms. And Kalshi, we've talked about it's gotten bigger and bigger and bigger,

in part because they've been so willing to work with regulators in the past. Some of these polymarkets and these other platforms have sort of been, you know, skirting the law a little bit. And Kalshi, the reason I got so much VC money was, because they were willing to kind of go through the regulatory process. It's funny, you asked me about sort of like decision makers in a room, and I guess it depends on what the bet or the prediction involves. Because if it's a prediction about who's going to win an election,

I think that, you know, obviously polling has all its drawbacks. But I feel like the people who do the prediction markets are looking at the polling. there obviously there's a lot of other information but trying to guess accurately what a voter's going to do seems like a really a really tricky thing and I don't know that putting money behind it necessarily helps the the person betting figure out more accurately what other voters that they've never met and don't know are going to do without you know looking through what campaigns do which is like not just extensive quantitative polling but like qualitative polling talking to voters knocking on doors, organizing that way.

Yeah, and in a way, betting on elections is one of the more controversial uses. I think it's almost one of the least interesting uses, right? We already have, you know, polling. We have a lot of people pontificating what's going to happen, and we have a clear result, you know, that we're all paying attention to. Yeah, I don't think it's necessarily the sort of best and highest use of the platforms. Some of the people you talk to, like, what are they who either, you know, organize around betting markets or prediction markets or work for them?

what examples of sort of government decisions are they thinking that prediction markets would help make more accurate or would surface more accurate information around? You know, I mentioned the Federal Reserve. There's a lot always betting around whether or not the Federal Reserve is going to raise interest rates or not. There's whether Strategic Oil Reserve, like how the government's going to handle, there's an oil crisis, how the government's going to respond. So those are some of like the policy questions that people think these prediction markets are good at. And a big part of the appeal for people who are big fans of these markets is that you can use them to hedge, right?

So if your business depends on oil and you think it's going to be damaging to your business, whatever happens with, you know, sort of oil prices, that sort of thing, you can bet against it. That's traditionally how some, you know, financial hedging tools work. So people do see those policy events are so impactful on people's lives and people's businesses. So you can kind of bet on the other side to make sure you're covered. Offline is brought to by Quince. A thoughtfully built wardrobe comes down to pieces that mix well and last. That's where Quince shines. Premium fabrics, considered design, and everyday essentials that feel effortless to wear and dependable, even as the seasons change.

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So go to crooked.com slash yes we did. So our conversation is timely because this is all happening right now with the war in Iran. Night of February 28th, half a billion dollars was traded on polymarket over when the U.S. would strike Iran. I think a half a dozen accounts made about a million dollars. Cal she ended up issuing refunds over bets that the Ayatollah would be ousted. And then maybe the most frightening example, the journalist Emmanuel Fabian got death threats because he accurately reported on an Iranian missile striking Israel, which cost the people who bet that it wouldn't happen.

And those people wanted him to then change his reporting to say that it was interceptor fragments. Polymarket condemned this when Fabian made the story public. But how do they think about preventing this kind of thing from happening? Yeah, it's interesting. In that reporter case, you mentioned that some of the betters offered him a cut of the money. Yes. Your send it is reporting, which is a new way for journalists to make money, maybe. I mentioned Kalshi, part of their, you know, being regulatory friendly is saying insider

trainings is absolutely prohibited on the platform. It's a tough question. I mean, they do sort of like the know-your-customer oversight that a lot of financial companies do. But, you know, how do you actually say, what counts as insider information in a war, right? There's all sorts of people involved, you know, if you're a soldier, does that count as inside information? So it's really hard to draw the line on some of these bets where it's so.

So the playing field is so wide, right? We're not talking about just sports betting where you kind of know who's a coach, who's a player, that sort of thing. It's the whole universe of possible contract. So it's really hard to police. But, you know, Kalshi, that's part of their bet is that they can do it. Well, and you mentioned journalism. I wonder how you think about it as a reporter because reporters have inside information all the time

that you go out and find yourself and acquire and report with resources. But that makes reporting both an opportunity to manage. manipulate and abuse the system. But also, it puts you out there as like, you know, there's an argument that maybe it makes reporting more accurate. I don't know how you think about that. I hate the phrase slippery slope, but it seems like a slippery slope if I think I get a new piece of information. You know, the White House today announced a new AI policy. If I know about that ahead of time, you know, right before I hit file on my content management system, do I place a bet on, you know, when that's going to come out? It just seems entirely problematic. So it's

One more fun thing, journalists can't really participate in. Polymarket CEO was asked about the war betting controversy. He dismissed the criticism as more money, more problems, calling the markets innovative and disruptive to CNBC. Meanwhile, Polly Market has said that during wartime, their markets provide accurate, unbiased forecasts as a public service to people in the conflict zone. You think there's merit to that? You think it's self-serving?

A little bit of both. I spoke with somebody who runs an organization called the Coalition for Political Forecasting, And it's a guy named Pratechoglay. And he got into these markets because at the time he was sort of working in and around the State Department. And it was during the Iraq War shortly after the start of the Iraq War. And he said the predictions around the Iraq War were so bad. And I'm old enough to remember the predictions around the Iraq War were so bad that

if you had these markets sort of as a little bit of a check hanging over policymakers to say, you know, when you say Iraq has weapons of mass destruction and then markets are say absolutely not. That makes no sense that they would have weapons of mass destruction. is potentially a useful sort of, you know, other source of information. The CFTC is the government agency charged with oversight over prediction markets. The Trump-appointed chair is very supportive of giving Polymarket and CalGhee free reign to sort of do what they want. Can you talk a little bit about the regulatory history in the current status around these?

Because I think, as you mentioned before, Polymarket had been banned briefly. But obviously, this, like, sort of kicked up a lot in the Biden administration and now in the Trump administration. Yeah, Washington has not been super favorable to these markets traditionally. We mentioned they started as academic projects. There was a little bit of like look the other way. You know, the regulatory approach was called no action letters. You sort of would say to some of these markets, okay, we're not going to, we're not going to regulate you, but stay as small. Keep your bets under a few hundred dollars, that sort of thing.

When they started realizing that people might want to put more and more money on these markets, they ran into the regulators, particularly during the Biden administration. but administration was just not. They just, you know, for various reasons, I'm happy to discuss, they just were not that open to the possibility of these markets actually being regulated and mainstreamed. They, I mean, a big one is that, you know, the sort of around war problem, it kind of, it feels icky to have people betting on circumstances in which people might die, right? It feels like you to bet on elections when somebody could be a staffer or a member of

Congress themselves or some other way have the ability to influence the outcome of election and they can bet on it. Other argument is the CFTC is, you know, it's an agricultural regulator who's created to, you know, regulate agricultural futures. It's, you know, one of the interesting things to me is the oversight committee in Congress is the Ag Committee for CFTC. So it's not really set up to kind of police these products. And so their argument was we just don't in some ways have the staff or the expertise to

if this is going to be a multi-billion, multi, you know, potentially a trillion dollar market, you know, someday that they just don't have that expertise to, to conduct proper oversight. There's, you know, again, sometimes decisions are made by very few people. There's a few handful of staffers in the CFDC who just, you know, thought these didn't really add much to the world. Companies like Calci would say it's not about adding so much to the world. If there's nothing, you know, particularly wrong with them,

you should allow us to run these markets. And that was a point of conflict between the tech community and the Biden administration. The bigger conflict between the tech community and Biden administration, this was one part of it to say, we've developed these new products, they're potentially interesting and exciting. Can we at least try them out? And the administration saying kind of no. And that kind of turned a lot of people off right in the tech world to that administration. Fairly or not, it did.

And now they kind of have free reign under the Trump administration. Though I saw that Arizona just filed 20 criminal misdemeanor counts against Kalshi. I think it's the first ever criminal charges against a prediction market for accepting bets on elections and sporting events without a state license. Cal she says it's a financial marketplace, not a gambling operation. Is that distinction real? What do you make of Arizona's case? When people realize you could bet on sports on these markets in states where you can't otherwise bet on sports that drew a lot of people in the debate, including people that, you know, profit from the regulation of sports gambling in states. One of the big voices on this is Chris Christie, who's a gambling industry.

regulator who said, let's not pretend this is anything more than just sports betting. And that ultimately will probably be what drives us to the people who are expecting this to go to the Supreme Court in the not too distant future is the idea of, is this a federal regulator question? Do they have jurisdiction or to states of jurisdiction, which they have had over sports betting? The CFTC, Mike Seelig's the new chairman who's very, very pro-prediction market is saying, this is my, you know, he put out an op-ed in a video saying, this is my deal. I'm the regulator of record on these issues, so that, you know, that is proving to be a big fight, in part because there's so much money involved.

I talked to Senator Chris Murphy for this episode who just introduced the Betts Off Act this week, which would ban wagers on government actions, terrorism, war, assassination, and events where one person controls or knows the outcome. Do you think that Polymarket and Kalshi would fight that kind of regulation? Like, how do they feel about regulation in general, even sort of, sort of, you know, more minor regulation. Yeah, I don't know. I think, I don't know yet, to be honest with you. I don't, and I think different companies will behave differently.

Kalshi wants the approval of regulators. They want to be the prediction market that partners up with big companies, big news networks, that sort of thing, and they're kind of a safe product. Polymarket has proven a little bit more willing to be a little more risky in some of the practices they allow. So it's going to be an interesting debate, right, as we actually see pieces of legislation, what the industry is willing to back and what they'll throw themselves into fighting against with deep pockets, right? There's a lot of resources that could go into fighting this regulation. So probably the next round of the, you know, we're right still in the middle of the AI battle over regulating AI. And we're going to get another one. We're probably

going to get a big fight over prediction market regulation. Yeah, I'm sort of fascinated with all the partnerships that they're developing with media outlets. I think CNBC signed a deal with Calshita integrate its probabilities into TV. in digital programming, Dow Jones signed to deal with Polymarket to bring prediction data into the Wall Street Journal. And now, you know, contract prices are going to sit alongside earnings and election coverage as a piece of, like, reporting infrastructure. What do you think that means for the industry? And like, what does it mean when a bet becomes a data point that sort of shapes what people think is true? One of the points of controversy in the history of these markets

was there's a platform called In Trade back in around 2012. And there was a big bet placed on the idea that Mitt Romney was absolutely positively going to be the next president of the United States. And there was a sense that somebody was placing that bet to get people thinking Mitt Romney was going to be. Yeah. So we'll have to learn how to interpret these numbers, right? Because they're probabilities. It's not 50 percent, you know, this thing's going to happen. 50 percent, this thing's not going to happen.

So how we're not super good at like understanding probabilities as reporters as Americans. arguably. So we're going to have to learn how to interpret that data. I can't remember if you wrote about this or I read this somewhere else, but I had forgotten that Bill Ackman during the New York mayoral race encouraged Eric Adams to drop out of the race and then place a huge bet on Andrew Cuomo to try to boost Andrew Cuomo's chances, almost like an endorsement, but by putting a huge bet in the markets so that it would like up his chances, which seems illegal. I don't know. Yeah. And then as a reporter, right, you're on deadline and you have to sort of file on the

race and what do you do with that information, right? It's a signal, but we're not great at interpreting what that signal is yet. You've covered this, how technology reshapes political power for a long time. If you look at the trajectory, you know, social media, algorithmic feeds, now prediction markets, is there a through line about what happens when you sort of financialize and gamify civic life? Only good things occur. I mean, that is the concern, right? You know, our elections is what our elections really need. That was sort of Murphy's point. He's like, there's something deeper than just the, you know, potentials for corruption and abuse,

which is like what happens to us spiritually when every moral question becomes a market. Like, is that what we need in politics right now? Yeah. That was, I mentioned this, you know, betting that I did a wager for journalistic purposes on what Caroline Levitt would say during a White House press briefing. And it was around immigration, deportations, right? Serious real-life thing. And I bought a $5 worth of contracts on that.

But I'm listening to that as if it was a sports event, right? I'm not thinking anymore that somebody's life is at stake or, you know, this is a big public policy question. It's absolutely gamified my thinking about those issues within minutes. I've raised this bet. Yeah. And but, well, you know, advocates will say they do this. You can bet on elections in the UK.

And that's a, you know, sort of functioning democracy. So maybe we shouldn't be all that concerned, given everything else that's maybe wrong with elections that this isn't what's going to drag us down. One of my producers raised a question about the rise of markets as a result of young people's sort of perceived economic immobility. Have you found in talking to folks that like the user base or the people who are drawn to these markets is part of it as a result of this belief that since, you know, long-term financial stability seems like it's slipping away, you know, why not just keep playing the lottery

and hope you hit it big? Yeah. And I think, and also if your friends are doing it, right, if your friends are doing it, right, if your friends are making money off of betting on sports, betting on elections, you kind of feel like you're missing out if you don't participate. Yeah, I think there's very much. You know, there's a lot of, a lot of the culture around prediction markets is a lot of young men. Young men on the internet doing what young men on the internet do.

That's very much part of this, yeah. Nancy Scola, thank you so much for making us smarter on prediction markets. Thank you, John, my pleasure. Yeah, take care. Thank you. Thank you. As always, if you have comments, questions, or guest ideas, email us at offline atcrucic.com. and if you're as opinionated as we are, please rate and review the show

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