Kalshi and Robinhood's Partnership in Prediction Markets

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Transcript

00:00So this is the story that I think maybe is the most fascinating one of the day, because Kalshi,

00:06for every single reason, Sam, under the sky, is getting in our show and making news,

00:12it feels like, every single week. So look, they're part of the prediction market. I'm

00:17going to recap a little bit of some of what I understand, and then please correct me after I'm

00:21done. FanDuel comes out and says, not specifically about Kalshi, but just says, hey, look, if these

00:27prediction markets are going to be out there, we don't know that we can back responsible gaming

00:31with these. Then DraftKings comes out and says, hey, look, we're going to do the same thing that

00:35Kalshi is doing. Essentially, now we hear that Robinhood, they're partnering here with Kalshi.

00:41So I mean, this is obviously, you know, people are looking at this as a moneymaker or else we

00:45wouldn't be talking about them as much. Yes, certainly. I think we have to go back to

00:50around December is when Kalshi and other prediction markets, PolyMarket, and even

00:56Crypto.com, these entities that are not sports betting websites, they essentially allow you to

01:03wager on the outcome of an event. So for instance, you could bet on the election by buying a

01:09proposition of whether Trump or Harris would win. Technically, it's not betting. There was a court

01:15case that got solved this past year that kind of allowed that to go through and not be regulated as

01:21gambling. Once that happened, that kind of opened up the floodgates to what exactly can we offer on

01:27these prediction markets. So Kalshi and a couple others have the bright idea to offer betting on

01:31the Super Bowl, essentially, where you're not actually gambling, you're just buying a proposition

01:36of whether a team will win or not. Sort of the same thing, but a different mechanism. And they're

01:41doing it under that different mechanism is because they don't want to adhere to the state

01:45by state gambling rules. This is legal or this is available in all 50 states. So Kalshi and Robinhood

01:51were then going to partner to offer Super Bowl wagering. They pulled that back at the CFTC's

01:57request. The CFTC essentially said, hey, this is a lot. We don't really know whether we can regulate

02:03it. We don't know how to regulate it. We don't know whether to leave this up to the states.

02:07And that has created this mass uncertainty where we've talked about on this show again and again,

02:12you have the feds trying to regulate it. You have states like Nevada coming out and saying,

02:16actually, this is gambling. You need to stop this. And you have major leagues have come out.

02:20The MLB came out and said, there's no safeguards here. FanDuel, as you mentioned,

02:25said that their platform, we have to do all these requirements to pay fees, licenses. We vet,

02:31we make sure that there's no crazy things going on behind the scenes in terms of match fixing.

02:36These platforms can just offer this. So Robinhood had halted on the Super Bowl,

02:40but now with March Madness, $3 billion is going to be bet at legal sports support.

02:44It seems like they kind of just thought this is a no-brainer. Let's launch it while we can grab

02:49the money. And again, you don't have to pay any of the taxes, the fees, anything. So it's a much,

02:53much more lucrative business than it is to open up a sports book, even an offshore sports book.

02:59There's a roundtable later this month to kind of be the first step in figuring this all out.

03:03But it seems like these companies are just going all out and saying, we're going to do it until you

03:08tell us we can't. So it'll be really interesting to see how many people use this because it was

03:13very popular on the Super Bowl. And I'd imagine if they make a lot of money doing it, they're

03:18not going to want to stop anytime soon.