00:00I mean, I don't know how else to look at this. Like, we do not have legalized sports betting, but somebody can drop Robin Hood on an app and go to Calci on an app in California and Texas and do things very similar to folks who want to bet on sports in legal states.
00:17So if this passes and this continues where you could predict games and invest in sports, where does this leave sports betting with the illegal states in the United States?
00:31Yeah, it's a great question, Craig, and unfortunately one that I don't have the answer for, and it seems like nobody else really does have the answer for.
00:42You have the scenario where Robin Hood and Calci just this week announced that they're going to be offering markets on the National Football League and college football, which builds on what they've been doing over the past year.
00:54If you go back, you'll remember that they really only started offering what they're calling the sports prediction markets, where since you can wager on the outcome of the game, buying a proposition into whether this team will win or that team will win, they started doing it around last year's Super Bowl just with the Eagles and the Chiefs.
01:12And when they did that, they got a lot of pushback, people saying that this looks like sports betting, we have sports betting regulated in 38 states.
01:20In order to do this, you have to get a license, you have to go through the states, you have to pay your taxes, you have to do basically what FanDuel, DraftKings and everybody else has had to do.
01:28And one of the reasons that we waited years to have legal sports betting is because it took all of that regulatory stuff.
01:34It took the process such a long time.
01:37Now, fast forward to, you know, this year, they've already done $9 million in trading just on NFL preseason markets.
01:44So this is no longer just kind of a novelty business for them.
01:48If you remember, Kalshi, Polymarket and all these other companies started offering these prediction markets around betting on the election, being able to wager who's going to win an Oscar, the weather economy, kind of novelty markets around predictions.
02:02But once they've crossed over into sports, it's really kind of changed their business.
02:07This is a company that's now valued at over $2 billion.
02:10And the CEO, whenever he's talked about, you know, sports as being kind of the driver of where they're going, he's really, you know, hit home the fact that they're going to keep expanding it.
02:19People obviously seem to be invested in it.
02:22And to your point, Craig, it allows them to operate in states like Texas and California, where legal sports books so far have not been able to.
02:29So this hasn't been without pushback.
02:31You've had, you know, court cases in Nevada, court cases in New Jersey.
02:34But those have kind of ended up in a legal process point where the court has said that, hey, this is something that's supposed to be decided by federal regulators.
02:43The CFTC is the one who oversees this.
02:46Now, the CFTC has largely been quiet on this front.
02:49They really have not weighed in.
02:51And it's allowed these companies like Kalshi, like Robinhood, to go ahead and self-certify and just offer these new markets kind of whenever they feel like it.
02:58And it kind of seems like until the CFTC pushes back, which maybe will never happen, this is going to keep going on until eventually some court case winds up with a result that rules in one favor or another that kind of gives us more clarity.
03:11But, again, because sports betting is a 50-state issue, it's kind of decided state by state.
03:17And because these companies are arguing that, no, we're not subject to those laws.
03:20We're subject to federal laws, which have not been enforced.
03:23It really just creates this massive legal gray area.
03:26So sports books right now, they're watching as well.
03:29They want to see if they're going to be able to offer this.
03:31If, you know, you can't get sports betting legalized in California, maybe they can do the same thing with prediction markets.
03:36But there's a lot at stake here, you know, with pissing off regulators in other states, with pissing off the tribes in the state as well.
03:43But kind of when you boil it all down, it's just it looks like Kalshi and everybody else is going to keep doing these things, which are obviously making them a lot of money.
03:51Otherwise, it wouldn't be expanding.
03:52It's definitely a different kind of, you know, it's not it's not traded the same way as sports betting.
03:57It's a little different.
03:58But right now, it seems like the audience is really appreciating it.
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