00:00Let's talk a little bit about Kalshi. We've been talking about Kalshi for a little while here as they have really started to kind of impact the space, the predictive markets in a lot of different ways.
00:11But now parlays are in the mix, which I think is is really for one, it's consumers love it and it's impacting a lot of people favorably in that end.
00:22There is a an element of this that is not so good elsewhere, though, outside of Kalshi, and that is for some of the U.S. sportsbooks that saw a drop in stock prices as a result of people really flocking to this new market.
00:38What do you make of what we've seen so far?
00:41Yeah, it's a really interesting scenario.
00:43So parlays, obviously, if you know anything about sports betting or the U.S. sports betting business at all, it's what has driven the backbone of profitability for sportsbooks like FanDuel and DraftKings that kind of for years were just emptying their wallets on acquiring customers.
00:57And investors really wanted to see them show how they could turn a profit.
01:01So they shoved these high margin bets down people's throats and they've been doing it.
01:05If you open the apps, you see same game parlay bonuses and everything's geared around getting people to bet more parlays.
01:11That's what Wall Street wants to see is people betting more parlays because those bets are twice as profitable for sportsbooks.
01:19Usually the hold is much higher for them.
01:21It's just better bets for the sportsbooks in general, on top of all the extra stuff like they attract people to bet them more.
01:29When you see somebody win five dollars to win a thousand, it's kind of free advertising for them.
01:33So this has been their crown jewel for the most part.
01:36It's the reason that FanDuel and DraftKings are kind of in the lead.
01:39And then there's everybody else because they do it better than anybody else.
01:42They have the product.
01:43They have the technology in the app.
01:46Enter prediction markets, which have just started to do basically a version of sports betting in 50 states, including states where sports betting is illegal.
01:54They haven't been able to do this so far, which FanDuel and DraftKings executives have said, you know, that makes us not worried about them.
02:01We have a better product.
02:02People want to do parlays.
02:03It's much more profitable.
02:04Then flash forward to this week, suddenly before Monday Night Football, all of a sudden, Kalshi, which is partnered with Robinhood, unveils its same game parlay product, which, again, it's not calling parlays.
02:15It's calling a make your own combo prediction because it doesn't want to be regulated as gambling.
02:19It wants to be federally regulated.
02:21They did about two hundred and fifty six thousand dollars in a handle on the Monday Night Football games with the first test of their parlay product, which is is much smaller than a sports book would take on any given game.
02:33I want to make sure that's clear.
02:34It's not the same amount of handle.
02:36It's much less money.
02:37But what that did among the investing community was get everyone worried about sports books ability to offer this product or prediction markets ability to offer this product, which would kind of infringe on the crown jewel that sports books have.
02:50So the stocks took a massive hit.
02:51DraftKings fell 12 percent the next day.
02:54Flutter, which owns FanDuel, fell 10 percent the next day as kind of the investment community tries to figure out, OK, is this a long term threat?
03:02Are these prediction markets going to stay around?
03:05We don't know when legal clarity will come.
03:07It doesn't seem like it will for a long time.
03:09In the meantime, the states tell DraftKings and FanDuel and every other sports book, hey, you can't do this because it's going to piss us off and we'll revoke your license in a state like Ohio if you do it where we think it's illegal in California.
03:21So it creates this quandary of sports books having to kind of wait on the sidelines while these prediction markets obviously only ramp up their offerings, make their technology better and seemingly expand the money that they take.
03:32So some investors believe it's actually a good opportunity to buy now because it won't last.
03:36Other investors think it's more of a threat.
03:38So, yeah, it's caused quite a tizzy in the stock market community so far.
03:43We'll see what kind of comes out of it in a few weeks when we have the G2E conference in Las Vegas, where presumably DraftKings and FanDuel and everyone else will kind of dress the elephant in the room.
03:53And, you know, we'll see if these stock hits are real and here to stay or if kind of prediction markets are, you know, just a temporary thing.
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