00:00No surprise that we'll be getting into some prediction market talk here.
00:03Let's start right there because we've got some news courtesy of the CFTC issuing, yet again it feels like,
00:10new guidelines surrounding prediction markets and where this goes going forward.
00:14There's always going to be pushback. We know how this works.
00:17But you tell us, what's the latest here and what should we expect here in the coming weeks?
00:23Yeah, it's pretty big news that just yesterday the CFTC finally came out with two sets of guidance.
00:29One was a notice from the Division of Market Oversight, an advisory guidance, which did a few things.
00:38It basically said that exchanges, prediction markets like Kalshi, Polymarket, et cetera,
00:45now FanDuel and DraftKings have their own products.
00:47It said they can't offer contracts that could be easily manipulated.
00:51But that's kind of as far as it went. It didn't specifically say what exactly those would be.
00:57Chairman Michael Selig did give some examples when pressed by CNBC on this matter.
01:02He said potentially, you know, contracts on injuries, betting on a player to get hurt,
01:07officiating decisions, things that could be easily manipulated by a bad actor, someone trying to make money.
01:14But it was very vague and didn't say exactly what those would be.
01:17It didn't say it did. It could potentially include player props if you think, you know,
01:22this contract is easily manipulated just from one player's performance.
01:26But it didn't specifically say what it was.
01:28It was kind of just a notice to Kalshi and others that, hey, we want you to police yourselves.
01:33We're still working on this. We're trying to figure that out, which I think is pretty, pretty telling.
01:38It kind of shows that the CFTC, which, again, has fought for the authority to regulate sports prediction contracts over
01:46states,
01:46which say, no, we should do it. It's sports betting.
01:48The CFTC has fought for this authority.
01:50But at the same time, time and again, said it's up to Kalshi and all these other platforms that we
01:56want to regulate
01:57to kind of regulate themselves and police themselves.
01:59The CFTC also issued a notice of advanced rulemaking, which, again, sets out what it's going to do potentially
02:08with sports prediction markets, which, you know, it's just a crazy topic right now.
02:13It didn't go as far to say what exactly it's going to define and it's asking for comments.
02:18But one interesting nugget is it said specifically, again, injuries, officiating decisions likely would be off limits,
02:26which is actually something that Major League Baseball and the NBA last year wrote to the CFTC saying,
02:32hey, we're concerned that these markets could be offered.
02:35I think it's really interesting that, you know, these keep being brought up as examples of contracts off limits.
02:40But if you look on Kalshi or Polymarket right now, Adam, you can't find any of those contracts.
02:45You can't find injury contracts. You can't find officiating decisions.
02:48So it seems to me like a bit of a red herring where they're talking about contracts that are easily
02:53manipulated.
02:54It's like, oh, these would be terrible instances.
02:56But what's the point in doing all this work to get rid of these contracts if they're not being offered
03:00in the first place?
03:02So it seems like they're kind of aligning with league interests there.
03:05Another, you know, important kind of wrinkle in that is they made a strong suggestion
03:09that Kalshi and Polymarket and those folks should be working with sports leagues the same way that sportsbooks do,
03:15where they're using their official data to certify the market.
03:19So if a guy finishes with 20 points, they're ensuring that he actually did finish with 20 points
03:25because they have that, the statistics as it comes from the league specifically.
03:29It was something that was very important in sports betting when it was becoming legal,
03:34but mainly just from the point that it allows the leagues to make more money off of this business.
03:39The leagues obviously make a lot of money from sports betting right now.
03:42And I think one of their concerns kind of quietly has been, how do we make money off prediction markets?
03:46So they're kind of suggesting that, you know, it might help market integrity if you do this.
03:50But if you kind of read between the lines, it might be better for the leagues as well.
03:54And they've certainly lobbied to have rules and restrictions around prediction markets,
03:58whether that's more about them making money from it or whether that's more about the validity
04:02and the safety and integrity of the game.
04:05Let's kind of open up to interpretation.
04:06But we'll have about 45 days from now where they'll have the final comments will be submitted
04:12and we'll see what rules the CFTC is actually going to make here besides, you know, just suggestions.
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