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00:31Welcome, welcome, welcome to Last Week Tonight.
00:35I'm Jonathan, thank you so much for joining us.
00:37We are back and it has been a busy week.
00:40Eric Swalwell's political career justifiably imploded.
00:43A jury found that Life Nation runs a monopoly,
00:45which is no surprise to anyone who's ever had to deal with them.
00:48And Hungary's Viktor Orban was kicked out of office
00:51with one particular moment in the aftermath
00:53catching everyone's attention.
00:56The shackles are off and they're dancing to a different tune.
01:00This viral video of Hungary's expected new health minister
01:04encapsulating the party mood.
01:06I love it. Celebrating an autocrat's downfall
01:09by dancing like your drunkest uncle
01:11during the last 20 minutes of a wedding is incredible.
01:14And while I am happy for Hungary, I'm also a bit jealous
01:18because they're getting this guy as their health minister
01:20while we are stuck with this beefy creep
01:23who just this week we learned once cut the penis off a roadkill's wacoo.
01:27As a purely vibes-based matchup, we have lost heavily.
01:32Meanwhile, our tentative ceasefire with Iran seems to be holding so far,
01:35though as of taping, the Strait of Hormuz remains in chaos
01:37with dueling blockades from the US and Iran causing widespread confusion.
01:41Even the Pope has now seemed to criticize the war, saying,
01:44quote,
01:45whoever is a disciple of Christ, the Prince of Peace,
01:47never stands on the side of those who yesterday wielded the sword
01:50and today drop bombs.
01:51It was one of a series of statements that made Trump lose his shit.
01:56First, he posted this screed, which began with,
01:59Pope Leo is weak on crime,
02:01which, in terms of insults, just doesn't work.
02:05It's like saying this possum is weak on Balkan geography.
02:09Okay, but who gives a shit?
02:12It's not a possum's job to correctly place Bosnia and Herzegovina on a map.
02:16Her job is to eat garbage, hang upside down,
02:19and, by this evidence, fuuuuuck.
02:22But Trump wasn't done, because he then posted this image,
02:24which, understandably, generated fierce backlash,
02:27and his excuse was pretty weak.
02:30Tonight, President Trump is defending his social media post
02:33of this AI-generated image that depicts him as Jesus Christ.
02:38I did post it, and I thought it was me as a doctor,
02:40and had to do with Red Cross as a Red Cross worker there,
02:44which we support.
02:45Oh, that makes sense.
02:46A doctor.
02:47You know, how when you go to the doctor,
02:50and you get checked in by a nurse and a few bald eagles,
02:52and then the doctor comes in,
02:53and he's wearing an ancient tunic, and says,
02:55we're gonna get you started on antibiotics,
02:57and on orbs of light born from my very skin,
02:59take them with food.
03:01You know, the doctor.
03:03Meanwhile, caught in the middle of all this was J.D. Vance,
03:06who actually has a new book coming out
03:07that's literally about his decision to convert to Catholicism,
03:11with, fun fact, a stock photo of a Methodist church on the cover.
03:15Now, when pressed on the Pope's remarks,
03:18Vance took a bold swing.
03:20When the Pope says that God is never on the side of those who wield the sword,
03:25there is a thousand year, more than a thousand year tradition of just war theory, okay?
03:31Now, we can, of course, have disagreements about whether this or that conflict is just,
03:35but I think that it's important, in the same way that it's important
03:38for the Vice President of the United States to be careful
03:40when I talk about matters of public policy,
03:43I think it's very, very important for the Pope
03:45to be careful when he talks about matters of theology.
03:48Yeah, that is J.D. Vance douche-splaining theology to the Pope,
03:55which is objectively crazy.
03:56It'd be like me explaining to J.D. Vance where the clit is on a togo-sectional.
04:01Why would I even try to do that?
04:04He spent his life devoted to this very subject.
04:07I'm out of my lane there.
04:09Also, be careful, the Pope's got a lifetime gig.
04:13He doesn't need to be cautious about what he says.
04:16He could start tweeting,
04:17where's the album at Rihanna every day for the rest of his life,
04:21and that still wouldn't change the fact
04:22he's considered the vicar of Christ.
04:24Literally, the only thing he should probably be careful about
04:28is not meeting with J.D. Vance,
04:30because historically, that has been fatal for Pope.
04:33But incredibly, the President still wasn't done.
04:36He reposted this AI image of Jesus hugging him,
04:39which had the caption,
04:40I was never a very religious man,
04:41but doesn't it seem, with all these satanic,
04:43demonic, child-sacrificing monsters being exposed,
04:45that God might be playing his trump card,
04:47which, for someone who was repeatedly photographed
04:50with society's buzziest child-sacrificing monster,
04:54is a bold thing to repost.
04:56And on Thursday, he couldn't resist taking one more swim.
05:00Before leaving for Las Vegas,
05:02the President was asked about his feud
05:03with the Pope over the war.
05:05I'm not fighting with it.
05:06The Pope made a statement.
05:08He says, Iran can have a nuclear weapon.
05:10I say Iran cannot have a nuclear weapon.
05:12Pope Leo has never said Iran should have a nuclear weapon,
05:16pressed on whether he would be willing to meet with the Pope.
05:19Trump said...
05:20I don't think it's necessary.
05:21Yeah, I don't really think it's necessary either.
05:24This battle of words has not gone well for Trump.
05:27Plus, I don't think they'd see eye-to-eye on much,
05:30other than maybe whether it's a good idea to cover your workplace
05:32in more gold shits that seems physically possible.
05:36The point is, Trump seems to be on an epic run of picking losing fights,
05:39and whatever air of invincibility he had last year is fading fast.
05:43All of which is a pretty good reminder that one day,
05:46he is gonna be gone.
05:47And on that day, it will be time to,
05:49as I believe the phrase now goes,
05:52dance like a Hungarian health minister.
05:55And now, this.
05:58And now, local Pittsburgh newscasters try to pronounce their ballpark's new snack.
06:04The team unveiled a slew of new food options available at PNC Park.
06:08Some of the new food items include the Boracua dog.
06:12The Boracula dog brings a bit of Puerto Rican flavor.
06:17A Borquia dog.
06:18This is a Puerto Rican-inspired hot dog.
06:21Then there's the Boracua dog.
06:25The Boracula dog.
06:28The Boracua dog.
06:31Boracua dog.
06:33They include a Boracua dog.
06:35This is this Puerto Rican-inspired hot dog here,
06:38with a Pittsburgh twist.
06:43Moving on.
06:44Our main story tonight concerns prediction markets,
06:47the fast-growing platforms where you can bet on basically anything,
06:50as this TikToker explains.
06:52I've been making a ton of money on this app
06:53that lets you bet on anything in the world.
06:55I bet that GTA 6 won't be released on time.
06:57I bet that Trump would pardon Young Thug this year.
06:59I'm predicting Delta Airlines will be the first airline
07:01to sell Xen on their flights.
07:03I made money off Trump being elected president,
07:05and because Kamala Harris didn't go on Joe Rogan's podcast.
07:07When I was in New York, I bet that it would rain,
07:09and it did, so I won money.
07:10I bet that Justin Bieber will go to the Diddy trial.
07:13When I was in Chicago, I bet on the temperature and won.
07:15Okay, shout out to that guy, Caden Booth, for having such a diverse set of interests.
07:20The first half of his bets are strictly Gen Z boy, Grand Theft Auto, Young Thug,
07:24Xen, Rogan, but the back half is 100% suburban mom.
07:28Potential rain, the temperature, grisly celebrity trials.
07:32Cade, you contain multitudes.
07:35Prediction markets are basically platforms where you can wager on the outcome of future events.
07:39The companies decide on the questions to list, and right now, you can wager on anything from,
07:44will traffic in the Strait of Hormuz return to normal by the end of April,
07:47to will the US confirm that aliens exist before 2027?
07:51These markets have seen exponential growth in recent months,
07:54logging billions of dollars in bets every week.
07:57You may have heard about them on the news, or seen ads, or stumbled across influencers like this guy,
08:02who is constantly updating his followers on how his various wages about the Trump administration are going.
08:07And I'll warn you, it's a real roller coaster.
08:10China question.
08:12Eeeeee!
08:12High-end video chips to China, but the Wall Street Journal reported yes.
08:16Oh, my hero!
08:17The president has made his position on this very clear,
08:20both to the Chinese, that's not something we're interested in selling to China.
08:23Yes!
08:25Yes!
08:27Barack Hussein Obama.
08:28Yes!
08:29Yes!
08:30Barack Hussein Obama!
08:32Getting rickshaw Jeffrey Epstein.
08:35All the files dropped?
08:36Yes!
08:37Is Donald Trump named in the files?
08:39They're all redacted?
08:41Yeah.
08:42A lot more screaming than you thought there, huh?
08:45And it's kind of amazing to witness someone absolutely furious that Trump's name was redacted from the Epstein files,
08:50for a completely different reason than the rest of us.
08:53The point is, a lot of people are getting into prediction markets,
08:57thanks in part to an aggressive marketing push by the two big players in this space,
09:01Cauchy and Polymarket.
09:02Cauchy recently locked in a $22 billion valuation from investors,
09:06doubling its valuation from just a few months earlier,
09:09and Polymarket's currently trying to do the same.
09:11Meanwhile, dozens of new entrants like Coinbase, Robinhood,
09:14and even Truth Social are also trying to get in on the action.
09:18It is shocking the extent to which prediction markets have proliferated,
09:22and sometimes it's been a little unnerving, given the things that you can now bet on.
09:27Ali Khamenei out as supreme leader of Iran?
09:31Will Nancy Guthrie's kidnapper be arrested by the end of February?
09:36Those are just two events offered on popular prediction markets in the U.S.
09:41over the last couple of weeks, where people could have put their money down, betting on the outcome.
09:46There's a lot of bad stuff going on in the world, and being able to bet on just like horrible
09:51things like that,
09:52like, when somebody's gonna be found, like, that's not, that's really dark to me.
09:58Yeah, he's right. The impulse to try and make money betting on war or an unfolding tragedy is really dark.
10:04When someone dies, you're supposed to send their family a card that says,
10:08sorry for your loss, and not one that says, thanks for covering the spread.
10:12That's just one of many issues associated with these sites.
10:15And given that, tonight, let's take a look at prediction markets and try to answer a few questions that you
10:20might have.
10:21Where exactly did these sites come from?
10:23What purpose, if any, do they serve?
10:25And how on earth is any of this legal?
10:28And let's start with the fact that the broad concept of prediction markets on news events is nothing new.
10:33In the late 80s, economists at the University of Iowa created the Iowa Electronic Markets as an experiment,
10:39allowing students and faculty to buy and sell predictions about upcoming elections.
10:43And interestingly, they began to outperform many leading polls.
10:47The theory was that the wisdom of crowds in the form of people putting actual money behind their opinions
10:52can produce useful forecasts.
10:55And controversial uses of these markets are not new either.
10:58After 9-11, the Pentagon actually flirted with creating a market where experts could wager on future events,
11:04hoping it could help predict events in the Middle East.
11:07But it quickly got shut down once members of Congress found out about it and voiced their disgust.
11:12This betting parlor on the internet will include wagers, for example, as the examples on the internet site put up
11:21by the Department of Defense,
11:22would include, will Mr. Arafat be assassinated?
11:26Will there be missile attacks from North Korea?
11:29Will the King of Jordan be overthrown, just as an example?
11:32I think this is unbelievably stupid.
11:34It's not only...
11:36It is...
11:36Well, that is a gentle thing to say about a program that is so devoid of value.
11:41It combines the worst of all of our instincts, in my judgment.
11:45Yeah, he was justifiably upset at the notion of people betting on geopolitical events
11:50that would affect millions of lives.
11:52As we all know, the only groups the society's decided are allowed to profit from instability
11:57are military contractors, members of the Trump family, and the Mormon wives.
12:01Whitney joined the cast of Chicago on Broadway, and Taylor gets announced as Bachelorette,
12:05and then notably unannounced?
12:07I don't know how these women do it, but I cannot stop watching.
12:11The point is, back then, the concept of betting on grim outcomes seemed beyond the pale.
12:16But everything started changing a few years ago when Kalshi and Polymarket launched as startups,
12:21opening the door to the free-for-all that we have now.
12:24Initially, Kalshi sought regulatory approval, and in 2020, it was approved as the first regulated exchange.
12:30But Polymarket went a different way, launching without approval,
12:34and seemed to be comfortable working outside the rules.
12:36The government actually accused Polymarket of operating an unlicensed exchange,
12:40and as part of a 2022 settlement, it agreed to pay 1.4 million,
12:44and block Americans from trading on the platform, while admitting no wrongdoing.
12:48And it is worth watching Polymarket's CEO, Shane Copeland, try to spin that penalty.
12:53It was a 1.4 million dollar fine, and also...
12:55It was a settlement.
12:56And you could not have customers in the United States.
12:59Yeah, we had to go and geoblock trading in the U.S. and move certain operations offshore,
13:03and it wasn't, hey, you're banned from trading in the U.S.,
13:06it's like, until you're licensed.
13:07I mean, it was breaking the law.
13:08I mean, people say breaking the law, it's like, which law, you know?
13:11So, if anything, it's incompatible.
13:14It's incompatible with the law.
13:15Yeah, with the regulatory matrix that existed.
13:18Look, incompatible with the law is clearly ridiculous,
13:21but please don't overlook the line, people say breaking the law,
13:24and it's like, which law, you know?
13:26I'm sorry, what?
13:28I'm pretty confident there is a specific law you broke, given, you know,
13:31you paid a 1.4 million dollar penalty.
13:34Regulators weren't just like, shit, he just asked which law.
13:37Oh, uh, the Chinese Exclusion Act of 1882.
13:41From the start, Polymarket took an extremely libertarian approach,
13:45allowing users to use crypto to bet anonymously on things like war.
13:49And while it's currently rolling out a new app to U.S. users,
13:52that does have government approval,
13:54it is way more limited, and mostly offers trading on sports.
13:58The vast majority of its business
14:00is still done on Polymarket's international version,
14:02which is based offshore in Panama,
14:04and on which American users have to mask their location
14:07if they want to trade.
14:08And while doing that might be a high technological bar
14:12to clear for someone like me,
14:13using a VPN is something anyone under 25
14:16learns to do before they learn how to write a cursive capital G.
14:20Mostly because that is an impossible letter
14:22invented by someone who wanted to make children suffer.
14:25It looks like someone stabbing himself in the stomach with a pencil,
14:29because that's exactly what trying to write that letter
14:31makes you want to fucking do.
14:33But regardless of how these companies got to this point,
14:37both enjoyed a huge surge of attention about a year and a half ago
14:41after this happened.
14:42Calci made a name for itself in the 2024 election.
14:46Just over one week away from election day,
14:49and the race is neck and neck.
14:50It looked close, unless you were keeping an eye on Calci,
14:54which called the race well before the TV networks did.
14:58It was like Calci, then Fox, then CNN.
15:01How did that feel?
15:02I don't know. It was crazy.
15:04Yeah, Calci predicted Trump would win,
15:07as did Polymarket, who's CEO then tweeted,
15:09make no mistake, Polymarket single-handedly
15:11called the election before anything else.
15:13The global truth machine is here, powered by the people.
15:16And while it is not the most important thing,
15:18you have now met the CEOs of these two companies,
15:21and I'm just gonna say it, they are two of the most extras
15:23in a Totino's Pizza Rolls commercial-looking motherfuckers
15:26I have ever seen in my life.
15:28Anyway, since then,
15:30they've both been scrambling for market dominance,
15:33which is why Calci, for instance,
15:34has run TV ads like this.
15:36Indiana gonna win, baby!
15:38We're in Florida asking people what they put their money on!
15:41I'm all in on OKC!
15:43Indiana got that dog in them!
15:46Will egg prices go up this month?
15:48I think we'll hit $20.
15:50How many hurricanes do you think we'll have this year?
15:53Calci!
15:54Calci!
15:55Calci!
15:56Calci lets you legally trade on anything anywhere in the US.
16:00OKC!
16:01Indeed!
16:03OKC!
16:03Calci!
16:06Okay, that visual cacophony is an AI slop atrocity.
16:11It contains two alligators,
16:13four shirtless or nearly shirtless old guys,
16:14one egg freak,
16:16three different people being pursued by the police,
16:18one woman I'm kind of rooting for,
16:19one USDA inspectors fucking nightmare,
16:22and one alien seemingly rooting for Duke,
16:24which honestly tracks.
16:26And the whole thing ends with
16:27the world's gone mad, trade it.
16:29Although, given everything that came before,
16:31a more honest tagline might have been,
16:33fuck empathy, get money, Calci!
16:35And again, that is the one that likes to present itself
16:38as the more buttoned-down rule-abiding company of the two.
16:41And at this point, you might be thinking,
16:43wait, isn't that an ad for a gambling site?
16:46But both Calci and Polymarket will fiercely argue
16:49that that's not what they are at all.
16:51They argue that gambling involves playing against the house,
16:54while their users are trading against each other,
16:57with the companies typically just charging a fee on trades.
17:00They'll also insist that they're simply modern versions
17:02of commodity futures markets,
17:04which have been around for over a century.
17:06If you're not familiar with them,
17:07they're a place where people can speculate
17:09about the future price of things like corn or natural gas.
17:12And crucially, they will argue that the bets they sell
17:15are financial instruments that enable ordinary people
17:17to hedge against future risks,
17:20like betting that, say, a hurricane will hit,
17:22or that the US government will shut down.
17:24Here is how Calci's CEO frames it.
17:27We had a market about whether student loan
17:29are gonna be forgiven or not this year,
17:31and so a lot of people were hedging using that market.
17:34And so if it wasn't forgiven,
17:35they would get paid some amount of money
17:36that they could use to basically pay the student loan.
17:38And that's why this is very important.
17:41Right.
17:41Apparently, they're just trying to help people
17:43make wise planning decisions.
17:45It's the kind of responsible financial thinking
17:47that you intuitively associate
17:49with a company that advertises itself
17:50with a shirtless old man being arrested,
17:52or an alien pledging Sigma Chi.
17:55And look, that might make some sense
17:58when you're talking about an economic indicator
18:00or a specific event that might impact you personally.
18:03But what exactly is the financial loss
18:05that I'm hedging against if I bet on the next
18:08winner of the masked singer,
18:09or whether or not Mr. Beast will say feastable.
18:12And when you watch some of Calci's actual customers
18:16in action, the notion that this is about
18:18sober risk management feels absurd.
18:21I'll tell you, if I didn't win this election,
18:23and if you had a moron like Kamala,
18:25or a moron like Sleepy Joe-
18:29Yeah!
18:31Here we go.
18:33Bang!
18:33There we go.
18:35Number one, Sleepy Joe.
18:36That's okay.
18:36We're looking good so far.
18:38Easy, bro.
18:39Okay, all right, all right, all right.
18:40We made about 200 bucks.
18:42Okay, all right.
18:43200 bucks.
18:44Men playing in women's sports-
18:45Wait, wait, wait!
18:47Transgender-
18:47Hey!
18:50Hey!
18:51We are off to a great side.
18:52Yeah, we hit on that shit immediately.
18:55There we go.
18:55Sleepy Joe is transgender.
18:56We got Sleepy Joe is transgender
18:57in like the first five minutes, bro.
19:00Bro, we're up like 500 bucks.
19:02We got to make a thousand.
19:03Yeah, we got to make a thousand.
19:04You got it?
19:04All right, all right.
19:06I know-
19:07I couldn't even tell you what the
19:09this man is saying.
19:10Like, he just says a soup of random words.
19:12Somehow Joel is just deciphering this
19:14and just making money.
19:15Yeah, that is not using a financial instrument
19:19to hedge risk.
19:21It's taking advantage of a sundowning geriatrics
19:23rapidly declining verbal abilities.
19:26Oh, you bet he's gonna say the word nasty?
19:28Great guess, dude.
19:29It's one of the last 200 words he has left.
19:33Honestly, that clip is unsettling on multiple fronts.
19:35One, because the president's harmful rhetoric
19:37is being divorced from its actual meaning.
19:39But two, because that's not what these bros
19:41are supposed to be doing.
19:43They shouldn't be betting on Trump speeches.
19:45They should be sitting on that same couch
19:47and watching YouTube highlight reels
19:48of Kevin Love outlet passes,
19:50six modellos in,
19:52forging a deep, beautiful friendship
19:53that will last for 40 years
19:54and that they will never, ever discuss.
19:57Nature has lost its course.
19:59The point is, that sure looks like gambling.
20:03And it is pretty telling that while political mentions
20:05markets like that get a lot of attention,
20:08around 90% of trading volume on Calshi is on sports.
20:12But you can see why these companies are so insistent
20:16that they are not gambling sites.
20:18Just 39 states, D.C. and Puerto Rico
20:20have some form of legalized sports betting.
20:23With only 32 of those allowing online gambling,
20:26leaving some pretty attractive megastates
20:27like California and Texas on the table.
20:30And by insisting they are financial exchanges
20:33offering not bets, but event contracts,
20:36prediction markets are not only able to operate
20:38in states where gambling isn't legal,
20:40but also get around state taxes
20:42and minimum age requirements in states where it is.
20:46And they've sometimes talked out of both sides
20:48of their mouth on this,
20:49because in ads like this one,
20:50Calshi's called itself
20:51the first nationwide legal sports betting platform.
20:54But, when asked about it,
20:56it later tried to qualify that statement saying
20:58the bet language is only used in the sense
21:01that any financial position
21:02can be considered a bet on the future.
21:05And that is so dumb,
21:06it is almost charming.
21:08It's like seeing a sign outside a strip club
21:11that says, girls, girls, girls,
21:12and then seeing the manager come out and say,
21:14we meant girls, girls, girls who code.
21:16We support women in STEM.
21:18Sure you do, buddy.
21:20Nice try.
21:22But these companies' insistence
21:24that they are not gambling platforms
21:26is actually one of the two most irritating claims
21:29that they tend to make.
21:29The other is that they're actually incredibly important
21:32to society, because they can help us
21:35more accurately predict the future.
21:37The head of Polymark, it's even called it
21:38the most accurate thing we have as mankind right now,
21:41and has bragged that the predictions it generates
21:43can save lives.
21:45When I get hit up by people in the Middle East
21:49who are saying that, hey, you know,
21:51we're looking at Polymark to decide
21:53whether we sleep near the bomb shelter.
21:55Like, we look at it every day and I'm like,
21:56oh, it's really that popular?
21:57Like, are you kidding me?
21:58Like, do you not even know what's going on?
22:00Like, everyone's relying on this.
22:02Um, that's very powerful.
22:05That's like a, you know,
22:08an undeniable value proposition
22:11that did not exist before.
22:12Hey, quick question.
22:14What exact stage of capitalism are we in
22:16when the child CEO of an offshore gambling platform
22:19refers to betting odds on bombings
22:21as an undeniable value proposition?
22:23Because it feels like we're in palliative care
22:26at this point.
22:27But I guess that is the point you reach
22:29when you're a 27-year-old billionaire
22:30surrounded by yes-men who will never tell you the truth,
22:33something I know for sure,
22:34because no one in his life told him
22:36never to ever wear that jacket.
22:39Which, when he is sitting like that,
22:40unmistakably says,
22:42peed-rider.
22:43Though, for all the talk
22:45of these sites' unparalleled accuracy,
22:47you should know that's a bit of an oversell.
22:49They have shown promise in some areas.
22:51A recent paper found Cauchy's predictions
22:52were roughly consistent
22:54with those of professional forecasters
22:56when it came to the economy
22:57and Federal Reserve policy.
22:59But they've also had some big misses.
23:02For instance, both favored the Chiefs
23:04to win last year's Super Bowl
23:05and also whiffed the recent
23:07Texas Republican Senate primary
23:08with Polymarket even posting
23:09a breaking alert that morning
23:12announcing Ken Paxton was projected to win
23:14with their odds giving him an 83% chance
23:16and, you know, he didn't do that.
23:19And look, all of that would be fine.
23:21These are just odds
23:22and real life can defy odds.
23:25Were it not for the fact
23:26that these companies are actively selling themselves
23:28as basically oracles.
23:30And they've even tried to bolster that reputation
23:33by entering paid partnership deals
23:35with news organizations.
23:37Dow Jones, parent company of the Wall Street Journal,
23:40announced a partnership with Polymarket
23:42earlier this year,
23:43while CNN, CNBC and Fox News
23:45all signed deals with Cauchy,
23:47which even sponsors segments on CNN
23:49that feature Cauchy's odds
23:51on various future events
23:52scrolling across the bottom of the screen.
23:55And I do not want the CNN ticker
23:58to have betting odds on news events.
24:00I don't really want anything on there
24:02except maybe the odd distractingly weird headline
24:04that takes my mind off things for a second.
24:06You know, something like,
24:06Giraffe escapes from zoo.
24:08Please say it has a gun.
24:10You know, something fun to Google later.
24:14But having their logo like that
24:16on CNN is a big win for Cauchy.
24:19Just as it's a big win
24:21for them to have influencers
24:22like that guy from earlier
24:24saying how easy it is to win money.
24:26Though you should know,
24:27after we asked,
24:28Cauchy told us
24:29that they paid him for that post.
24:31And it feels like,
24:32deals like those
24:32should really be more transparent.
24:34It makes me a little annoyed
24:35and to be honest,
24:36even more hungry.
24:37And you know,
24:37when I need something nutritious,
24:39yet in a can,
24:40I know where to turn.
24:42Bush's baked beans.
24:45But full disclosure,
24:46I was paid $40 to say that.
24:49The thing is,
24:50it's worth knowing that,
24:51in reality,
24:52as with sportsbooks,
24:54researchers have found
24:55that most users of Cauchy
24:56and Polymarket lose money.
24:59As we've discussed before,
25:00casual gamblers
25:01are always going to be
25:02easy prey
25:02for more sophisticated operators
25:04with advanced systems
25:06to give them an edge.
25:07Which is probably why.
25:08While Polymarket
25:09has more than 2 million users,
25:11one analysis found
25:12more than two-thirds
25:13of all money won on it
25:15was held by just 740 accounts.
25:17And if you're thinking,
25:19how exactly
25:20are these companies
25:21getting away with all this?
25:23Well,
25:24a lot has to do
25:25with who is in the White House
25:26right now.
25:27Both companies
25:28have fostered strong connections
25:29with the Trump family.
25:30In fact,
25:30Don Jr. is both an investor in
25:32and an unpaid advisor
25:33to Polymarket
25:34and a paid advisor
25:35to Cauchy.
25:36And look,
25:37I am not saying
25:38that Don Jr.
25:39isn't providing
25:40important
25:41or valuable insights.
25:42Although,
25:42in a much truer sense,
25:44I very much am saying
25:45that.
25:46I'm just saying,
25:47it's notable
25:48just how hard it was
25:49for Cauchy's CEO
25:50to answer a series
25:51of basic questions
25:53about Don Jr.'s role.
25:54Why did you guys
25:55make Donald Trump Jr.
25:57a strategic advisor?
25:58We have a lot of advisors.
26:00Mm-hmm.
26:00Um, and they span
26:03across the board,
26:04across different functions.
26:05Um, but really,
26:06this is all about
26:07growing this industry,
26:09the prediction market industry
26:10that a lot of people
26:11really believe in.
26:12What kind of advice
26:13does he give you?
26:14So, it really is,
26:15again, about
26:16growing prediction markets.
26:17You know,
26:18he believes in prediction markets,
26:19we believe in prediction markets,
26:20a lot of people believe
26:21in prediction markets,
26:21and it's really about
26:23go-to-market and expansion plans.
26:24Does he come to meetings?
26:26How much do you pay him?
26:27What's his role?
26:28I mean, this is the son
26:29of the president.
26:30We, again,
26:30I mean, we have a lot of advisors,
26:32and whether it's our investors,
26:33whether it's our people
26:34that we really trust
26:35and respect...
26:36But he's not just any advisor.
26:38He has a direct line
26:39to the White House.
26:41We have a lot of advisors.
26:43Yeah.
26:44Turns out,
26:45it's pretty hard to justify
26:46hiring a Nepo baby,
26:48or, in Don Jr.'s case,
26:49a Nepo divorced dad.
26:51But the thing is,
26:52if hiring Don Jr.
26:54helped get these companies
26:55on Trump's good side,
26:55it's a bet that's paid off
26:56massively for them.
26:58Because while the Biden
26:59administration had at least
26:59tried to rein in
27:00some of what these markets
27:02were doing,
27:02the Trump administration
27:03has gone hard
27:04in the other direction.
27:06And to understand the degree
27:07to which that's the case,
27:08take a look at the CFTC,
27:09or Commodity Futures Trading Commission.
27:12It regulates these platforms.
27:14And it was actually empowered
27:14under the Dodd-Frank Act
27:15in 2010
27:16to block event contracts
27:18about terrorism,
27:19assassination,
27:20war, and gaming.
27:21You know,
27:21a bunch of what you've seen
27:23so far tonight.
27:24But it is clearly not doing that,
27:26and it doesn't even seem
27:27to be trying.
27:28In fact,
27:29while the CFTC is supposed
27:30to be comprised of five commissioners,
27:32two of whom are required
27:33to belong to the minority party,
27:34it currently only has this guy,
27:37Michael Selig,
27:38a Trump appointee
27:39who's a massive cheerleader
27:41for this industry.
27:42He completely buys into their whole
27:44this is all about hedging risk
27:46argument,
27:47to the point that he once suggested
27:48that somebody with a medical condition
27:49could manage the potential risk
27:51of having a future treatment
27:52or medical costs
27:53by placing a bet
27:55on the likelihood of something
27:56passing a drug trial.
27:57Which is,
27:58and I don't say this lightly,
27:59one of the most fucked up suggestions
28:01I have ever heard
28:03for this country's Guernica-ass
28:05healthcare system.
28:06And while Selig's recently
28:07made noises about
28:08stronger enforcement,
28:09it is hard to take him
28:10at his word,
28:12given that during his
28:12confirmation hearings,
28:13he told Congress
28:14he'd let courts decide
28:15whether these companies
28:17constitute gambling.
28:18But in office,
28:19he's done the exact opposite
28:21of that.
28:21In fact,
28:22more than a dozen states
28:23are currently suing prediction markets.
28:25But,
28:25rather than let that play out
28:27in the courts,
28:27like he promised,
28:29Selig posted this video.
28:30To those who seek to challenge
28:33our authority
28:34in this space,
28:35let me be clear.
28:37We will see you in court.
28:39What a fucking weasel.
28:42That guy
28:43has both the energy
28:44and fashion sense
28:45of a suits villain
28:46who goes toe-to-toe
28:48with Harvey and Mike
28:48all season long
28:49while Lewis and Meghan Markle,
28:51I don't care what you say,
28:51that's a character named to me,
28:53watch on.
28:54But he's done more
28:55than just threaten.
28:56Selig's let his agency
28:57to sue three states
28:58to get them to back off
29:00trying to regulate prediction markets.
29:02So, right now,
29:03these companies are able
29:04to operate under
29:05extremely friendly conditions.
29:07And given that,
29:08it's worth looking at
29:09some of the problems
29:09that have already begun
29:10to emerge.
29:11Starting with the fact that,
29:12for a lot of these bets,
29:13it is incredibly easy
29:14for individuals
29:15to manipulate the outcomes.
29:17Some have even joked about that.
29:19For instance,
29:19on a recent earnings call,
29:20the CEO of Coinbase said this.
29:22I was a little distracted
29:24because I was tracking
29:24the prediction market
29:25about what Coinbase will say
29:27on their next earnings call
29:28and I just want to,
29:29you know,
29:30add here the words
29:32Bitcoin, Ethereum,
29:33Blockchain,
29:34Staking,
29:35and Web3
29:36to make sure we get those in
29:37before the end of the call.
29:39Yeah.
29:39He saw people's bets online
29:41and just rattled off words
29:43that they bet on him saying.
29:44And it really feels like
29:45manipulating betting outcomes
29:46should be more difficult
29:48than that.
29:49In the old days,
29:50you at least had to
29:51sneak cocaine to a racehorse,
29:54not just rattle off a list
29:55of the most punchable words
29:57in the English language.
29:58We even realized
30:00while researching this piece
30:01that there was betting
30:01happening around this show,
30:03specifically on what words
30:05I'd say during our show
30:06on February 22nd,
30:07which is stupid
30:08for multiple reasons,
30:10including that we tape
30:11on Saturday
30:12in front of a studio audience,
30:14all of whom would then
30:15have a massive
30:16information advantage
30:17and more than 24 hours
30:19before the betting window
30:21closed.
30:21Now, thankfully,
30:22we wipe every audience
30:24member's memory
30:24before we let them
30:26out of the taping.
30:27We try to erase
30:28only the last couple of hours,
30:29but sometimes we do wipe clean
30:31a milestone birthday.
30:32That's on us,
30:32and we're constantly
30:33calibrating the technology.
30:35You've been warned.
30:36You won't remember,
30:37but you've been warned.
30:39And there are markets
30:41where it is way too easy
30:42for anyone to manipulate
30:44outcomes.
30:44Just last summer,
30:45you might remember
30:46a bunch of arseholes
30:47started throwing dildos
30:48on the court
30:49during WNBA games
30:50to promote
30:51a crypto meme coin.
30:53And if that
30:53wasn't already
30:54a cursed enough sentence,
30:56I'll let this
30:57South African man
30:58fill you in
30:58on what happened next.
31:00Did you know you can
31:01actually bet on
31:02whether a dildo
31:03will be thrown
31:04at the WNBA game
31:06on August 9th,
31:08August 11th,
31:10that's today,
31:11and August 12th?
31:13Right here,
31:14on Potting Market.
31:15I had no idea.
31:17Actually, I had no idea
31:18what the WNBA was either
31:19until, you know,
31:22you could place a bet
31:23on whether a dildo
31:24would be thrown at it.
31:25Yeah, none of that is great,
31:27and it is pretty depressing
31:28that the way he learned
31:29about the existence
31:30of the WNBA
31:32was finding out
31:33you could bet
31:33on whether a dildo
31:34would be thrown
31:35at one of its games.
31:36It'd be like finding out
31:37about the existence
31:38of Robert De Niro
31:39by googling
31:39the cast of Dirty Grandpa.
31:41Oh, no.
31:42No, don't.
31:43Not like this.
31:44Don't learn about him
31:46like this.
31:47But it is true.
31:49People started betting
31:50whether dildos
31:51would be thrown again,
31:52and Polymarket
31:53even put up this tweet
31:54promoting the bets.
31:56And sure enough,
31:57more dildos
31:58got thrown.
31:59And that could well have been
32:00because Polymarket
32:01had just created
32:02a situation
32:03where you could
32:04easily make money
32:05by betting someone
32:06would throw a dildo
32:07and then go into a game
32:08with a dildo
32:09and throwing it.
32:10There have also been
32:11multiple instances
32:12of people seeming
32:13to use inside information
32:14to gain these markets.
32:16Last year,
32:16a trader made
32:17over a million dollars
32:18with a series
32:19of accurate bets
32:20about Google's rankings
32:21of its most searched people
32:22of 2025.
32:23That same person,
32:24by the way,
32:24had also earned
32:26over $150,000
32:27by correctly predicting
32:28the exact release date
32:30of Google's Gemini 3 model.
32:32Which really makes you think
32:33that that person
32:34either worked for Google
32:35or knew someone who did
32:37or maybe managed
32:38to hack Google
32:39from the outside.
32:41In which case,
32:42would it kill you
32:42to do a Google Doodle
32:43for my birthday?
32:44It is on Thursday,
32:45by the way.
32:47And Polymarket's CEO
32:48has in the past
32:49openly celebrated
32:50the fact that this
32:51kind of thing
32:51can happen on his platform
32:52because he's argued
32:54it just makes
32:55its prediction abilities
32:56that much stronger.
32:58What do you guys do,
32:59if anything,
33:00to basically guard
33:01against insider trading?
33:02Yeah.
33:03So,
33:04it goes back to this idea
33:05of information markets,
33:06right?
33:06Like, you think about
33:09when will Gemini 3 launch.
33:11Nobody is under the impression
33:13that nobody knows the answer.
33:15Right?
33:15Like, of course,
33:16there's people who are working
33:17on it who know when it's going
33:18to come.
33:19And I think what's cool
33:20about Polymarket
33:21is that it creates
33:23this financial incentive
33:24for people to go
33:25and divulge the information
33:26to the market
33:27and the market to change
33:28and all of a sudden
33:29it's trading at $0.95
33:29and people are like,
33:30I mean, you think,
33:31when you say divulge,
33:32you mean the people
33:32who actually know?
33:33Or if someone tells someone
33:34and then the market responds.
33:36Yeah.
33:37He basically just answered
33:38the question,
33:39how do you guard against
33:40insider trading there?
33:41With no.
33:42And he did it
33:44with a fashion choice
33:45somehow even worse
33:46than his biker jacket
33:47because what in the NYU
33:49army fatigues
33:50is that shit?
33:52That sweater looks like
33:53it was made
33:53from illegally poached
33:55grimace.
33:55But also,
33:56I don't care
33:57how many
33:58statement sweaters
33:59you wear
33:59or how many
34:00Ben Platt
34:01and Dear Evan Hansen
34:02haircuts you have.
34:03You're not describing
34:04some edgy, chill way
34:06to divulge information
34:07to the market.
34:07You're describing
34:08insider trading.
34:10And it gets genuinely
34:11chilling
34:11when you realize
34:12that people seem
34:13to be using insider info
34:14to bet on life-or-death events.
34:16In January,
34:17after the US seized
34:18Nicolas Maduro,
34:19an anonymous trader,
34:20pocketed more than $400,000
34:22off bets
34:23that that would happen.
34:24With the bulk of those bets
34:25made mere hours
34:26before the raid was announced.
34:28In February,
34:29two Israelis
34:29were charged with using
34:30classified military information
34:31to place bets
34:32on polymarkets.
34:33And in March,
34:34this happened.
34:35Deadly American strikes,
34:37and some people
34:38may have made money
34:39from them.
34:40More than a dozen
34:41anonymous accounts
34:42placed bets predicting
34:43that the United States
34:44would strike Iran
34:45by Saturday,
34:46the 28th of February.
34:48Most of those wages
34:49were placed in the hours
34:50before the first bombs fell.
34:52And many of the accounts
34:53had been created
34:54only days earlier.
34:56One of the biggest winners
34:57used the account name
34:58Maga My Man.
35:00The trader placed
35:00$87,000 on a wall
35:02with Iran
35:03exactly 71 minutes
35:05before the first strike.
35:06Winning a jackpot
35:07worth $515,000.
35:10Yeah, that sure feels
35:12like someone
35:12with inside information
35:13was betting on Polymarket.
35:15And I'd say
35:15that it wasn't a great idea
35:17to make their username
35:18Maga My Man.
35:19Except it doesn't seem
35:20to matter anymore, does it?
35:21His username might as well
35:22have been Maga My Man.
35:23Just kidding.
35:24My name is Dylan Bathwell
35:25and I work at the Department
35:26of Defense.
35:27He's not really risking much.
35:29Now, I should say,
35:30Cauchy just announced
35:31it took action
35:32in two insider trading cases
35:34and has taken out billboards
35:35bragging that it bans
35:36insider trading
35:37and also that it
35:38doesn't offer death markets,
35:40which is a little weird.
35:42It'd be like McDonald's
35:43putting up ads
35:43that its nuggets
35:44don't contain baby meat.
35:47Okay, mama,
35:48but now I have
35:49way more questions.
35:51For its part,
35:52Polymarket recently updated
35:53its rules to clarify
35:54that users can't act
35:56on stolen confidential information,
35:58wager using illegal tips
35:59or bet if they're in a position
36:01to influence the outcome
36:02of an event.
36:02Although,
36:03it is not a great sign
36:05that just recently
36:06there was a suspicious
36:07spike in trading
36:07right before the ceasefire
36:09with Iran was announced
36:10as a group of new accounts
36:12on Polymarket
36:12made highly specific
36:14well-timed bets about it,
36:15earning hundreds of thousands
36:17of dollars.
36:18So it sure seems
36:19like right now
36:20we've effectively
36:21got gambling sites
36:22operating even in states
36:24where gambling is illegal
36:25and offering bets
36:26on things that they've been
36:27laws against for over
36:28a decade now.
36:29So, what can we do?
36:31Well, at the bare minimum,
36:32the CFTC should be doing more.
36:35And while it says
36:36it's writing new rules,
36:37I wouldn't expect much,
36:39especially for as long
36:40as this fucking guy
36:41is in charge.
36:42As I said earlier,
36:43there are a bunch of cases
36:44making their way
36:45through the courts right now,
36:46but it's not clear
36:46how they'll resolve
36:47and it's probably
36:48going to be
36:48in front of the Supreme Court.
36:50Meanwhile,
36:51Congress is considering
36:52a number of proposals
36:53tackling aspects
36:54of this issue.
36:54Although, given
36:55that the President
36:56of the United States
36:57has a kid currently advising
36:59both major companies,
37:00I wouldn't hold your breath.
37:02So, meaningful policy shifts
37:04in the near term
37:04do seem unlikely.
37:06But at some point,
37:07we do need to put in place
37:08some basic guardrails here.
37:10And until then,
37:11if we can't change
37:12how these sites operate,
37:15we should at least
37:15try and change
37:16how we individually
37:17see them.
37:18One thing that would
37:19frankly help is if
37:20news organizations
37:21stopped laundering
37:23these companies' reputations
37:24for them
37:24by putting their odds
37:25on screen
37:26like they are actual news.
37:27Because,
37:28is it a bad idea
37:29for them to be doing that?
37:30If I may quote
37:31the single loudest man
37:33in the world,
37:33Yes!
37:36Yes, exactly.
37:37I couldn't have screamed
37:39it better myself.
37:40And look,
37:41on a personal level,
37:42if you're considering
37:43using these markets
37:44to gamble,
37:45try and remember
37:46that you are statistically
37:47likely to lose money.
37:49And while I am not
37:50against gambling per se,
37:52there is something
37:52so grim
37:53about these sites
37:54turning every aspect
37:56of our lives
37:56into a bet.
37:57Because sure,
37:58money can be won on them.
38:00But in that happening,
38:01something also gets lost.
38:02Specifically,
38:03a society where things
38:04aren't only weighed
38:05in financial terms
38:06and where people
38:07engage with news
38:08for what it means
38:08to human beings,
38:10not just because
38:10they have $50
38:11riding on it.
38:12And when something
38:13unexpected happens
38:15in the world,
38:15it would be really nice
38:16not to have to
38:17automatically question
38:18whether it's only
38:19because someone
38:20is trying to move
38:21a market.
38:22That is why
38:23I'm gonna make you
38:23a promise tonight.
38:24I will never do anything
38:26because someone online
38:28placed a bet on it.
38:29So you can be confident
38:29that if I ever say
38:31Bitcoin, Ethereum,
38:32blockchain, staking
38:33and Web3,
38:34it won't be
38:35because I'm trying
38:35to move markets.
38:36It'll be
38:37because I'm having
38:38a stroke.
38:39And once you have
38:41that trust,
38:42you can feel secure
38:43in the knowledge
38:43that if a dildo
38:44ever lands on this desk,
38:46it's not because
38:47someone had a secret
38:48wager on it.
38:49It's because
38:49we weren't sure
38:50how to get out
38:51of a 32-minute segment
38:52on a quasi-legal
38:53gambling industry.
38:54But we knew
38:55that a thrown dildo
38:56in the right circumstances
38:57and with the full consent
38:59of the person
38:59having it thrown at them
39:00would be
39:02undeniably funny.
39:03And if more
39:04than one dildo
39:04lands,
39:05it's only because
39:06a fundamental rule
39:08of comedy is
39:08more dildos
39:10is more funny.
39:11And if it turns out
39:12there are too many dildos
39:13flying through the air,
39:14I promise
39:15it will only be because
39:16we didn't know
39:17how many to buy
39:18and now we're
39:19sort of screwed
39:20because I don't think
39:21you're allowed
39:22to return them.
39:23That is our show.
39:24Thank you so much
39:25for watching.
39:26See you next week.
39:27Good night.
39:28This is...
39:29This is just
39:30too many dildos.
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