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Last Week Tonight with John Oliver - Season 13 - Episode 08 EngSub
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00:01I
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 Live 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,
01:21while we are stuck with this beefy creep,
01:23who just this week we learned once cut the penis
01:26off a roadkill's wacoo.
01:27As a purely vibes-based match-up, we have lost heavily.
01:32Meanwhile, our tentative ceasefire with Iran
01:34seems to be holding so far, though, as of taping,
01:36the Strait of Hormuz remains in chaos,
01:38with dueling blockades from the US and Iran
01:39causing widespread confusion.
01:41Even the Pope has now seemed to criticize the war,
01:44saying, quote,
01:51It was one of a series of statements that made Trump lose his shit.
01:56First, he posted this screed, which began with,
01:59which, 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
02:15and Herzegovina on a map.
02:16Her job is to eat garbage, hang upside down,
02:19and by this evidence, fuck.
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
02:32his social media post of this AI-generated image
02:35that depicts him as Jesus Christ.
02:38I did post it, and I thought it was me as a doctor,
02:41and had to do with Red Cross as a Red Cross worker there,
02:44which we support.
02:45Oh, that makes sense.
02:46A doctor.
02:48You know how when you go to the doctor,
02:49and 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
03:05was J.D. Vance, who 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
03:14on 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
03:24of those who wield the sword,
03:25there is a thousand year,
03:27more than a thousand year tradition of just war theory, okay?
03:31Now, we can, of course, have disagreements
03:33about whether this or that conflict is just,
03:35but I think that it's important,
03:37in the same way that it's important
03:38for the Vice President of the United States
03:39to be careful when 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
03:53to the Pope, which is objectively crazy.
03:56It'd be like me explaining to J.D. Vance
03:59where 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.
04:08I'm out of my lane there.
04:09Also, be careful.
04:12The 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
04:19for 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 swing.
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 ships that seems physically possible.
05:36The point is, Trump seems to be on an epic run
05:38of picking losing fights, and whatever air of invincibility
05:41he 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
06:01try to pronounce their ballpark's new snack.
06:04The team unveiled a slew of new food options
06:06available at PNC Park.
06:08Some of the new food items include the boracua dog.
06:12The boracua dog brings a bit of Puerto Rican flavor.
06:17A borquia dog.
06:18This is a Puerto Rican-inspired hot dog.
06:22Then there's the boracua dog.
06:25The boracua dog.
06:28The boracua dog.
06:31Boracua dog.
06:33They include a boracua dog.
06:36This is this Puerto Rican-inspired hot dog
06:37here with a Pittsburgh twist.
06:43Moving on.
06:44Our main story tonight concerns prediction markets,
06:47the fast-growing platforms where you can bet on
06:49basically anything, as 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
07:01that sells 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,
07:08I bet that it would rain and it did so I won money.
07:10I bet that Justin Bieber will go to the Diddy trial.
07:13When I was in Chicago,
07:14I bet on the temperature and won.
07:15Okay, shout out to that guy, Caden Booth,
07:18for having such a diverse set of interests.
07:20The first half of his bets are strictly Gen Z boy,
07:23Grand Theft Auto, Young Thug, Xen, Rogan,
07:25but the back half is 100% suburban mom.
07:29Potential rain, the temperature,
07:30grizzly celebrity trials.
07:32Cade, you contain multitudes.
07:35Prediction markets are basically platforms where you can wager
07:38on the outcome of future events.
07:39The companies decide on the questions to list,
07:42and right now, you can wager on anything from
07:44will traffic in the Strait of Hormuz return to normal
07:46by 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,
07:59or seen ads,
08:00or stumbled across influencers like this guy,
08:02who is constantly updating his followers
08:04on how his various wages about the Trump administration
08:06are going.
08:07And I'll warn you, it's a real rollercoaster.
08:10China question, please!
08:13High-end video chips to China,
08:15but 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,
08:21that'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!
08:33Getting rich, Chuck, 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
08:48that Trump's name was redacted from the Epstein files,
08:50for a completely different reason than the rest of them.
08:53The point is, a lot of people are getting into prediction markets,
08:57thanks in part to an aggressive marketing push
08:59by the two big players in this space,
09:01Cauchy and Polymarket.
09:03Cauchy recently locked in a $22 billion valuation
09:05from investors, doubling its valuation
09:07from just a few months earlier,
09:09and Polymarket's currently trying to do the same.
09:12Meanwhile, dozens of new entrants,
09:13like Coinbase, Robinhood, and even Truth Social,
09:16are also trying to get in on the action.
09:18It is shocking the extent to which prediction markets
09:21have proliferated, and sometimes,
09:22it's been a little unnerving given the things
09:25that you can now bet on.
09:28Ali Khamenei out as supreme leader of Iran?
09:31Will Nancy Guthrie's kidnapper be arrested
09:33by the end of February?
09:36Those are just two events offered on popular prediction markets
09:40in the U.S. over the last couple of weeks,
09:42where people could have put their money down,
09:45betting on the outcome.
09:46There's a lot of bad stuff going on in the world,
09:48and being able to bet on just, like, horrible things like that,
09:52like, when somebody's gonna be found?
09:54Like, that's not...
09:56That's really dark to me.
09:58Yeah, he's right.
09:59The impulse to try and make money betting on war
10:02or an unfolding tragedy is really dark.
10:04When someone dies, you're supposed to send their family
10:07a card that says, sorry for your loss,
10:09and 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
10:17at prediction markets and try to answer a few questions
10:20that you might 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
10:30of prediction markets on news events is nothing new.
10:34In the late 80s, economists at the University of Iowa
10:36created the Iowa Electronic Markets as an experiment,
10:39allowing students and faculty to buy and sell predictions
10:41about upcoming elections.
10:43And interestingly, they began to outperform many leading polls.
10:47The theory was that the wisdom of crowds
10:49in 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.
10:59After 9-11, the Pentagon actually flirted with creating a market
11:02where 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
11:10found out about it and voiced their disgust.
11:13This betting parlor on the internet will include wagers,
11:16for example, as the examples on the internet site
11:20put up by the Department of Defense would include,
11:22will, uh, Mr. Arafat be assassinated?
11:25Uh, will there be missile attacks from North Korea?
11:29Will the King of Jordan be overthrown?
11:31Just as an example.
11:32I think this is unbelievably stupid.
11:35It's not only, it is, well, that is a gentle thing to say
11:38about 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
11:48on geopolitical events that would affect millions of lives.
11:52As we all know, the only groups the society's decided
11:55are allowed to profit from instability are military contractors,
11:58members of the Trump family, and the Mormon wives.
12:01Whitney joined the cast of Chicago on Broadway,
12:04and 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
12:15seemed beyond the pale, but everything started changing
12:18a few years ago when Cauchy and Polymarket launched as startups,
12:21opening the door to the free-for-all that we have now.
12:24Initially, Cauchy sought regulatory approval,
12:27and in 2020, it was approved as the first regulated exchange.
12:30But Polymarket went a different way, launching without approval
12:34and seeming to be comfortable working outside the rules.
12:36The government actually accused Polymarket
12:38of 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,
12:47while admitting no wrongdoing.
12:48And it is worth watching Polymarket's CEO, Shane Copeland,
12:51try to spin that penalty.
12:53It was a 1.4 million dollar fine, and also...
12:56It was a settlement.
12:56And you could not have customers in the United States.
13:00Yeah, we had to go and geoblock trading in the US,
13:02and move certain operations offshore,
13:03and it wasn't, hey, you're banned from trading in the US,
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,
13:31given, you know, you paid a 1.4 million dollar penalty.
13:34Regulators weren't just like,
13:36shit, he just asked which law?
13:37Oh, uh, the Chinese Exclusion Act of 1882?
13:42From the start, Polymarket took an extremely libertarian approach,
13:45allowing users to use crypto to bet anonymously
13:47on things like war.
13:49And while it's currently rolling out a new app to US 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 is still done on Polymarket's
14:01international version, which 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,
14:14using 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's stabbing himself in the stomach
14:28with a pencil, because that's exactly what trying to write
14:30that letter makes you want to fucking do.
14:33But regardless of how these companies got to this point,
14:37both enjoyed a huge surge of attention
14:39about a year and a half ago after this happened.
14:42Kelshi 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 Kelshi,
14:54which called the race well before the TV networks did.
14:58It was like Kelshi, then Fox, then CNN.
15:01How did that feel?
15:03It was crazy.
15:04Yeah, Kelshi 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 Titino's Pizza Rolls commercial-looking motherfuckers
15:26I have ever seen in my life.
15:29Anyway, since then, they've both been scrambling
15:32for market dominance, which is why Kelshi, 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.
15:49How many hurricanes do you think we'll have this year?
15:53Kelshi! Kelshi!
15:55Kelshi!
15:56Kelshi lets you legally trade on anything,
15:59anywhere in the US.
16:00OKC!
16:01Indeed!
16:03OKC!
16:03Kelshi!
16:06OK, that visual cacophony is an AI slop atrocity.
16:11It contained two alligators, four shirtless or nearly shirtless
16:14old guys, one egg freak, three different people being pursued
16:17by the police, one woman I'm kind of rooting for,
16:20one USDA inspector's 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, Kelshi.
16:35And again, that is the one that likes to present itself
16:38as the more button-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 Kelshi 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 Kelshi'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 a student loan.
17:39And that's why this is very important.
17:41Right, apparently, 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 with a company
17:49that advertises itself with 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,
18:07if I bet on the next winner of the masked singer,
18:10or whether or not Mr. Beast will say Feastable.
18:13And when you watch some of Kelshi's actual customers in action,
18:16the notion that this is about sober risk management
18:19feels 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 Joke...
18:29Yes!
18:31Let's go.
18:32Bang!
18:33There we go.
18:34Bang!
18:35Number one, Sleepy Joke.
18:36That's it. We'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...
18:46Wait, wait, wait!
18:47Transgender...
18:48Hey!
18:50Hey!
18:51We are off to a risk.
18:53Yeah, we hit on that shit immediately, yo.
18:55Sleepy Joke transgender.
18:56We got Sleepy Joke transgender in like the first five minutes, bro.
19:00Bro, we're up like 500 bucks.
19:02We gotta make 1,000.
19:03Yeah, we gotta make 1,000.
19:04Okay, all right, all right.
19:05Under the way we...
19:06I know...
19:07I couldn't even tell you what the this man is saying.
19:10Like, he just says a soup of random words.
19:12Somehow Joel is just deciphering this and just making money.
19:16Yeah, that is not using a financial instrument to hedge risk.
19:21It's taking advantage of a sundowning geriatrics rapidly 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 is being divorced from its actual meaning.
19:39But two, because that's not what these bros are supposed to be doing.
19:43They shouldn't be betting on Trump speeches.
19:45They should be sitting on that same couch and watching YouTube highlight reels of
19:49Kevin Love outlet passes, six modellos in, forging a deep, beautiful friendship that
19:53will last for 40 years and 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 markets like that get a lot of attention,
20:08around 90% of trading volume on Cauchy is on sports.
20:12But you can see why these companies are so insistent that they are not gambling sites.
20:18Just 39 states, DC and Puerto Rico have some form of legalized sports betting.
20:23With only 32 of those allowing online gambling, leaving some pretty attractive mega states
20:27like California and Texas on the table.
20:31And by insisting they are financial exchanges offering not bets, but event contracts,
20:36prediction markets are not only able to operate in states where gambling isn't legal,
20:40but also get around state taxes and minimum age requirements in states where it is.
20:46And they've sometimes talked out of both sides of their mouth on this,
20:49because in ads like this one, Cauchy's called itself,
20:51the first nationwide legal sports betting platform.
20:55But, when asked about it, it later tried to qualify that statement saying,
20:58the bet language is only used in the sense that any financial position
21:02can be considered a bet on the future.
21:05And that is so dumb, it is almost charming.
21:08It's like seeing a sign outside a strip club that 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 that they are not gambling platforms
21:26is actually one of the two most irritating claims that they tend to make.
21:29The other is that they're actually incredibly important to society,
21:33because they can help us more accurately predict the future.
21:37The head of Polymarkets even called it
21:38the most accurate thing we have as mankind right now,
21:41and has bragged that the predictions it generates can save lives.
21:45When I get hit up by people in the Middle East who are saying that,
21:51hey, you know, we're looking at Polymark to decide whether 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 every day?
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.
22:06That's like a, you know, an undeniable value proposition that did not exist before.
22:12Hey, quick question.
22:14What exact stage of capitalism are we in when the child CEO of an offshore gambling platform
22:19refers to betting odds on bombings as an undeniable value proposition?
22:23Because it feels like we're in palliative care at this point.
22:27But I guess that is the point you reach when you're a 27-year-old billionaire surrounded by
22:31yes-men who will never tell you the truth.
22:33Something I know for sure because no one in his life told him never to ever wear that jacket.
22:39Which, when he is sitting like that, unmistakably says, peed rider.
22:43Though, for all the talk of these sites' unparalleled accuracy, you should know
22:47that's a bit of an oversell.
22:49They have shown promise in some areas. A recent paper found Cauchy's predictions were
22:53roughly consistent with those of professional forecasters when it came to the economy
22:57and Federal Reserve policy, but they've also had some big misses.
23:02For instance, both favored the Chiefs to win last year's Super Bowl,
23:05and also whiffed the recent Texas Republican Senate primary,
23:09with Polymarket even posting a breaking alert that morning,
23:12announcing Ken Paxton was projected to win,
23:14with their odds giving him an 83% chance, and you know, he didn't do that.
23:19And look, all of that would be fine.
23:21These are just odds, and real life can defy odds, were it not for the fact
23:26that these companies are actively selling themselves as basically oracles.
23:30And they've even tried to bolster that reputation
23:33by entering paid partnership deals with news organizations.
23:37Dow Jones, parent company of the Wall Street Journal, announced a partnership with Polymarket
23:42earlier this year, while CNN, CNBC, and Fox News all signed deals with Cauchy,
23:47which even sponsors segments on CNN that feature Cauchy's odds on various future events,
23:53strolling across the bottom of the screen.
23:55And I do not want the CNN ticker to have betting odds on news events.
24:00I don't really want anything on there, except maybe the odd,
24:03distractingly weird headline that takes my mind off things for a second.
24:06You know, something like,
24:07Giraffe escapes from zoo, please say it has a gun.
24:10You know, something fun to Google later.
24:14But having their logo like that on CNN is a big win for Cauchy,
24:20just as it's a big win for them to have influencers like that guy from earlier,
24:24saying how easy it is to win money.
24:26Though you should know, after we asked, Cauchy told us that they paid him for that post.
24:31And it feels like deals like those should really be more transparent.
24:34It makes me a little annoyed, and to be honest, even more hungry.
24:37And you know, when I need something nutritious, yet in a can, I know where to turn.
24:42Bush's baked beans.
24:45But full disclosure, I was paid $40 to say that.
24:49Thing is, it's worth knowing that in reality, as with sportsbooks,
24:53researchers have found that most users of Cauchy and Polymarket lose money.
24:58As we've discussed before, casual gamblers are always going to be easy prey
25:03for more sophisticated operators with advanced systems to give them an edge,
25:07which is probably why.
25:08While Polymarket has more than two million users,
25:11one analysis found more than two-thirds of all money won on it
25:15was held by just 740 accounts.
25:18And if you're thinking, how exactly are these companies getting away with all this?
25:23Well, a lot has to do with who is in the White House right now.
25:27Both companies have fostered strong connections with the Trump family.
25:30In fact, Don Jr. is both an investor in and an unpaid advisor to Polymarket,
25:34and a paid advisor to Cauchy.
25:36And look, I am not saying that Don Jr. isn't providing important or valuable insights.
25:42Although, in a much truer sense, I very much am saying that.
25:46I'm just saying, it's notable just how hard it was for Cauchy's CEO
25:50to answer a series of basic questions about Don Jr.'s role.
25:54Why did you guys make Donald Trump Jr. a strategic advisor?
25:58We have a lot of advisors, um, and they span across the board, across different functions.
26:05Um, but really, this is all about growing this industry,
26:09the prediction market industry that a lot of people really believe in.
26:12What kind of advice does he give you?
26:14So, it really is, again, about growing prediction markets.
26:17You know, he believes in prediction markets, we believe in prediction markets.
26:20A lot of people believe in prediction markets, and it's really about go-to-market and expansion plans.
26:24Does he come to meetings? How much do you pay him?
26:27What's his role? I mean, this is the son of the president.
26:30We, again, I mean, we have a lot of advisors, and whether it's our investors,
26:33whether it's, uh, people that we really trust and respect, whether people...
26:36He's not just any advisor. He has a direct line to the White House.
26:41We have a lot of advisors.
26:43Yeah! Turns out, it's pretty hard to justify hiring a Nepo baby, or,
26:48in Don Jr.'s case, a Nepo divorced dad. But the thing is, if hiring Don Jr.
26:54helped get these companies on Trump's good side, it's a bet that's paid off
26:56massively for them. Because while the Biden administration
26:59had at least tried to rein in some of what these markets were doing,
27:02the Trump administration has gone hard in the other direction.
27:06And to understand the degree to which that's the case,
27:08take a look at the CFTC, or Commodity Futures Trading Commission.
27:12It regulates these platforms. It was actually empowered,
27:14under the Dodd-Frank Act in 2010, to block event contracts
27:18about terrorism, assassination, war, and gaming.
27:21You know, a bunch of what you've seen so far tonight.
27:24But it is clearly not doing that, and it doesn't even seem to be trying.
27:28In fact, while the CFTC is supposed to be comprised of five commissioners,
27:32two of whom are required to belong to the minority party,
27:35it currently only has this guy, Michael Selig, a Trump appointee,
27:39who's a massive cheerleader for this industry.
27:42He completely buys into their whole,
27:44this is all about hedging risk argument, to the point that he once suggested
27:48that somebody with a medical condition could manage the potential risk
27:51of having a future treatment or medical costs,
27:53by placing a bet on the likelihood of something passing a drug trial.
27:57Which is, and I don't say this lightly, one of the most fucked up suggestions
28:01I have ever heard for this country's Guernica-ass healthcare system.
28:06And while Selig's recently made noises about stronger enforcement,
28:09it is hard to take him at his word, given that during his confirmation hearings,
28:13he told Congress he'd let courts decide whether these companies constitute gambling.
28:18But in office, he's done the exact opposite of that.
28:21In fact, more than a dozen states are currently suing prediction markets,
28:24but rather than let that play out in the courts, like he promised,
28:29Selig posted this video.
28:31To those who seek to challenge our authority in this space,
28:35let me be clear, we will see you in court.
28:39What a fucking weasel.
28:42That guy has both the energy and fashion sense of a suits villain,
28:47who goes toe-to-toe with Harvey and Mike all season long,
28:49while Lewis and Meghan Markle, I don't care what you say,
28:51that's a character named to me, watch on.
28:54But he's done more than just threaten.
28:56Selig's let his agency to sue three states,
28:59to get them to back off trying to regulate prediction markets.
29:02So right now, these companies are able to operate under extremely friendly conditions.
29:07And given that, it's worth looking at some of the problems that have already begun to emerge.
29:11Starting with the fact that, for a lot of these bets, it is incredibly easy for individuals to manipulate the
29:17outcomes.
29:17Some have even joked about that.
29:19For instance, on a recent earnings call, the CEO of Coinbase said this.
29:22I was a little distracted, because I was tracking the prediction market about what Coinbase will say on their next
29:27earnings call,
29:28and I just want to, you know, add here the words Bitcoin, Ethereum, Blockchain, Staking,
29:35and Web3, to make sure we get those in before the end of the call.
29:39Yeah, he saw people's bets online and just rattled off words that they'd bet on him saying.
29:44And it really feels like manipulating betting outcomes should be more difficult than that.
29:49In the old days, you at least had to sneak cocaine to a racehorse,
29:53not just rattle off a list of the most punchable words in the English language.
29:58We even realized while researching this piece that there was betting happening around this show,
30:03specifically on what words I'd say during our show on February 22nd,
30:07which is stupid for multiple reasons, including that we tape on Saturday in front of a studio audience,
30:14all of whom would then have a massive information advantage and more than 24 hours before the betting window closed.
30:21Now, thankfully, we wipe every audience member's memory before we let them out of the taping.
30:27We try to erase only the last couple of hours, but sometimes we do wipe clean a milestone birthday.
30:32That's on us, and we're constantly calibrating the technology.
30:35You've been warned. You won't remember, but you've been warned.
30:39And there are markets where it is way too easy for anyone to manipulate outcomes.
30:44Just last summer, you might remember a bunch of assholes started throwing dildos on the court
30:49during WNBA games to promote a crypto meme coin.
30:52And if that wasn't already a cursed enough sentence,
30:56I'll let this South African man fill you in on what happened next.
30:59Did you know you can actually bet on whether a dildo will be thrown at the WNBA game on August
31:079th,
31:08August 11th, that's today, and August 12th, right here on potting market?
31:15I had no idea. Actually, I had no idea what the WNBA was either until, you know,
31:22you could place a bet on whether a dildo would be thrown at it.
31:25Yeah, none of that is great. And it is pretty depressing that the way he learned about the
31:30existence of the WNBA was finding out you could bet on whether a dildo would be thrown at one of
31:35its games. It'd be like finding out about the existence of Robert De Niro by googling
31:39the cast of Dirty Grandpa. Oh, no. No, not like this. Don't learn about him like this.
31:47But it is true. People started betting whether dildos would be thrown again,
31:52and Polymarket even put up this tweet promoting the bets. And sure enough, more dildos got thrown.
31:59And that could well have been because Polymarket had just created a situation where you could
32:03easily make money by betting someone would throw a dildo and then go into a game with a dildo
32:09and throwing it. There have also been multiple instances of people seeming to use inside
32:14information to gain these markets. Last year, a trader made over a million dollars with a series
32:19of accurate bets about Google's rankings of its most searched people of 2025. That same person,
32:24by the way, had also earned over $150,000 by correctly predicting the exact release date
32:30of Google's Gemini 3 model, which really makes you think that that person either worked for Google,
32:35or knew someone who did, or maybe managed to hack Google from the outside. In which case,
32:42would it kill you to do a Google doodle for my birthday? It is on Thursday, by the way.
32:47And Polymarket's CEO has in the past openly celebrated the fact that this kind of thing
32:51can happen on his platform, because he's argued it just makes its prediction abilities that much stronger.
32:58What do you guys do, if anything, to basically guard against insider trading?
33:02Yeah, so it goes back to this idea of information markets, right? Like, you think about when will
33:10Gemini 3 launch. Nobody is under the impression that nobody knows the answer, right? Like, of course,
33:16there's people who are working on it who know when it's going to come. And I think what's cool about
33:21Polymarket is that it creates this financial incentive for people to go and divulge the information to the
33:26market, and the market to change, and all of a sudden it's trading at 95 cents, and people are like,
33:30I mean, you think, when you say divulge, you mean the people who actually know?
33:33Yeah, or someone tells someone, and then the market responds.
33:36Yeah, he basically just answered the question, how do you guard against insider trading there?
33:41With no. And he did it with a fashion choice somehow even worse than his biker jacket,
33:47because what in the NYU army fatigues is that shit? That sweater looks like it was made from
33:54illegally poached grimace. But also, I don't care how many statement sweaters you wear, or how many
34:00Ben Platt in Dear Evan Hansen haircuts you have, you're not describing some edgy chill way to
34:06divulge information to the market, you're describing insider trading. And it gets genuinely chilling
34:11when you realize that people seem to be using insider info to bet on life or death events. In January,
34:18after the U.S. seized Nicolas Maduro, an anonymous trader pocketed more than $400,000 off bets that
34:23that would happen, with the bulk of those bets made mere hours before the raid was announced. In February,
34:29two Israelis were charged with using classified military information to place bets on Polymarket,
34:33and in March, this happened.
34:35Deadly American strikes, and some people may have made money from them.
34:40More than a dozen anonymous accounts placed bets predicting that the United States would strike
34:45Iran by Saturday, the 28th of February. Most of those wages were placed in the hours before the
34:51first bombs fell. And many of the accounts had been created only days earlier. One of the biggest
34:57winners used the account name Maga My Man. The trader placed $87,000 on a wall with Iran exactly 71
35:04minutes before the first strike, winning a jackpot worth $515,000.
35:10Yeah, that sure feels like someone with insider information was betting on Polymarket,
35:15and I'd say that it wasn't a great idea to make their username Maga My Man,
35:19except it doesn't seem to matter anymore, does it? His username might as well have been,
35:23Maga My Man, just kidding, my name is Dylan Bathwell, and I work at the Department of Defense.
35:27He's not really risking much. Now, I should say, Cauchy just announced it took action in two
35:33insider trading cases, and has taken out billboards bragging that it bans insider trading,
35:37and also that it doesn't offer death markets, which is a little weird. It'd be like McDonald's
35:43putting up ads that its nuggets don't contain baby meat.
35:47Okay, mama, but now I have way more questions.
35:51For its part, Polymarket recently updated its rules to clarify that users
35:55can't act on stolen confidential information, wager using illegal tips,
35:59or bet if they're in a position to influence the outcome of an event.
36:02Although, it is not a great sign that just recently, there was a suspicious spike in trading,
36:08right before the ceasefire with Iran was announced, as a group of new accounts on Polymarket made
36:13highly specific, well-timed bets about it, earning hundreds of thousands of dollars.
36:18So it sure seems like right now, we've effectively got gambling sites operating,
36:23even in states where gambling is illegal, and offering bets on things that they've
36:27been laws against for over a decade now. So, what can we do? Well, at the bare minimum,
36:32the CFTC should be doing more. And while it says it's writing new rules,
36:37I wouldn't expect much, especially for as long as this fucking guy is in charge.
36:42As I said earlier, there are a bunch of cases making their way through the courts right now,
36:46but it's not clear how they'll resolve, and it's probably going to be in front of the Supreme Court.
36:50Meanwhile, Congress is considering a number of proposals tackling aspects of this issue,
36:54although, given that the President of the United States has a kid currently advising both major
36:59companies, I wouldn't hold your breath. So, meaningful policy shifts in the near term
37:04do seem unlikely, but at some point, we do need to put in place some basic guardrails here.
37:10And until then, if we can't change how these sites operate, we should at least try and change
37:16how we individually see them. One thing that would, frankly, help is if news organizations
37:21stopped laundering these companies' reputations for them by putting their odds on screen like they
37:27are actual news, because is it a bad idea for them to be doing that? If I may quote the
37:31single loudest man in the world.
37:33Yes, exactly. I couldn't have screamed it better myself.
37:40And look, on a personal level, if you're considering using these markets to gamble,
37:45try and remember that you are statistically likely to lose money.
37:49And while I am not against gambling per se, there is something so grim
37:53about these sites turning every aspect of our lives into a bet, because sure,
37:58money can be won on them. But in that happening, something also gets lost.
38:03Specifically, a society where things aren't only weighed in financial terms,
38:06and where people engage with news for what it means to human beings,
38:10not just because they have $50 riding on it. And when something unexpected happens in the
38:15world, it would be really nice not to have to automatically question whether it's only
38:19because someone is trying to move a market. That is why I'm going to make you a promise tonight.
38:24I will never do anything because someone online placed a bet on it.
38:29So you can be confident that if I ever say Bitcoin, Ethereum, Blockchain, Staking and Web3,
38:34it won't be because I'm trying to move markets. It'll be because I'm having a stroke.
38:39And once you have that trust, you can feel secure in the knowledge that if a dildo
38:44ever lands on this desk, it's not because someone had a secret wager on it. It's because
38:49we weren't sure how to get out of a 32-minute segment on a quasi-legal gambling industry,
38:54but we knew that a thrown dildo in the right circumstances, and with the full consent of
38:59the person having it thrown at them, would be undeniably funny. And if more than one dildo
39:04lands, it's only because a fundamental rule of comedy is, more dildos is more funny.
39:11And if it turns out there are too many dildos flying through the air, I promise it will only
39:16be because we didn't know how many to buy, and now we're sort of screwed, because I don't
39:21think you're allowed to return them. That is our show. Thank you so much for watching.
39:26See you next week. Good night. This is, this is just too many dildos.
39:32This is just too many dildos.
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