00:00I want to start off with a political question here, and I want to start with some comments that we
00:05recently got from President Trump talking about prediction markets last week, saying that the whole world, unfortunately, has become somewhat
00:13of a casino.
00:14You look at what's going on all over the world, in Europe and in every place, they're doing these betting
00:18things.
00:19I was never much in favor of it. I don't like it conceptually.
00:23And I wonder, you know, when you think about those comments, how you see the political landscape sort of evolving
00:29as prediction markets just become more and more ubiquitous in our society.
00:34So I think President Trump really cares about the little guy. He doesn't want to see the little guy get
00:39hurt.
00:40And the wonderful thing about these markets is that they are truly markets and they are not casinos.
00:46You're not taking a side against the House. The House isn't setting the odds.
00:49The revenue of the company isn't equal to the customer's losses.
00:53These are peer-to-peer trading venues where the information provides real-world value and real-world hedging opportunities to
01:01businesses, entities and individuals in a new way.
01:03Well, I hear what you're saying, and certainly that is the grand hope for these prediction markets.
01:08But you think about right now, I think 90 percent of your volume is sports right now.
01:13So how do you sort of boost the share of some of those more economically valuable markets on CalShift?
01:21Sure. Actually, the volume of sports has come down from about 90 to 70 percent.
01:26And I think just the popularity of sports and the frequency of sporting events contributes to that.
01:33I think as we get closer to the election cycle, we'll see that category significantly increase.
01:39But obviously, people engage with markets when they feel like they have an edge.
01:43And these are markets where individuals actually do feel like they have an edge and do have an edge over
01:49big Wall Street firms like they don't do in the stock market.
01:52I am curious, though, particularly on the sports side.
01:54And obviously, you have this weird situation where obviously primarily regulated by the states,
01:58but you have CalShift kind of able to operate outside of that under, you know, to a certain degree under
02:03federal jurisdiction.
02:04The states complain. They say, OK, we're losing six hundred, you know, whatever billion dollars in tax revenue off of
02:09this because of that competition.
02:12Where do we get some sort of equilibrium in the way that a traditional sports book is treated and the
02:17way a CalShift or another prediction market is treated?
02:20So I think both models can coexist.
02:22I mean, CalShift is a federally regulated derivatives market underneath the purview of the CFTC, the derivatives regulator that's been
02:29around for 50 years.
02:31Sports books and casinos can operate at a state level if they're legally allowed to.
02:36And, you know, but but individuals are free to engage in a federally regulated marketplace.
02:41And I think what we've seen is that the revenues of both have gone up.
02:46The trading activity in both the marketplace and the betting activity in casinos has gone up.
02:52So I don't think it's really a zero sum game.
02:53But so you would be OK. I mean, I know you're not at CFTC anymore, but you think regulators would
02:57be OK if Flutter, if DraftKings or one of those companies just started a prediction market under the purview of
03:04the federal regulations as under CFTC without any regard for the state regulations?
03:09Actually, they are. DraftKings and FanDuel are already doing this.
03:13And but I fundamentally think it's a different model.
03:16Again, it's a marketplace. These are exchange operators.
03:18They're bringing people together to trade. You're not you're not betting against the house where customers losses equal revenues for
03:25the company.
03:26I do want to talk a little bit more about, you know, the idea of bringing in more institutional investors
03:32and users onto Colesheet,
03:34because there's a lot of interesting use cases there when you think about hedging, some of which you mentioned.
03:39But at this point, I mean, how much of that is a thought exercise versus, you know, something that's actually
03:44happening on your platform?
03:45What is the breakdown roughly when it comes to the, you know, the institutional side of things versus some of
03:51these retail players?
03:52Well, the institutional side's grown a lot. It's actually grown 8x since November.
03:56So we're seeing big players, hedge funds, insurance companies come into this space and use these markets.
04:02But another really fascinating thing is that out of all of the users that have accounts that we have, that
04:08Calci has, 70 percent don't trade.
04:11They come in to just look at the information, to gain insight into what's going on in the world and
04:16what those market probabilities are,
04:17to incorporate into their decision making, to understand whether or not now's a good time to buy a second home,
04:23to finance a car, to take a vacation.
04:26This is really a new information economy that's being built.
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