00:00According to an analysis by Citizens, traders on prediction markets fare worse than traditional
00:04sports bettors on increasingly popular multi-leg wagers. Here to report on the story is Bloomberg's
00:11Ira Boudwe. Ira, the multi-leg versus parlay, people might know parlay from a traditional
00:17platform. What did the Citizens Report find when it comes to prediction markets versus the
00:22traditional players? They found that on these parlay style, the prediction markets call them
00:28combos or combination trades where you have a series of linked outcomes, who's going to win,
00:35what the final total points might be, how an individual player is going to perform, and they
00:38all have to hit for you to win the bet. On the traditional sports books from October of last
00:45year to the end of May, you typically saw 12% losses, right? For a median user, if you had
00:52a
00:52$100 wallet, you lost $12 over that period on parlays. On prediction markets, doing combos,
00:59same period, losses were 18%. So if you had a $100 wallet, you lost 18 bucks. So in this study,
01:05in this cohort, they're faring worse on prediction markets than they are on traditional sports betting
01:11apps. Yeah. And to be clear, both of those options show negative returns. So people are not making
01:15money. They might be having a lot of fun going about it, though. Ira, how are combination trades
01:20on prediction markets different than the parlays through those traditional platforms?
01:26The main difference is that on a parlay, like with any bet on a sports betting app,
01:30the house is taking the other side of the bet. They're setting the odds, and they are taking the
01:35other side of the wager. On prediction markets, they are matching up peers. And so the way they've
01:40managed to introduce parlay style trades or combos is by a request for quote process where you put in
01:47the four legs you want, and then somebody else on the other side instantly prices that out and offers
01:53you a wage or offers you a price on that. And so in order to do this RFQ, anybody on
02:01the platform
02:01theoretically can do it. But you really need some ability to price instantly, ability to pay out if
02:08you do lose and somebody hits big, and an ability to have the right software set up, right? So it's
02:15not
02:15a thing that typical retail traders are doing. It tends to be institutional users and market makers
02:21who are taking the other side of these combo trades, which is why, according to the citizen's analysis,
02:28you are seeing poor economics for the typical retail user, because on the other side of these
02:36combo trades slash parlays are often Wall Street firms, trading firms, very sophisticated actors
02:43on the platforms who are capable of doing these RFQs instantly and offering a price.
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