Keep Quiet
"A fool risks his house to test the wind’s temper.” ~ Ralph Waldo Emerson
My unsolicited advice for prediction markets remains the same: Let sleeping dogs lie. As Ralph Waldo Emerson put it: “A fool risks his house to test the wind’s temper.”
Whether or not sports contracts are permissible on prediction markets is something the courts will decide. Unless you (repeatedly) do something dumb and the issue gets settled by the only other entity that has the authority to step in: Congress.
From the banal:
To the head-scratching:
To the very serious:
And while the adage ‘you can’t please all the people all of the time,’ is certainly true, your goal shouldn’t be to piss off all of the people all of the time. Because that’s when you’ll get a reaction from people who can make your life a living hell.
As I said in a previous entry many months ago, there’s a simple solution: stop talking:
“My advice to Kalshi would be to stop talking in the court of public opinion. Save your arguments for the courts of law — and let your high-priced legal team do the talking, because what is coming out of Kalshi isn’t landing, and if it has any impact on the cases (or future actions), it will be negative.
“As Mike McDermott (Matt Damon) tells Worm (Edward Norton) in Rounders, ‘All I said is just keep your mouth shut for like five seconds.’”
Run your mouth long enough and eventually someone will see if your bark has any bite.
Confidence or Arrogance
Six months ago I would have told you that sports contracts have a 0.1% chance of being authorized by Congress, and a 0.1% chance of being restricted/prohibited. Now I would put those odds at 0.1% and 5% (given the number of Congressional letters and bills on prediction markets), and the reason is something I’ve written about in the past on a variety of different topics: Hubris.
Here:
“I recently analogized these types of statements (and many others, like markets for everything and trying to pass off parlays as combos) as a form of seppuku. Rather than forward-looking statements with the usual caveats, prediction markets are propping themselves up as an all-or-nothing product. There’s no humility, only hubris, setting up a showdown where prediction markets will either become the next Shogun or avoid dishonor by committing seppuku…
Here:
The danger lies in hubris. The overconfidence that turns a smart risk into a reckless gamble. Not every (seeming) edge needs to be exploited; sometimes folding is the ultimate win, even when you might have an edge.
And Here:
Mansour went on to say that the cease-and-desist letters sent by Nevada and New Jersey “undermine the foundation of U.S. financial markets,” and that Kalshi has tried to “educate” these regulators on “how critical they [prediction markets] are… but our words fell on deaf ears.”
STTP Thought: Hubris level unlocked. I get this is a fight, but speaking so patronizingly to significant regulatory bodies doesn’t seem like the wisest choice unless you think you are a lock to win and are willing to go scorched earth.
This Is Not Clear Cut; In Either Direction
What we have is a 50/50 issue (or 60/40; 40/60): Do sports contracts belong on prediction markets?
But instead of responding to criticism with ‘we are eager to make our case in court,’ we are being told (over and over) that their legality, which seems incredible when you think about it, is an airtight case by “hoodie-wearing crypto bros,” as American Gaming Association (AGA) President and CEO Bill Miller called them on my podcast.
Prediction market cheerleaders will tell you that anyone who thinks Congress didn’t legalize nationwide sports betting under the Commodity Futures Trading Commission oversight (overseen by the Senate Agriculture Committee) in a 2008 financial law is clearly ignorant and anti-tech, even if they happen to be tech entrepreneurs like Rainmaker Technology CEO Augustus Doricko.
We are supposed to believe that the 2018 PASPA case decided at the Supreme Court should have been deemed a moot ruling.
Well, I’m here to tell prediction market advocates that a lot of people, including people in power, think differently. Some for valid reasons, and many more because they hate gambling, especially gambling that isn’t benefiting government services.
A Growing List of Critics
When you have the Religious Right on the same side as the AGA and Elizabeth Warren and the Gov. of Utah in lockstep, ‘Ya done messed up A-A-Ron!’ (Second Mr. Garvey reference in as many weeks!)
Now toss in pretty much every state in the country (gambling and non-gambling), tribes, and a growing list of national political figures, and my original advice makes a whole lot of sense: Stop trying to fight this battle in public, where you will lose, and let it play out in the courts.
You are not going to beat weekly stories like this:
You are not going to win by having influencers (and your own platform on occasion) tweeting out fake news, shit-posting with competitors or the land-based industry, continuing to push the envelope with your offerings, trying to draw a “well actually…” distinction between your product and traditional sportsbooks (like people drawing a distinction between slots and HHR/VGT machines), and trying to debate the merits of or parse the meaning of insider trading.
How political have prediction markets become?
Critiques are coming from all corners of the political spectrum:
From local press in Utah:
“These prediction markets you are breathlessly defending are gambling — pure and simple,” the governor posted. “They are destroying the lives of families and countless Americans, especially young men. They have no place in Utah.”
In an email response to questions from Ethan Bauer at Deseret Magazine, Utah Sen. Mike Lee said, “Prediction markets are clearly a form of gambling, simply with an inventive mechanism to work around gambling laws like Utah’s.”
To a likely 2028 presidential candidate:
To US Senators on both sides of the aisle:
To pundits:
Increasingly Political
And it will likely be an issue in the midterms and creep into the 2028 presidential election, given the stench of corruption emanating from it (summed up nicely in this recent Wired column):
“Selig is a Trump Administration appointee, and there is ample evidence to suggest that President Trump and his inner circle want to ensure prediction markets are treated with a light touch, not the least being that he and his family plan to soon launch their own called Truth Predict. The president’s son Donald Trump Jr. is an adviser to both Kalshi and Polymarket, and his firm 1789 Capital is an investor in the latter. The Trump Media and Technology Group also has a strategic partnership with Crypto.com.”
And I’ll close with some words of wisdom from Richard Schuetz:
