What did you take away from this decision?

Well, first, I don't think this was surprising that the Ninth Circuit ruled this way.

They had oral arguments.

The judges all pretty clearly, you know, did not really think that sports event contracts should be legal.

They were ripping into the lawyers for Kelshi.

cftc etc so we kind of knew like oh once the ninth circuit rules it's probably going to be against kalshi um but you know now that it is here i think the first thing is this could potentially tee up the supreme court to hear the case fairly soon um New Jersey, well, the other circuit court that is ruled in a case like this is the Third Circuit, which ruled Kelsey's way.

And two different circuit courts disagreeing is usually a big sign for the Supreme Court to have to take up a case.

Daniel, what did you want to talk about? What else did we do? What else did we miss?

But what was your top level takeaways from listening to this? It was like, I don't know, between an hour and hour and a half of yakking about prediction markets at the CFTC.

Yeah, so a lot of it was kind of boring, but it was the parts where CME's Terry Duffy was involved were interesting.

He definitely provided some excitement.

It's a shame he'll be retiring, and I don't know, we might lose that from future meetings.

But he had a clash with Michael Selig.

And to me, it felt like Michael Selig just didn't, I mean, Selig was just incorrect about what he was talking about.

So Terry Duffy is talking about a lot of different markets that he sees as problematic.

Either we think prediction markets are... um you know giving us accurate probabilities what a market thinks or you're thinking they're being manipulated um there's not a whole lot in between because there's not this idea that there's some difference between foreign markets and foreigners betting and calci where it's you know 99 plus percent americans we think um you know that's that's not a meaningful difference so i don't know like uh i feel like this is going to be a storyline for the next two and a half months

Uh, first was the emergency order based on New York court, the New York's court maybe telling, uh, Kalshi to, to stop serving the state, and CFTC comes in and says, "No, you shouldn't stop serving the state, even if they tell you." Maybe you could tell us more, in more factual terms than what I just said.

Yeah.

Well, I think, yeah, that's, that's the gist of it, basically.

Um, you know, you might remember, uh, that New York had sued Kalshi in state court.

They're asking for a temporary restraining order against Kalshi.

Um, and Kalshi says that, that that temporary restraining order would basically shut them down.

It seems like it's worded to cover more than just sports.

First was incentive programs.

Tell us a little bit about DraftKings reported on earnings that you saw, Daniel.

Um, well, I think the most interesting thing out of DraftKings earnings, and FanDuel had some, or well, Flutter Entertainment's FanDuel had some sort of similar lines, but DraftKings elaborated on it a bit more.

They say that they're not seeing any effect from people choosing prediction markets over their sportsbook.

Um, for...

I, I don't know if I fully buy this.

The results on the sportsbook side weren't great.

There's some type of slowdown.

This is maybe a little more passionate for me than you, but like what do you make of, of this and like elections and, and where our count- where the U.S. is headed in all this?

But talk us through, like, just how much stuff there was in courts this week.

Y- yeah, I'm gonna kinda run down a bunch of stuff that we could spend a decent amount of time on, but, uh, just too much happened this week, so I'm just gonna go through some of this pretty quickly.

Uh, Minnesota, you might remember, they passed a law, um, couple of months ago that would've banned all prediction markets, not just sports events, contracts, everything.

Um, a court this week, uh, said that they can't, uh, enforce that law.

At least for now, they issued an injunction blocking that law.

Judge seemed like she was pretty sympathetic to the idea of banning sports contracts, but sort of felt the law, by going... covering everything, went too far, couldn't find a way of drawing a line, so opted to block that law going into force overall.

Um, Wisconsin, um, federal district court, uh, issued an injunction that, uh... or sorry, denied Kalshi an injunction that would've protected it from enforcement from the state.

IG Group.

I'd be like, what are you talking about? Daniel, tell us about what is going on in Wisconsin and why we care.

Yeah, so at the beginning of the week, the Wisconsin Elections Commission put out a press release that basically says that if you bet on elections in Wisconsin, then you could lose your vote.

It points to these two, one of them very old statutes, the other still pretty old.

Neither of these were written recently because of prediction markets.

They've both been on the books recently.

long before prediction markets came along.

And one of the statutes says, if you bet on any election, you're not allowed to vote in it.

It feels like, If we're going to beat this drum that insider trading is illegal, there has to be more repercussions than, again, what's been reported so far about what the repercussions for this person are.

like nationwide cancellations which is like that's something pretty hard to manipulate anyway like uh what do you what do you make of all of this to me it feels like another instance of calci doing something and people just don't like calci and they find a reason to not like it

yeah to some extent i suppose shows just how strong the public opinion is against kelsey at least like in some circles i'm sure it's you know it's something that i think we both encounter when we sort of talk about what we do like we're you know sometimes maybe within the prediction market world, seen as like opponents of prediction markets, but you talk to like a regular person and the level of disdain for them is sometimes so extreme.

I don't know whether some of this is, yeah, that, I don't know, Kelshi has almost become enough of a regular gambling platform that the idea of like, a market where there's more of a traditional hedging of risk.

People aren't even seeing that.

Right.

But it, yeah, it does feel like a normal enough market.

I suppose one thing I will say is that, you know, sometimes I feel like self-certifications can be kind of, you can get a lot of things in under a single self-certification.

Can you get us maybe up to speed, Daniel?

But this is not the first nor the last of these kind of cases of insider trading with something that has nothing to do with sports and that I don't think anybody ever – ever contemplated so let's see other things that happened this week it was again it was a pretty like other than spotify it was a pretty slow week i keep i feel like we keep saying this but um there's not just not as much craziness as there used to be but we had uh this week also calci is getting kicked out of michigan can you tell us a little bit about what's happening there

Yeah.

So, you know, a lot of the time we talk about, you know, something happens in the courts and the consequences are like, oh, that's appealed.

Nothing will happen for a year or so until the Supreme Court does something.

But here, you know, a court made a decision that actually has an immediate effect in state court.

And a couple of months ago, Michigan's attorney general had sued Kelsey.

And now the court has ordered a temporary restraining order that forces Kalshi to block players from Michigan for at least the next two weeks.

And

that came out um we also saw calci ceo tarik mansour go on cnbc and kind of you know not not poo-poo ipo talk like they're obviously looking at ipo but doesn't sound like it sounds like that raise would happen an ipo would be more like next year uh like what do we make it all that is calci worth of 40 billion dollars daniel i'll put you on the spot

I mean, I think it's very hard to say mostly because, you know, we see these really impressive numbers of how much money they're taking in.

I have no idea how much they're spending.

I don't really think anybody knows.

And, you know, you want to know how their path to profitability looks like.

It's definitely like, you know, if you're offered the chance to invest in college, it's definitely like... going to be risky you could imagine a world where some court rulings kill the sports stuff and then everything else maybe by the time you know a new administration UCFTC comes in a lot of that gets killed some of it just never takes off in the way they hope and the 40 million valuation looks stupid, but you can also imagine a huge upside if they can get, especially now, you know, the perpetuals and everything that they are taking aim at the big financial exchanges.

Uh, they also, you know, seem to be doing, you know, some, you know, a decent, I don't know how much activity they're having outside the U S but I think that they are not entirely, you know, that they're getting some volume from elsewhere, which helps them.

And you wrote about that this morning.

So I don't know, what do you make of the Rothera launch and how that plays in the Calshi? And have we been overblowing the statement and Calshi is just going to grow whether Robinhood is here or not?

Yeah, it's definitely pretty incredible that Rothera has grown blown up this much in such a short space of time, and yet Kalshi's volume has itself also increased so dramatically.

I think you would have thought you'd see one of them maybe underwhelm a little.

So the combined level of activity is just really impressive.

I think that, yeah, so Rathair is doing upwards of $100 million a day in volume now, which is basically based on their monthly statements.

That's what Robinhood was sending to Kalshi in at least sort of maybe March, April.

So I don't know if that's If almost all the activity now on Robin Hood is going to Rothera, there's still a lot going to Kalshi as well.

this uh i'm gonna let you know daniel here to kind of run this through i was on vacation last week and kind of tangentially staying up with all this stuff but a lot going on profit x uh launched we we learned earlier that they got their cftc approval but now they've launched daniel

Can you tell our dear listeners what happened with George Santos and prediction markets?

Yeah.

So the, um, former Congressman George Santos, who's most sort of well known for his, uh, bizarre fabrications, um, has, uh, is now-- is being referred by Kalshi, uh, to the Justice Department over some suspicious trades, uh, on Kalshi on the market about whether or not he will attend the State of the Union.

So, uh, before the State of the Union this year, he'd initially, uh, posted on Twitter saying that he was going to be attending.

Um, then he later, uh, posted actual- saying that actually he would not be attending.

Uh, and obviously each of those moves dramatically, uh, moved the price of whether or not he would attend the State of the Union on Kalshi.

But right before that second tweet saying he would not be attending, there was a very large bet or a few very large bets on him not being there.

Um, you, uh, in-game reported on a new designated contract market that is been a- been applied for with the CFTC.

And Daniel, maybe you can walk us through, uh, the big news that kind of, uh, rippled through, through the world this week.

Yeah.

So for the second time now someone has actually been charged with, uh, insider trading on a prediction market.

Um, again, it was a Polymarket case which concerned a market that I think most people had noticed in real time appeared to have some insider activity.

This was Google's year-end search.

Um, there was one user who seemed to make a very large amount of, uh, very successful trades at odds that were, uh, pretty low at the time.

Uh, just looking at the, you know, user, uh, information, I think a lot of people speculated this was very clearly a Google insider.

but, like, tell, talk us through, like, what you, what you wrote and, um, what you're seeing.

Yeah.

Um, yeah.

But, you know, this is-- I mean, the...

It's really interesting that, you know, and there is, there is the potential for, you know, competition of, you know, anyone could be...

Well, you know, it's more difficult to be a market maker when Kalshi's RFQ system for parlays than it is on normal trades.

But, you know, you do have a decent amount of potential competition between potential market makers on parlays.

But, you know, the price hasn't, you know, dropped towards near zero.

Who are you buying and selling heading the fall? Or is this just Kalshi's game and everybody's, everybody's too late?

Um, and it's interesting to hear them ex- specifically call this out, and that they're going to be more mindful of it arguably than, than, um, than the prediction markets companies themselves.

Yeah.

And I think what was really interesting was how Jason Robins elaborated on this in the earnings call.

He pointed back to DFS and how, you know, there was a sharps versus recs issue there.

It was hard to let them to...

You know, the recs were losing so much early on, and that, you know, DraftKings took certain measures in DFS to, to limit sharps from certain contests.

Um, Jason Robins also said that he felt like some of the leading prediction markets have been a bit irresponsible in the way they describe prediction markets as peer-to-peer.

Yeah