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Betting on Being Right: The Growth of Global Prediction Markets · What the Flux

• 0:05
  Speaker 1: This is what the flux.
• 0:06
  Speaker 2: I'm Larissa and it's Friday, the thirty first of July.
• 0:09
  Speaker 2: Here are the three biggest news stories today. For our
• 0:12
  Speaker 2: first story, Optus, Australia's second biggest teleco company, is being
• 0:15
  Speaker 2: sued by the ACMA over a massive network outage last
• 0:19
  Speaker 2: year that stopped hundreds of calls reaching triple zero. Optus
• 0:23
  Speaker 2: allegedly breached legal obligations more than a thousand times. For
• 0:26
  Speaker 2: our next story, FIFA soccer's governing body is under fire
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  Speaker 2: over a plan to raise up to six billion dollars
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  Speaker 2: by selling off a chunk of the World Cup's commercial
• 0:35
  Speaker 2: rights to outside investors. FIFA's president's job is now reportedly
• 0:39
  Speaker 2: on the line, and a tournament boycott's on the table too.
• 0:42
  Speaker 2: For our final story, Harvey Norman and Latitude Financial have
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  Speaker 2: been fined fifty five million dollars in the Federal Court
• 0:48
  Speaker 2: after the Australian Corporate Regulator found the two companies misled
• 0:52
  Speaker 2: customers into taking out a credit card when buying Harvey
• 0:55
  Speaker 2: Norman products. It's the largest ever penalty of its kind.
• 0:59
  Speaker 2: In this series Going Deep, we do bite sized explorations
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  Speaker 2: into the most interesting industries, businesses, and economic trends in
• 1:07
  Speaker 2: Australia and around the world. For today's episode, we're looking
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  Speaker 2: at one of the fastest growing corners of global finance
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  Speaker 2: that most Australians have never even heard of, prediction markets.
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  Speaker 2: This isn't a bit on an AFL game or a
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  Speaker 2: punt on the Melbourne Cup. This is placing real money
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  Speaker 2: to bet on world events like whether the RBA cuts
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  Speaker 2: rates or whether a recession hits before Christmas. In this episode,
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  Speaker 2: Brett and Justin explore how prediction markets went from a
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  Speaker 2: university experiment in Iowa to Robin Hood's fastest growing product,
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  Speaker 2: and whether this is the future of finance or just
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  Speaker 2: the world's most sophisticated casino. Over to you, Brett and Justin.
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  Speaker 1: Hey man, you know how you sometimes hear people talk
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  Speaker 1: about being a better betting predictor than the experts.
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  Speaker 3: So many people claim they knew that that was going
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  Speaker 3: to happen.
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  Speaker 1: Well, someone built a whole industry around that. Really go on? Okay,
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  Speaker 1: So prediction markets are basically platforms we can bet real
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  Speaker 1: money on whether something will happen or not. And jaseboy,
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  Speaker 1: we're not just talking sports, We're talking elections, interest rate decisions,
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  Speaker 1: whether a dictator gets captured. Honestly, at this point, if
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  Speaker 1: humanity can think of it, somebody has probably built a
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  Speaker 1: prediction market for it.
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  Speaker 3: And this is happening right now. The prediction market industry
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  Speaker 3: is blowing up.
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  Speaker 1: But interestingly, these things are actually way older than people realize.
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  Speaker 3: Well, I might just take you all the way back
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  Speaker 3: to Renaissance Europe Jusey Boy, where people were literally placing
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  Speaker 3: bets on who would be elected as the next pope.
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  Speaker 1: Then political betting came to the US with the first
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  Speaker 1: English settlers.
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  Speaker 3: In fact, Josey Boy newspapers actually used the betting odds
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  Speaker 3: to call elections before proper poles existed.
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  Speaker 1: But then it got banned before World War Two and
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  Speaker 1: went quiet for a few decades.
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  Speaker 3: Then in nineteen eighty eight, three economists walking to a
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  Speaker 3: bar in Iowa City, and yes, that's genuinely how this
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  Speaker 3: story starts.
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  Speaker 1: There was an upset win in an election and they thought,
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  Speaker 1: what if people could bet on election outcomes? Wouldn't that
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  Speaker 1: force the pulses to get closer to the results.
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  Speaker 3: They built a company called Iowa Electronic Markets where people
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  Speaker 3: could bet real money tapped at five hundred bucks per
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  Speaker 3: person on election.
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  Speaker 1: Results run on a college campus.
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  Speaker 3: Now, Josey Boy. When the next election votes came in,
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  Speaker 3: they're weird. Little better experiment beat Gallup, Pole beat Harris Pole,
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  Speaker 3: beat the CBS New York Times Pole, and.
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  Speaker 1: The government regulators basically looked the other way and said,
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  Speaker 1: carry on as long as it stayed small and pretty academic.
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  Speaker 3: And that proved something pretty simple. When people put their
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  Speaker 3: own money on the line, they tend to want to
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  Speaker 3: bet on the right results.
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  Speaker 1: So me, man, how did a nerdy university experiment turn
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  Speaker 1: into a multi billion dollar industry.
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  Speaker 3: Well, there was a platform called in trade in the
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  Speaker 3: early two thousand where you could bet on elections and
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  Speaker 3: awards and celebrity stuff and a whole range of other things.
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  Speaker 1: Got pretty popular, but eventually got shut down by US
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  Speaker 1: regulators who couldn't decide if it was a financial market,
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  Speaker 1: which is playing gambling.
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  Speaker 3: And honestly, jaziboy that question gambling or finance. It's still
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  Speaker 3: a central fight.
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  Speaker 1: Today. The two big players have broken through. You've got Caushi,
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  Speaker 1: which is fully regulated by the US government, and poly Market,
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  Speaker 1: which runs on crypto.
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  Speaker 3: Together they handled roughly ninety seven and a half percent
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  Speaker 3: of all the money flowing through prediction markets globally.
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  Speaker 1: Last year alone, they processed forty four billion US dollars,
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  Speaker 1: which is a ten time increase on the year before.
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  Speaker 3: Now, Josibog Cowshi just raised a billion bucks and is
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  Speaker 3: now valued at twenty two billion, and Polymarket is sitting
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  Speaker 3: around fifteen billion value.
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  Speaker 1: And then Robin Hood saw this prediction market and they
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  Speaker 1: got involved as well, honoring with Koshi to offer of
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  Speaker 1: one thousand different prediction mark We're.
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  Speaker 3: Talking about bets on whether the Federal Bank will cut rates,
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  Speaker 3: or who will win the World Cup or my personal favorite,
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  Speaker 3: which song ad Bunny opens with at halftime.
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  Speaker 1: And whether Timothy Chalamey and Kylie Jenna will survive another
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  Speaker 1: award season together.
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  Speaker 3: Yeah, you can literally hege your mortgage on celebrity relationship longevity.
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  Speaker 1: But here' where things get a little bit ticklesh. The
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  Speaker 1: whole idea is it the market price reflects what people
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  Speaker 1: genuinely think will happen.
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  Speaker 3: The theory is, if enough people will bet real money,
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  Speaker 3: the market becomes surprisingly accurate.
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  Speaker 1: What happens when one of those people already knows the
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  Speaker 1: likely outcome, Well.
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  Speaker 3: Josie Boy, this has happened. Meet Gannon hen Van Dyke
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  Speaker 3: thirty eight years old US Army Special Forces.
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  Speaker 1: In December twenty twenty five, Van Dyke was brought into
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  Speaker 1: the planning of Operation Absolute Resolve, a secret US military
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  Speaker 1: mission to capture Venezuela's Nicholas Maduro find the paperwork the NDAs,
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  Speaker 1: and eighteen days later he opened a holy market account.
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  Speaker 3: Between December twenty seven and January second, he placed thirteen
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  Speaker 3: bets totaling thirty three thousand bucks, betting that Maduro would
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  Speaker 3: be gone by January thirty.
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  Speaker 1: One, which happened on January third.
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  Speaker 3: His bets paid out. He pocketed four hundred and nine
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  Speaker 3: thousand bucks in crypto.
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  Speaker 1: And now Van Dyke's spacing four charges deft of government
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  Speaker 1: info the lost, but.
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  Speaker 3: It doesn't stop there. Calshi has also suspended three members
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  Speaker 3: of Congress were caught betting on their own election campaigns.
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  Speaker 1: But here's the thing, be man. Currently there are no
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  Speaker 1: rules specifically written for this situation.
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  Speaker 3: Now they're using old commodities law and everyone's making it
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  Speaker 3: up a bit as they go.
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  Speaker 1: Okay, so give it all that. Is this going to
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  Speaker 1: keep growing or is it about to get squashed?
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  Speaker 3: Well, there's an investment bank named Bernstein, and they reckon
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  Speaker 3: prediction markets. Will hit one trillion bucks in trading volume
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  Speaker 3: by twenty thirty.
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  Speaker 1: Growing roughly at eighty percent a year, and they're already
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  Speaker 1: at sixty bill just in the first few months of
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  Speaker 1: twenty twenty six, so they're kind of on.
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  Speaker 3: Track right now. It's mostly sport sixty eighty percent of
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  Speaker 3: all bets are sports related, but the.
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  Speaker 1: Next big wave is expected to be economic staff, interest rates,
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  Speaker 1: company decisions, government policy. Basically Wall Street meets sports Beteah
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  Speaker 1: and b Man countries are already looking at this with
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  Speaker 1: a bit of concern. Belgium, France, Italy they've already banned
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  Speaker 1: poly market, and new European rules kicking in this July
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  Speaker 1: will shake things up even further.
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  Speaker 3: Yep, and Google Finance wants to plug live prediction market
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  Speaker 3: odds directly into surf results.
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  Speaker 1: So when you type will the RBA cut rates next month?
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  Speaker 1: Instead of an article, you get market says seventy three percent.
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  Speaker 1: Good luck out there, champ.
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  Speaker 3: Which is honestly both incredibly useful and slightly terrifying.
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  Speaker 1: Okay, so be man. We've been talking about prediction markets
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  Speaker 1: like there are just a fun new way to have
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  Speaker 1: a punt. What's actually being built here is something much bigger,
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  Speaker 1: tell me more. Well. It's essentially a live, real time
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  Speaker 1: read on what the world thinks is going to happen next,
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  Speaker 1: and that.
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  Speaker 3: Starts to touch decisions that real people make every single day.
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  Speaker 1: Should I fix my mortgage? Is it worth booking that
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  Speaker 1: overseas trip? Is my job in industry that's about to
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  Speaker 1: get hammited?
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  Speaker 3: These markets are starting to shape how people think about
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  Speaker 3: the future itself.
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  Speaker 1: The good version of this future is genuinely exciting.
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  Speaker 3: Fast, more honest info for everyone, priced by people who
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  Speaker 3: actually have something on the line.
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  Speaker 1: They're not so great version is that the people with
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  Speaker 1: the most information, the ones in the rooms. I found
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  Speaker 1: a shiny new way to get rich off everyone else,
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  Speaker 1: So it does it wore. The rules are still catching up,
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  Speaker 1: like way way behind catching up whether this ends up
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  Speaker 1: being the future of finance or just the world's most
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  Speaker 1: sophisticated casino. The markets are fifty to fifty on this one,
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  Speaker 1: Fox Sam, we hope you enjoyed our deep dive on
• 7:02
  Speaker 1: the prediction markets and betting on being right. On Wednesday,
• 7:05
  Speaker 1: we'll be doing a deep dive into the business of IVF.
• 7:08
  Speaker 1: Birth rates of hitting record lows. People are having kids
• 7:11
  Speaker 1: later than ever and a more than seven hundred million
• 7:13
  Speaker 1: dollar Australian industry has built itself on that gap, but
• 7:16
  Speaker 1: over the last year we've seen two of Australia's three
• 7:18
  Speaker 1: biggest IVF providers by major scandals. Looking forward to doing
• 7:22
  Speaker 1: a deep dive next week. Thanks for listening and we'll
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  Speaker 1: see you on Wednesday.