Why Sharp Bettors Are Ditching Sportsbooks for Prediction Markets

本站添加: 2026-05-20

[00:00:00]Hello and welcome to episode 982 of the official establish.com podcast. My name is Adam Levitan. I am one of the co-founders here at ETR and prediction markets have officially taken over the sports gambling world. So we thought it was time, frankly past time to learn as much as we can about prediction markets.

[00:00:21]To do this, I am joined by three distinguished guests. First up, Nigel Eckles founded FanDuel in 2009. Changed my life in the process uh personally.

[00:00:32]But anyways, Nigel left FD in 2017, has since founded Betex and Bet Hog.

[00:00:38]Appreciate you being here today, Nigel.

[00:00:39]How's it going?

[00:00:40]>> That's great. Thank you. Thanks for having the show.

[00:00:43]>> Also here, Henry Karens's VP of trading at Novig, which just raised $75 million.

[00:00:49]Hashrich could tell very quickly. Henry, one of the sharpest people in the space.

[00:00:54]Henry, how's it going today?

[00:00:56]>> Um, super excited to be here. Longtime listener, first- time caller.

[00:01:00]>> And I also wanted to have hashtag one of us on here. He goes by sports_projections.

[00:01:06]We'll call him SP. He needs to remain anonymous because he has a real life job. But I, you know, when I say one of us because SP was a DFS player, listen to the DFS edge has shifted his attention to prediction markets and from what I can tell is one of the biggest winners amongst individuals on prediction markets out there. SP, how's it going today?

[00:01:28]>> It's good. I'm glad to be on. I I am honored that I can represent the common man, you know, today on the show.

[00:01:35]>> Perfect. All right.

[00:01:36]>> Common man is winning a lot of money according to the marketing. I just, you know, so it's good to be a common man.

[00:01:43]>> Exactly. We're going to get into that for sure here, Nigel. I I want to start uh with this. If I go on Koshi or Novig or Pi, it just looks like a sports book, right? I can see prices. I can bet the Pistons minus three and a half. I can bet series prices. I can bet futures. I I'm not sure it's clear to the casual better what is actually going on behind the scenes when they go on a prediction market. So Henry, maybe you can explain exactly what's really happening under the curtain when you go to make a prediction or a bet on a prediction market.

[00:02:19]>> Sure. Um there are there are basically two stages to a trade on a prediction market. Um which we call the make and the take. And so I I'll start with sports books as a point of reference. So if DraftKings posts a bunch of lines for an upcoming game, let's say the Cavs Pistons game that's coming up, you know, they might post um over under 24 and a half points for James Harden. And they also offer a price on both sides.

[00:02:45]They're going to have minus 115 on both sides. They set the line and the price on a prediction market. uh a Cali Poly Market and Novig. We're only going to open up James Harden over under 24.5 points. That's the market. But the the exchange has no part in setting the price. So then market makers come on and start making offers to say, "Oh, I would sell this at minus 115. No problem."

[00:03:12]Somebody else says, "I'd sell a 100red bucks at -12 or - 110. Um I'd sell just the under, just the over." this collaborative process of offering better and better pricing and trying to beat other market makers so that you're the at the front of the queue and and and offering the best price to the user is price discovery. And this is what pushes those spreads to be tighter on prediction markets than it would be on a sports book. Um this is kind of the the platonic ideal of the whole thing, right? Um and the the uh aggregate of all this is what we call the order book where you you click on a market and you can see the total liquidity available at every price on both sides of the market.

[00:03:55]Um so that offering period uh which is available to every single user. I say market maker because a market maker is just some what we call somebody who participates in that process um either programmatically or manually on an app or a a desktop site. Um, that's completely novel compared to a sports book. Now, the second half of the trade is taking, and this is what people are a lot more familiar with, right? You might just call this betting. It's you open up the app, you see those prices, you pick the side you like, you type in an amount you want, you submit, right? And that process is not really any different between a sports book and a prediction market for the recreational to even moderately sophisticated trader. The process by which that liquidity was available to them is very different. Um but they're simply just seeing a price and taking what's there. However, if you're, you know, a serious professional sports better trader, there are a lot of meaningful differences. For instance, the fact that you can see exactly how much liquidity is available to you and and know that once you take it, it is gone and then see the next action that is taken. Does a market maker automatically reload more at that quantity? Do they move their prices aggressively? Um, you're not identified.

[00:05:15]The person on the other side of the trade has no idea that you're their counterparty. You're never going to get limited for this activity. So, I think it's one of these things that's deceptively similar. Um, but the more you dig into it, there's a lot of like metagame to it. Like for instance, all these executions are public, right? You could just be subscribing to a feed and seeing the activity on these markets.

[00:05:37]DraftKings doesn't publish a, you know, public ledger of every trade that happens in all these markets. Um, so yeah, I I think it's one of these things that the more you dig, the more you find these these layers of complexity that that really expand what a prediction market is in comparison to a sports book. I mean, it's fair to say that this is effectively how the stock market or financial markets work. If I want to go buy shares of Nvidia, I go on and I find the most accurate price because there are market makers competing to get my action, to get my bid on Nvidia. Right.

[00:06:08]>> Yeah. You never worry about getting screwed over buying a few shares of Nvidia for this exact reason.

[00:06:13]>> Right. Okay. So, Henry highlighted some things why this might be better for takers. The easiest one, the most obvious one, and I do want to get Nigel's take on this, is the whole limiting aspect around sports books. The obvious one, so many people that listen to this show can only bet a dollar on DraftKings or they can only bet 10% of what they should be able to on FanDuel.

[00:06:39]And this is very frustrating to a lot of WC plus or people trying really hard or sharp people. I Is that enough, Nigel?

[00:06:50]And I know for I just want to be clear to people. Nigel actually left FanDuel before Pasa was repealed. So Nigel was running FanDuel as a DFS site which obviously is near and dear to my heart.

[00:06:59]But I'm c just I'm curious Nigel if you think that that alone is enough to convince the market that prediction markets are indeed better for consumers.

[00:07:09]>> Yeah. Well actually like I've been involved prediction markets since 2000.

[00:07:13]So before Flutter was a um parent company was it was actually a persontoerson betting exchange. It merged with Bet Fair in 2001 and I was actually part of that transaction. Uh I also launched BetDAC in 2003 which was a betting exchange based out of Dublin. Uh so I've been a huge fan of what we used to call betting exchanges. We now call them prediction markets for about 25 years. Um let's say what my experience has been with them is for certain end of the market betting betting exchanges are better. Um and so those are going to be your really price sensitive customer. Um that and certainly your professional semi-professional and should we call them aspiring professional.

[00:07:57]um because aspiring profession is a good name for it because a lot of these people are not they're not profitable even but they sort of aspire to be um for the mass market though we've seen and we've seen this in a lot of markets um the UK for example betting exchanges so bare dominated that market um from early sort of 2000s I would say bare today is probably less than 5% of the UK market um and and there's really was no limitation on it. Part of it was definitely execution. Bet Fair was not honestly I kind of laugh at it when I see the interface. Um we redesigned the interface. I think it was in 2004 and it's still pretty much the same interface today. Um and you know when you look at and and I joke with my friends I say we did such an amazing job that they just couldn't better it in 20 20 what 22 years. Um, but you know that's not they just really have underinvested in it and so they definitely made a lot of mistakes and they basically underinvested in it and it became a little like eBay. At the same time though, I think even with the best execution, it probably wasn't going to get to more than say 20 25% of the market because retail and by this I mean recreational players, people that you know, hey, they want to win, but that's not long-term winning, being aspirational profitable, like being a trader is not why they play. And so what we found in the UK is that a lot of these people didn't, you know, the things they didn't like about exchanges, they didn't like the complexity. Like they just found it confusing. Why is there two prices? Why is there like six prices, right? Um the other thing that we discovered users like um is that users actually prefer bonuses to good prices? Um, and so just to very simply good price when a user doesn't even often read the price and they don't compare prices, they don't really see price, but they do know when they get here's $100. Um, and so the problem for exchanges, certainly in the UK, was that if your margin is like 1%. You can't be out giving like loss back and and feeding money back into it. So for the massive retail I think as we see the US play out I think they'll still be on sports books if if everything being equal in you know if sports books are available in every state and but for the price sensitive the the professional aspiring professional that market largely just moves to exchanges >> okay yeah and I totally agree and I actually had some a question more specific on that later which we'll get to SP though is there stuff beyond uh not getting limited that would be an advantage for people playing on prediction market because this is number one question that I get. I we got a bunch of questions. I asked for questions for this show and a lot of people were like I don't get it. What why are why should I play on prediction market verse a sports book? What makes it better? Obviously the limiting thing I think is clear to everyone beyond that SP. Any other takes on why people would be interested in playing on prediction markets?

[00:11:12]>> Yeah, I mean you hit you hit the big thing. I think it's it's limiting. I think there's a couple other things that, you know, at least pop to mind for me. I mean, on on most of these prediction markets, there's way more uptime, if not 100% uptime, which is meaning odds are live basically like all the time. So, for like even just a recreational customer, that is a better betting experience, you know, for most people than the constant grade out odds boxes. So that that's you know one point for people who are trying to win or just recreational that that has been interesting because you know in the prediction markets right now so much of the action is actually live um because this is like a huge leg up I think they have um over you know the traditional sports books right now. Um, the other thing that I think um that is is worth highlighting and it's sort of related to limiting and it's sort of related to a point Henry made is it really I think there's a subset of people who like aspire to make this more than just you know betting for fun and it's like a hobby to them something they take seriously and this is an outlet for that where they don't see like a a roadblock where it's just going to end when they get limited and so I think it you like Nigel was saying, I think it attracts like a different type of people who want to take it, you know, more seriously, like other types of hobbies like running or anything who who just get like really into their hobby and aren't just, you know, betting after work to to get a little bit of entertainment.

[00:12:41]>> Yeah. I've seen a lot of people say, "You always get the best price. You always get the best price. You always get the best price." Sometimes if I and I haven't done this that much, but sometimes if I go on Koshi or something, it looks like it's the best price and then after the fees, the price on Sportsbook is actually better. So, like do you have a take on that, Henry? Like, are we actually getting the best price after the fees that you get when you take >> I mean, are you going to bait me into shilling my own product?

[00:13:08]The the couch bees are heinous. Um, the I think, you know, we're we're not in equilibrium at all for this, right?

[00:13:17]We're talking about a year ago, nobody had ever even heard of these products.

[00:13:21]Um, and now you've had just one player that's really had extended time with an actual CFTC license um, in the United States, which is Khi, and they've been a able to charge whatever they want, um, because of that advantage. I think you're naturally going to see fees get pushed down everywhere. Um, and on low fee platforms, I mean, the prices are insanely good. We we every night are offering NFL NBA games that are one cent wide, like just the most insane uh bid aspect you ever seen in your life. Um but to Nidel's point, I think there will be a kind of user preference discovery period as well, which is do users prefer paying higher fees which then are rebated to them in in the form of bonuses? you know, bonuses probably aren't strictly speaking um directly legal on federally regulated exchanges, but there are variants of that, right?

[00:14:20]Like for instance, the the broker that is pointing you into a prediction market is not the same business as the market itself, right? So when you when you trade PM contracts on Robin Hood, they're actually executing on Kouchy. So do people start building, you know, consumer centric um business layers on top of these things, right? and and what do the financial arrangements between these companies look like? A lot of this kind of sounds like boring details, but I I think what I'm saying is um we've we've seen exchanges before. We've seen Bed Firm, whatever. We've never seen American venture capital back to the tune of $2 billion uh exchanges before. And that's a different beast.

[00:15:02]And that's when you start seeing like a an entire economy of of major players building an ecosystem around these things and and a lot of the the downsides of the product that you guys are describing I think are really UIUX stuff that is solvable. I to I totally agree on that. Like actually, >> you know, already, you know, bet far is this 25 year head start and when FanDuel said, "Hey, we're going to go and launch an exchange." What do they do? Surely they go to their season proven product.

[00:15:34]They don't go near it. Um already we're seeing with the front ends with like Novig and Cali in particular. It's better. It's better than Bet Fair has had in, you know, forever. Um and I just think the amount of money going in here, we're going to see a lot of innovation.

[00:15:49]that's going to end at a different result than what we saw in the UK.

[00:15:54]>> Okay. One thing that you guys didn't bring up that I thought was a benefit for Taker, like someone like me, I like to bet markets that often on the sports book are not two-way. So, I'm trying to bet stuff like who will lead the game in receiving yards. That is not a two-way market on uh DraftKings or FanDuel.

[00:16:10]Correct me if I'm wrong. I believe all the markets on prediction markets are two-way. Is that is that fair? Is that not Is that not true? uh SB >> they're all they're all technically two-way, right? Because someone's on on both sides of it. Uh on certain sites and certain production markets, it's easier to um to actually access one side of that. Um you know, for example, like on on Kshi, it's actually you have to go through, for example, like the API to actually get on the the no sides of certain trades. Um we'll talk about RFQS probably in a little bit. that's not something you can just take the opposite side of very easily. But, uh, the short answer to your question is is yes, there's there's sort of both sides of every trade. So, in theory, assuming the the order book is open, um, yeah, there's there's a way to get on on both sides of each trade.

[00:16:57]>> Okay. Um, Nigel hit on something that that I I wanted to just discuss. The state, there are big states in America that do not have legal sports books right now. Florida, Texas, California, Georgia among them. I have no insight into the data whatsoever. My assumption is that most of the action on these prediction markets right now is coming from those states because those people can't be on DraftKings and FanDuel. And like Nigel said, if given the choice, maybe they maybe they go on a prediction market or maybe the people in California will say, "Hey, I want the bonuses and you know, whatever else that comes on on FanDuel and DraftKings and Caesars, etc." So Nigel, how do you think this plays out in states like that? If they ever get I don't know if you have a take on California, >> states like say New York where you have both or states like >> I'm talking about states like California, Texas, Georgia, Florida. Do you think those that will ever get sports legal sports betting I guess and what do you think happens when those two go headto-head there?

[00:18:00]>> Like so I think we have legal sports betting and something like 40 or 60% of the country by population. Um California or Florida does but it's just hard rock.

[00:18:09]It's monopoly. It's seminal tribe.

[00:18:11]>> Um the only way I see that opening up is if the seminal tribe they decide to open it up. Um Texas is kind of feels like a win, but is it two years? Is it four years? Is it six years?

[00:18:24]don't know. Um then California is like who knows? No one knows. Um but not anytime soon. Um and so it's a huge problem. Texas and California are two of your biggest states. Uh and it's the timeline there are both really unpredictable. I California could be a never like it, you know, it just doesn't through the you know state regulated route. I also would say that as a as a, you know, regulated operator, if you had a choice between doing it via, you know, CFTC license or going in and paying the massive rake that the states going to ask, that the tribes are going to ask for, you're going to much rather go in via the CFTC.

[00:19:04]Uh, and that's what you're seeing like California, uh, Fand was now in California via the CFTC. That would be their preferred option. Um, and so they're they may not even be lobbying anymore in California because they're like, "Look, we're here. you know, we don't need to go down the the steep route.

[00:19:19]>> Yeah. From uh you know, working at Novig, Henry, do you guys have any concern that if these states ever got sports betting that prediction market volume would go down significantly if those big states ever got sports betting?

[00:19:31]>> Well, before we had a little legal hiccup in New York, New York was always our number one or number two highest volume state. Um, and has like fully legalized OSB. Um, and I think a major reason is there's a lot of very sophisticated sports traders in New York and it's it's just simply a completely different experience and product for people like that.

[00:19:53]>> Um, I also think you know that product parody is very achievable. Um, a lot of the the built-in advantage of DraftKings and FanDuel is from brand recognition, which if you're talking about states that don't have legal sports betting, like the you know, people see the ads, but they don't have the apps installed on their phone, right? The stickiness factor is really not there. Um, and then like you know as Nigel talked about like the I think people are really the ability to exist as a wrapper around PMS um is just beginning to be explored.

[00:20:30]Like the FanDuel and DK predicts products kind of work that way. Uh but it they're not sophisticated yet. They they haven't attracted customers for obvious reasons. But that path is very doable and there are a lot of tax advantages to it. there a lot of regulatory advantages to it. So there are a bunch of these factors that kind of combine to make prediction markets actually a a really attractive new product category even in spite of the entrenched players in my opinion.

[00:21:01]>> Okay, I want to move to market making and this is what Henry started with how this all works behind the scenes. Now, there's some marketing on this, and Nigel kind of alluded to it at the beginning. A lot of these sites, they market it like, "Hey, you know, the sports books are screwing you, which whatever. Okay, I I might agree. Come bet against your peers on prediction markets." Cool. Sounds great in theory.

[00:21:26]Except what's really going on is some of the sharpest financial institutions in the world like Susuana or jump trading are your counterparty or Rufus Peabody uh is your counter party or Henry and his team or Koshi's internal trading team. You get my point. The counterparty isn't some random on the street. It's quite possibly someone more sophisticated than DraftKings or FanDuel. I'm not sure that matters that much though. Um SP doesn't matter like who your counterparty is. If I want to bet Knicks minus 7 and DraftKings is offering minus 110 and a market makers minus offering minus 102. Do I really care who my counterparty is? SP. So I I think we need to when we have this conversation, we need to split it up into betterers who like want to win and are taking this seriously and the recreational customers. So if we think of just like the recreational customers first and foremost, like they should not be scared at all in my opinion of betting against, you know, SIG or any of these companies at better prices than they could get at uh, you know, the equivalent OSB book. Um the idea that you know you're betting into someone sharp so you don't want to bet a better price is just like unfounded and not that doesn't really make sense. Um, so that's, you know, the first part. I think the part you're you're getting at and like the the discourse around this I see on Twitter is when you have competition for price and you don't have, you know, like, you know, the DraftKings and FanDuel and whatnot having a monopoly on the price, the idea is that the competition is going to get you a a sharper price over time, right?

[00:23:01]And so where it's harder to win. So the idea is that a minus 102 on Koshi isn't is not better than you know minus 110 on on DraftKings. The idea is that over time we're going to be very certain that the price is between you know the bounds the spread of what's on Khi. So I think from that lens like if you are you know trying to win and take this seriously like that's a serious consideration of like we have many smart people competing now. If there's you know a million a million shares on each side they're probably pretty confident that the price is in between these two and maybe we shouldn't bet this anywhere. Um is is sort of the dichotomy I would think through.

[00:23:43]>> Yeah. Well and my thought was like let's say I find some amazing golf line on cash. I'm like, "Oh my god, this is off market. This is the best line in the world." And then I come to find out that's Rufus' line. Do I really want to be on the other side of of Ruf of what Rufus' lean is against the market in the long term? That sounds like a losing proposition for me, right? Um >> and that's where what what's going to be interesting to see how this plays out is, you know, like I think the whole, you know, sports bet betting discourse on Sharp, there's like this idea of what Sharp books are, right? And, you know, it's the classic like pinnacle type of type of deal. Those are like the the truth the the points of truth. Well, there's more money on these prediction markets than like anywhere right now.

[00:24:24]And so, you know, there's there's going to be this this point where it flips where, you know, the sharpest point is, you know, the prediction markets and there's games being played about, you know, exactly that like leans and like people know they use Pinnacle as a source of truth. So, I can shade and I can get like lots of liquidity because I have all these people thinking it's the sharp side and all this is going to sort of evolve over time. It's not like a static thing, but um yeah, that's that's sort of the the point we're at right now.

[00:24:54]>> Yeah. Well Well, yeah. I mean, it it's it feels the the marketing side of it, Nigel, you you brought up where it it doesn't feel great. However, you are if you're consistently getting the best price, you are more likely to win. will have less losers in the ecosystem if they are all consistently getting a better price than they are elsewhere.

[00:25:14]We've been down this path though, Nigel, with marketing around these kind of products. I mean, I'm sure you remember uh you know DFS coming up at the presidential debate. They were like they asked Chris Christie at the Republican presidential debate like what do you think about playing fantasy on FanDuel and drafting? I was like, "Oh my god, they're talking about this like it's gotten so out of control. They're talking about this in a presidential Yeah. debate. So, would you have any advice to Kowi or anyone else marketing this stuff?

[00:25:43]>> I understand the marketing that it's not gambling. Uh because look, you want to, you know, position as a financial product that would sits naturally under the CFTC. There's going to be rulings on this. It doesn't help if you then market your product as sports betting and then say in a league court that it's not.

[00:25:59]Judges see that. Um and they do sometimes call [ __ ] on it. Um my issue with it is um like I love gambling and like I've always loved gambling and I've worked in the gambling industry for 25 years but every product like I've never marketed a product that was gambling as you know a way to get ahead as something that was like a financial instrument that you know that you should be sitting beside your stocks and shares and uh you know something for your kids college fund. And I fundamentally find that I find it unethical. I think it's uh it's deeply wrong. I think people are going to get absolutely destroyed and not just their you know this is just their you know they're spending money like gambling should be an expenditure that well if you're a professional sure like you're going to you know you're going to bet on yourself go for it. But I find the marketing from some entities and not Novig so present company. Uh but you know like Kelsey the stuff I've seen from Kelshi I think is outrageous and I think it's unethical and I think their investors should be taking them aside and saying look you're making loads of money but this is going to come and bite you. Not just it's not just wrong it's coming up in court and it's it's it's going to it's going to change perception. You cannot piss off loads and loads and loads of people like yes you may have Trump in the White House now and it's a very less fire approach but there'll be another president there'll be another administration and if you create a product that bankrupts people and you've been marketing it as something that you know that people are going to get ahead with it's going to have bad repercussions and so that's that's kind of my big issue with it. I love these products. Um, and I, you know, I'm a fan and, uh, but it's just when you market in that way, I just find that I I just find it deeply wrong and I think it'll backfire on those companies really badly.

[00:27:54]>> Well, it's also ubiquitous, right? And just like DFS commercials were in late in late 2014, early 2015, you know, everything >> the ubiquitous part is hard to challenge because like everyone's in a race, you know, we're all going to like we want and you know, like even I remember when we talked about our ads being ubiquitous. We weren't nearly as ubiquitous as like personal injury or like auto insurance or something. No one complained about it. And so I'm like and these are terrible ads. So I'm always the ubiquity doesn't bother me as much as the what is the content. Um, so yeah, I don't I don't worry about as much as that.

[00:28:27]>> All right, I want to get deeper into the market making stuff, Henry. I'm sure there are some people listening to this, and we have a lot of very sharp listeners. I'm sure they are thinking, "Man, I'd love to be a market maker."

[00:28:37]And believe me, I have had that exact same thought. It's kind of consumed me ever since SP's risktaker podcast talked about ETR. Highly, highly recommend episode 140 of the risktakers podcast with SP. But anyway, like becoming a market maker feels so daunting to me.

[00:28:54]Like I think slash know we have the best numbers on player props and SGPs for NFL and NBA. I I think slashn know we have the best numbers for parlays across other sports as well. We've spent an outrageous amount of money developing this stuff. We have a huge team dialing in the inputs, but we're not traders.

[00:29:14]And so like for a lot of people that listen to this, we're like sports people. The idea of running a financial institution seemingly behind the scenes is like so daunting. So Henry, what would you say to like regular people like me who might have some numbers or opinions and know sports but have no experience whatsoever in the financial markets market making?

[00:29:35]>> Yeah. Well, I will say that uh the risktakers podcast is great for conversations about this and that I also do a podcast with my partner Chris Deerkis called Inside Prediction Markets where we talk to a lot of what we call garageband market makers who are um you know individuals or small teams doing this and and a lot having success and and targeting different areas. Um, there's a clumsy metaphor I've been using recently that probably isn't serving me, but I'm gonna drag it up one more time, which is that uh in market making, you have almost like the the Walter White and Gus Fring split. And for those who haven't seen Breaking Bad, Walter White's job is to make the best meth in the world. That's all he knows how to do. He has no other business skills. He's, if anything, a tremendous liability to the operation.

[00:30:24]Um, and Gus Fring is the ruthless businessman who understands the entire criminal underworld and all the key players and if he simply has great meth, he can make the whole business happen.

[00:30:38]Um, and market making is a lot like that where uh >> I love the >> seriously if you're if you're somebody like Adam who has great numbers, right?

[00:30:48]If you're cooking the best meth in the world, you know you have something valuable. Um, but it's very dangerous to just go out there with it and not understand what you're getting involved in. Um, and then there are players, people like me, who really truly understand every single little detail of of how these ecosystems have formed and who is active in them and where is the risk and where is the opportunity and how do we manage all of that. Um, and so I think partnerships that are formed between your proverbial Walter whites and Gus Rings are often the strongest approach to doing this. And so I would say the first thing is to decide, you know, am I am I going to consume a bunch of inside prediction markets and risktakers content and kind of learn the entire ecosystem or am I going to buy every single ETR product and reverse engineer all the numbers and and become like a modeler par excalance and and then how do I collaborate with others to kind of put this all together into a system that really works for me? Um because you know your competition is working that hard. So you you can't cut corners. You have to similarly bring a complete holistic approach to doing this if you want to have success. But it is possible.

[00:32:01]>> Okay. So, correct me if I'm wrong, but some of the biggest market makers right now are not sports people. They are financial institutions. Susuana, jump trading, whatever. They might not even have their own numbers. From what I understand, I could be wrong. Maybe they don't even have their own numbers.

[00:32:16]They're just winning based on their knowledge of trading and the ecosystem and how this all works. Is that fair to say? Do you think SP or Yeah. What's your take on the whole aspect of people winning right now and how how they're winning right now as market makers and how long that can last?

[00:32:37]I was trying to think of a number beforehand and I'm curious what what Henry's number would be or Nigel's, but my guess is probably 98 plus percent of volume traded on these big sites. The per the person doesn't isn't like building up their own number from scratch. Um would be my guess. So like a a very very high percent. Um, I think it's part like like I said like a a billion-dollar industry propped up on, you know, 5k pinnacle limits to an extent right now. Um, and trading off of that. I think there are also um, you know, sophisticated because I think the way Henry broke it up is exactly right. There's sort of like build up the price and then there's people who are just what I would call good at trading and you know those people are in finance and everything. I mean, like what what Jump and Sig and all these companies are good at is not necessarily like knowing everything about everything. They're good at like trading and seeing, you know, orders and reacting to that and all of that stuff.

[00:33:34]And so that's that's like a separate skill. Um, so I I mean like I I'm curious like Henry's perspective on I to me right now the more valuable skill is the trading just just right now. I don't know if that's like a forever thing. Um I think in my just my head sort of logicing through there would be more importance of like having the right price and that's another you know allure of prediction markets is in theory you're you're competing on like who can come up with the best price in theory.

[00:34:04]So right now I would say emphasis on trading but more on >> yeah that that would be quite different.

[00:34:10]So the international so betex operates an international market. So it's soccer, soccer, cricket, tennis, golf um and the international market I would say. So I don't know as much about the US market but the market makers on betex are much more specialized. So there'll be tennis market makers, there'll be cricket market makers and they soccer they they will really only focus on their sports and they generally will have a pretty strong view. I'm not saying they're still traders, but all of them will come in with a view and then they'll trade around that. Um, and I do know that some of them have now crossed over to the US.

[00:34:49]Um, so like that's sort of the international market and maybe the US ends up there where you get more professionalized or more dedicated market makers that go by by sport.

[00:34:59]>> Yeah. I mean, before you go, Henry, I just want to kind of explain to people what I think is going on. people are getting a quote unquote fair number to trade off of and you don't have you could just be a financial bro and you could go on what everything is sharp pinnacle or bookmaker or circa or you could find the SGP price on FanDuel or whatever and they're taking that number essentially copying someone else's work and just trade it and just trading off of that. Is that fair to say Henry and how sustainable is that for market makers? There's a lot of that happening and because of a a tragedy of the commons effect even if um each individual is only putting up a little bit of cash to do that and trying to be responsible cumulatively it can add up to enormous amounts of money kind of being copy traded. And if you watch the ticker tape closely, you will notice certain times of day that markets drift one direction and then the order book on the prediction market explodes and then the markets come right back to where they were before. Um so so certainly people have started taking advantage of these things. Um there's some legal issues around that. You know I but I will say in a in a traditional market making sense like we almost don't even really have a concept of fair internally. We have an opener. We have a mid price.

[00:36:15]>> Um we we get a fill. We move our number.

[00:36:19]Do we think the new number is more accurate than the last one? Maybe. Let's see what the next fill is. Right? It it we're never really fully beholdened to a view of what the the true probability of something is. It's more that we have a system that we think is minimally exploitable that that um dances around action. Um, so it I don't think you need to build every number from the ground up because the number you build from the ground up is is really just your opener.

[00:36:47]Um, that being said, you know, one of the key differences between the more traditional European and maybe even South American markets versus American markets is in Europe, you have a a long tale of leagues and sports, right?

[00:37:01]There's a ton of soccer leagues, a lot of tennis, cricket, whatever. um and a relatively limited number of markets within them. Like the the uh moneyline spreads and totals are doing a ton of the volume where in America people are really just betting the biggest six to eight leagues or so, but there's hundreds and hundreds of markets in each game. All of these like long tail um props. And then if you start actually counting discrete combinations of scam game parlays, it's it's like literally an uncapped number of unique markets that trade on a daily basis. So, uh the opportunities for having kind of niche origination that is then folded in with market numbers are endless in American sports, right? like you could just simply have a unique view on the relationship between Jaylen Brown's assist and Jason Tatum's threes, right?

[00:37:57]That like, oh, they they're more or less correlated than usually is the case and and then everything else is market numbers, but all of a sudden I kind of have this unique view about the specific combo and these guys play, you know, 80 games a season and so over the course of the season, that's a big opinion to have. Um, and so I think we're like really just in the like first inning of people finding ways to inject those kinds of opinions into all the different products that trade on these markets.

[00:38:25]>> I mean, speaking of being in the first innings, my thought on this is right now being a market maker, you can win without having an opinion, without knowing what the fair is. as it gets more and more competitive and I expect this fall to be way way way more competitive amongst market makers having a number that you think you can trade to or you can undercut this or you know I don't know anything about trading but I would think that being able to get closer and closer to the fair without going past it or what you think is the fair without going past it would be a huge uh advantage for a market maker and like maybe it's not that important right now but like Henry's saying in the future when it's super competitive around market makers I assume that it will obviously I'm talking my own book here because I think we have great numbers but is what it is. Um, okay.

[00:39:11]I want to go to taking. So, um, it seems like all the sharpest people institutions are making markets, right? They're not they're not going around taking bets, uh, from what I can tell, which makes sense to me, right?

[00:39:28]Like, it reminds me SP a little bit of the DFS head-to-head lobby. And you know, Nigel obviously started the DFS head-to-head lobby with a chat, which for anyone who was early on FanDuel, Nigel had to take it down, but there was a chat on FanDuel where you playing headtohead and it was meant to just like talk to each other, but people were out of control. It was so fun.

[00:39:48]>> They had to kill it. Nigel had to kill it. It was, you know, we would get support tickets saying, "Oh, somebody uh I don't know, LeBron, I was told LeBron is out and he's playing." And I'm like, "Who told you LeBron was out?" It was like chat.

[00:40:04]>> Yeah, >> I can't help you.

[00:40:07]>> Exactly. But anyways, it reminds me like a little bit of the DFS head-to-head lobby where I I still do this to this day. I will only post games in the head-to-head lobby for people to take.

[00:40:16]I'll take my chances against any random anyone who wants to play me. But I rarely scoop someone's headto head in DFS that's already posted because I assume if they're if they're posting, they're they're probably pretty sharp.

[00:40:27]They're willing to take on all comers.

[00:40:29]They're probably pretty sharp. So what is the merits in taking here SP with that in mind?

[00:40:38]>> Yeah, I think so there's there's two parts to this maybe. I think the the obvious thing on some of the in general every site you know that has fees is charging some type of fees in general the taker fee is going to be higher than the the maker fee. Um in in general reason that is is from the sites perspective if you're call poly market whatever like it's more valuable to have people make markets and provide liquidity and get you know like have it be a good user experience. So that's that's generally the direction. So there's just a fee portion of it, but I think the DFS example is a good one because really it's like an adverse selection problem. And if you just like go out of gambling, if if if you know I'm laying down a challenge, an open challenge saying I can run a six-minute mile, people would probably be pretty stupid to come challenge me to that. But in the reverse, it doesn't necessarily work that way. So I think there's just like a an adverse selection problem of like, you know, someone is posting this price for a reason. Um it I'm not saying it's always right. It's certainly not.

[00:41:36]There's certainly good opportunities to take. But the idea is like most makers are trying. And do you really want to be going against someone who's trying?

[00:41:46]Whereas a good portion of takers aren't really trying.

[00:41:50]>> Yeah. Well, I have an example of something that that I thought was a good place to take. I had someone tell me that uh Matt Nagi was going to be the next coach of the Tennessee Titans. And I thought it was a pretty good source.

[00:42:02]So I went out to Koshi and I blasted a bunch on and like it was unlimited. I mean there was a ton of liquidity. I could take like a ton on Matt Ngi to be the next Titans coach. I paid the fees but I thought I had this like information that I couldn't really use on any other place and this market was up. Turned out that the source was wrong and you know I got I got it wrong and I lost the money. But my point was like that was I thought a really good place to be a taker where the only place in the world where I could get how much I wanted on this was on Khi or or you know some other prediction market. So >> I'm not sure the analogy with FanDuel it is quite as tight because you know with FanDuel like our skilled players were like highly skilled. The difference between the the top and the average was was very significant. Whereas here you can actually even just quantify the difference. You know, it's not I don't I'm not sure it's as sharp like the So, I wouldn't be as concerned about taking um there are certainly cases we see with people sniping and they're very good at it. They're spotting that things are out of whack. They're very disciplined. I don't I I kind of see on bet decks I've seen people more, you know, they'll trade both and they'll make and they'll take uh the, you know, the profitable players. So it's not as distinct as with faners like >> Yeah. There's guys you don't want to go up against.

[00:43:24]>> Sure. For sure. Yes. Um we got a question from Herszig Henry. He said, "What should retail/casual traders be doing to have a chance against the market makers?" I'm not sure that there's like advice for this beyond what you would tell people to do on a sports book, but do you see any differences for retail casuals when trying to win as takers on PMs versus sports books?

[00:43:46]>> Yeah. Well, there's a there's a general framework. Obviously, I can't give specific advice like, you know, there's no I can't help you handicap. Um, but it's it's pretty comparable to poker, right? If you're like, how do I get p good at poker? It's like, well, you start at 1 cent, 2 cent, and when you're winning, you move up. Like, there's stakes. Um, the same thing exists in prediction markets, right? If you're if you're trying to get started, low liquidity markets or low liquidity regimes of markets, right? So when they open or you know ball in air right like live that nobody really wants to quote.

[00:44:18]Those are areas where um you can tell from the fact that the market is very wide and liquidity is very low that nobody really feels confident about what they're doing. And so either as a taker you know well this must be a very vulnerable surface area of attack or people would feel comfortable putting more size up. Or if you're interested in becoming a maker you can say look nobody's competing here. Maybe it's because there's just not enough order flow. This isn't popular enough. I won't get rich doing this. It's like playing one cent two- cent poker. But I can at least learn the ropes and and if I put up 50 bucks, I'm going to be top of book and actually get fills because nobody else is even trying this thing, right?

[00:44:57]So it could be, you know, CSGO challenger level tennis. Um, you know, player props traditionally at sports books don't really get posted till like Thursday. Um, prediction markets open them all way earlier in the week. Like you can if you're making numbers, you can come in on Monday with props for Sunday and say, "Look, nobody wants to post this except for like DFS pickum sites. I I have an opinion. Here it is."

[00:45:20]You know, and I think just kind of doing that process of like I'm going to play at the level where I'm I'm winning and as soon as my bankroll gets bigger, I I take that shot at something a little harder is is the general framework you want to follow.

[00:45:34]>> Yeah. And I think that's great. It's great advice for sure. And I've certainly thought about doing that as well. All right. All right, I want >> thing I would just add on that is specialization really matters like you being able to like you know pick a sport and get really really sharp on it. Um and the other one is like you know don't be limiting yourself to like one exchange. It's there's you know like this is a trader paradise you know you should be looking you should be looking across exchanges and books. Um it shouldn't be limited. There's just so much opportunity here that, you know, when you see somebody who's like sort of stuck in one chain, you're like, you're not going to get profitable that way.

[00:46:12]You really got to look across the market.

[00:46:14]>> Okay. Yeah, agreed. Before we get to listener questions, Nigel, I'd be remiss if I didn't ask you about the regulatory outlook here. Just because I know you went for years state by state, you went lobbying for DFS. It was really shaky at times. I mean, I I I know I've told the story a million times, but I was up at like 3 in the morning sweating a New York State assembly >> uh situation >> and like if if that had not gone our way, and I say our like I was part of Nigel's team, but I if it had not gone our way, uh >> be no DFS today.

[00:46:45]>> There would be no DFS, right? And I wouldn't be here talking to you guys uh right here, right now. So Nigel has been through the wars of regulatory. I know that I am a turbonit, but my god, the valuation on Koshi was 22 billion. poly was 15 billion. I I could never write a check at those numbers knowing that the legal standing to me >> it seems shaky like there's gonna be a Supreme Court case. I assume we could get a new CFTC chair, a new administration, whatever. So, as someone who's kind of been through this, Nigel, how do you see the regulatory process?

[00:47:15]>> It's very different from DFS. This is the first thing to say. It is very different. DFS was a state issue. It wasn't a federal issue. Um, and so to win what we had to do was to get either neutralize the AG, so the AG was like, I don't care. And there was lots of states, maybe 20 odd states, the AG didn't really care. There wasn't really an issue, or we had to get proactive legislation in those states. And a lot of people don't remember, but actually we got laws clarified in 22 states. We passed 22 laws in a space of two or three years, which is faster than any company has ever done. It's just incredible. including New York um you know California for example we neutralized them uh but so we had a sort of on the ground we had lobbyists in every state and that's what kind of saved the the DFS industry this industry and the pathway is going to be completely different the first thing is that all the states hit uh prediction markets like like almost universally um and the path here you know CFTC is on side the question is just going to be the court. Uh, and so there's going to be there's already been split decisions in the courts. Um, that's going to go through the appellet process and that and it will end up at the Supreme Court.

[00:48:29]There's there's absolutely no doubt in my mind that it's going to be at Supreme Court. Um, and then the Supreme Court is going to make a decision. I will say and I'm not going to talk about that bit. I will say there are certain things that don't really matter. Public perception doesn't really matter. Supreme Court's job is not to like you know to see what are people thinking. The other thing is I don't think the president matters as much as people think like this Supreme Court has already rocked knocked down tariffs. Trump's marquee you know this is a big thing and his justices have knocked it down. So I don't put any weight on that. What I put weight on is you know what does it say in the CEA and how does that map to what's happening today? And that's what I think that the court will look at. Um, so the the other thing is just the time. I think it's probably two years. Um, so you know, I guess we're, you know, it sort of runs through split decisions early next year, gets briefed end of uh end of next year, early 2028, and then there's a ruling by the summer of 2028. That's that's kind of and that's kind of a fast timeline, but I think that's the one we're on.

[00:49:38]>> All right. Super interesting. Let's get to the listener questions here. We'll go through five or six of these. Shill says, "How would you guys regulate the insider trading that can occur when there are markets, you know, and I don't want to get into the governments and what humans will do in the future? I I'm more interested in the sports aspect of it, i.e., let's say there's non-public injury. Let's say I know the janitor for the commanders and he tells me that he was walking by the x-ray room and he saw Jaden Daniels in the x-ray room uh crying after the game and I go trade on that. Henry, is that insider trading? Is that illegal? Should should that be illegal? Because I don't like I don't really care about this stuff. I think everybody's on their own. It's a war out there. But I could see why for public perception this is bad. So what's your take on the insider trading in sports?

[00:50:26]>> You should consult your own attorney about constitution started trading. I am not about to tell you what is and isn't legal. Um it is, you know, I think in sports it's it's not a moral issue, right? I I don't like the world isn't going to end if you are ahead of the market on um injury news. I do think that it is something that hardly anyone has thought about who is involved in this and and that you honestly should um if a big part of your process is insiders like I know for college uh sports people oftentimes they have networks of trainers and whatnot just because the stakes are low in college sports it's kind of not a big deal to leak information. There's not a um well-maintained injury report system like there is in professional sports.

[00:51:15]Um, so if you are one of those people like you should uh consult an attorney about whether or not what you're doing is legal, honestly. Um, it but you know it's not like something you know with the Maduro raid for instance, somebody goes and has has that information early and bets on it that could materially have impacted an American uh security operation in a way that could have cost lives, right? Like that's a big problem.

[00:51:41]And and I think honestly, you know, at the the beginning of the controversy around prediction markets, mostly centered around whether or not sports really constituted gaming or these really um event contracts, which is something that a lot of people are still concerned about. But I think what has been added into that mix is is this concern about, you know, war markets, politics markets, where, you know, MNPI can actually have damage on human beings. Um, and I think a lot of public officials attention with regard to regulating prediction markets has shifted to those questions because they really are more important. Uh, and if anything, that may have the effect of kind of clearing the road for sports uh, markets in the medium term. Um, but you know, I'm I'm just kind of hypothesizing here.

[00:52:31]>> Yeah. I mean, if you're a maker in sports and you have a lot out there, you could get hit for all of it, right? I mean, I assume there's some risk controls in place, but if I know Jaden Dylan's going to be out and no one else does and I can go bet 200,000 contracts or dollars or whatever, like you have to take it, right? There's no recourse or anything like that from the >> Yeah. There's there's no voids. That's your job is to understand, you know, what those risks are and and what what price signals mean and and all of that.

[00:52:58]Exactly.

[00:52:59]>> Right.

[00:52:59]>> If you complain to Henry enough, he'll void it, though.

[00:53:03]>> Okay.

[00:53:05]>> Yes, definitely. Insider trading is interesting in sports like there's even have a massive issue outside of sports but inside of sports if you actually think about it the primary victim of insider trading tip historically was the sports book you know so they had this situation where they were the ones getting hit now there's a secondary victim which is sort of the um the integrity of the sport like my view is the sports books and the sports league are so tightly coupled now that they both have an incentive to find the balance that I don't really worry about it that much. Um, like not that I don't think it happens. I think it does, but I don't think I think in any proper regulated sports they're going to do enough to protect themselves and their partners.

[00:53:50]>> Yeah, super interesting. I can see there's going to be controversy about this, you know, but, you know, to me it's like all in the game in sports stuff. Obviously, I agree with Henry on the on the >> I will say if you're talking about situations like this is a little different, but like Jonte Porter for instance, um that's a great example, right, where if if the if for those who don't know, Jonte Porter was um checking out of games early so that all of his unders hit and and users on his behalf or who are connected to him on on DraftKings and their sports books were betting, you know, big correlated under parlays on every Jonte Porter player prop and it's a big scandal that still hasn't resolved. Um, if those trades had executed on prediction markets first game, people would have flagged it. I mean, that's the the value of having public feeds, right? If all of a sudden there's unusual activity on relatively exotic combinations >> right away somebody's going to say, well, this is atypical. Who was doing this? Why was this happening? you know, so I there's a degree to which um we can bring a a lot more transparency to sports um and it can really benefit everybody who cares about the integrity of sports for all this activity to be, you know, federally reported, open APIs, etc., etc. Um so it's not all doom and gloom on that front.

[00:55:13]>> Yeah. Okay. I actually want everyone's take on on this next one. It's from Jake. He says, "What are the pros and cons of prediction markets market making on their own platform?" So, the optics on this to people who don't really understand what's going on, I feel like have been bad for prediction markets. I I don't I you know, I want to learn learn more about it. My initial take was like it's not that big a deal, but the optics seem bad. Nigel, do you have a take on >> Yeah, it's on market. I think it's an optics factor in fact like and it's kind of lost and and and my knowledge of some of the market making and some of the major platforms is that they're not actually even profit seeeking um like a lot of these mention markets are getting market made by their own platform because they like the PR so they're willing to lose money uh in order to do that their long game and even their short-term game is not to make money on these so but it's just kind of an optics problem that oh my god they're fleecing on customers just like the books, but that's actually not they're actually giving money away, right?

[00:56:15]>> Um, so I think as people kind of learn a bit about it, it's kind of not great.

[00:56:21]But they start to understand what's happening there. So I don't really worry about it much.

[00:56:26]>> Well, to me, it's like a liquidity issue, right, SP? Like if I go on to a to a prediction market and they don't have a market for something that I want to bet, it's like, why would I ever go back there? I want to bet Justin Herbert under under passing yards and it's not on Khi. Well, why would I go back there, right? So, I can see why you would want to have an internal marketmaking team to seed these markets. Now, are they going further and trying to win really hard and all this? I have no idea. Maybe, but yeah. SP, any thoughts on market making on your own platform?

[00:56:55]>> No, I I think you nailed it. I mean, it's the same reason the the prediction markets, you know, try and incentivize makers with with lower fees is because that that value that action is valuable so that people get a good experience and can actually trade. It's so it's the same reason why you'd have this. I think um you know Nigel nailed it. At one point there was a sort of a bug on on Kouch a while back and they they made their internal trading teams you know P&L public and they were down like massively at that time. That was a while back and it's because they're they're trading all this like these toxic markets like mentions and all this garbage that nobody wanted to make at the time. So like that's clearly the pro is more liquidity and you have they're probably the only person in the exchange who is like happy to lose money. So that's like a good thing. I think where it gets a more interesting conversation um is like the longer term if they're around longer term because for me I view this as a very short term like get enough liquidity hopefully and then let you know the participants run its course and you you have like for example mentions you have good liquidity on both sides I would say now in like something like that um because it does beg question like incentives certain decisions um structure of like you know fees and and just how you're designing the ecosystem if the business's primary way of making money is actually like trading and participating in the >> the market.

[00:58:20]>> Yeah. Uh Henry obviously you have deep insight into this. Is the are you worried about the optics of it or anything else with the uh making market make on your own platform? Yeah, I mean in case it wasn't clear, um we are in the process of forming a subsidiary of NOVIC whose purpose is to market make across all prediction markets, but in particular to be the primary liquidity provider on NOVIC. Um and it's it's what I joined the company to do and something I personally believe very strongly in.

[00:58:52]Um, look, you know, it gives it gives the exchange the highest degree of flexibility in servicing their customers because if you don't have a partnered market maker, you just end up giving the world away to a SIG or a jump trading um who ultimately end up having perhaps even more leverage than than your partner American Maker Ward because they can walk away from it at any time. Um, now that being said, I think the main thing that is just a fundamental conflict of interest that uh, every exchange needs to own up to is if you have a partnered market maker and there's a a true settlement issue, right? where it's, you know, a a game ends early unexpectedly or some outcome that isn't accounted for you and your rules happens and the exchange simply knows that, you know, making a decision one way is worth a million dollars to us versus another way. It's impossible to push that out of your head, right? There no human being in the world isn't affected by that to some degree. And so what I what I would love to see us do and every prediction market do is to put together some kind of independent board of you know people who come from sports and trading you know trusted figures somebody like yourself Adam or Spanky or you know these big figures from sports and to say we we'd love to have you on retainer as an adviser and an advocate for players right to to deal with this um and to help us make these decisions in a way that are that are positive for users because you know ultimately these things do happen. I think I think the best way to have internal market making that supports the user experience is to not bury your head in the sand about the inevitable conflicts of interest that can arise and be proactive about them instead of pretending they don't exist.

[01:00:40]>> Okay. Um I think it's a good one for Nigel. Barracuda says, "If the prediction market model survives, won't consolidation be inevitable or an order routing service at the very least?" I'm not sure what ever happened in Europe.

[01:00:54]Did Bet Fair face competition and they just won or or >> they were they were early and just dominated the market from very early on.

[01:01:02]I was at BetDA. We launched 2003 and so was really kind of three years late and it was underfunded. It wasn't a great product and so it never really threatened Bet Fair. Bet Fair merged with Flutter which was the company I was part of in 2001. So it was kind of a FanDuel and DraftKings came together like would have ended up dominating.

[01:01:24]That's what happened with Bedfare.

[01:01:26]>> Um so oh sorry what was the in the followup question?

[01:01:29]>> So on on prediction markets do you think this will end in consolidation in the same way we've seen not not fully with sports books but DFS sites really people only play on two now and and >> yeah like it's certainly less than we're going to have like you know I don't think I'd want to be certainly wouldn't want to be outside the top 10 but it's certainly top five. I I think we're going to see we may also see more some more specialization like the sports go one way. Uh we've really sort of seen with sort of calcium and poly market like poly market I always think of as more international and more non-sports.

[01:02:02]Um so I do we will we definitely will but we are going to have like we have uh at least five companies with at least a billion kind of committed sort of thing if you include uh Robin Hood FanDuel DraftKings Goshi Poly Market. So it's a lot of big players there spending a lot of money.

[01:02:24]So I think it's going to be yeah I think it's going to be interesting for a while.

[01:02:29]>> Okay.

[01:02:31]Candyman, I think it's going for SP.

[01:02:32]Candyman says, "What are some of the opportunities to build tools that support growth in the prediction market space, specifically opportunities not requiring direct CFTC regulation?" I mean, there's a lot of people building a lot of stuff around prediction markets right now. Any advice for builders out there, SP?

[01:02:50]>> Yeah, I mean, I would I would just look at the stuff that's that's been popular in the adjacent industries like like sports betting. There's obviously been, you know, companies and tools and, you know, your site as one of them that's that's been very successful just sort of building off of, you know, content tools. Um, you know, Odds Jam sold for like ton of money like the versions of that like stuff that's repeatable. I think the other thing that's interesting, which we, you know, this this podcast has been entirely focused on sports, but like all these markets that are non-sports are also like new and untapped. And so I think some of those will grow, some of those will not grow. But getting in earlyish on something like that and sort of building like a sports layer, like the sports type of tools, which you might be familiar with, into those other, you know, markets, I think there's there's a lot of opportunity there if you're creative.

[01:03:40]>> I know it's every time I go on these sites, I look at like the non-sports one, it like blows my mind like what will the temperature be in Chicago on Wednesday at 3 PM and stuff like that.

[01:03:50]It's so wild. I mean, uh, yeah. Okay.

[01:03:53]Um, Dan, he has a question for Henry. He says, "Henry, if you weren't at NOVIG, how would you be attacking the open field in PMs right now?" I'm not sure exactly what he means by open field, but perhaps you do, Henry.

[01:04:06]>> Uh, I think he means how would you just be trying to win? Um, look, I would say, you know, again, there's a million approaches you could take and I talked about it depends on your skill set and kind of where you want to optimize. One thing we haven't even really touched yet, um, SP made a glancing reference to it, RFQS, which means request for quote. This is a, this is a non-order book system that exists on prediction markets whereby uh, you put together you send out a signal to all the market makers. I'd like I'd like you to make a number on this particular uh, market or combination of markets. You get quotes back. You can choose whether or not to accept them.

[01:04:45]It's currently only being used for parlays really. It's I think most people conceptualize it as a way to deliver parlays because parlays don't really work on order books. Um my expectation is that it's going to become a more and more popular mechanism that uh the obscurity of it really suits some of the smaller markets that we were talking about, you know, player props, you know, um smaller leagues, etc. Um, and it also kind of conforms to a lot of classic sportsbook type UI UX. And so I think learning the ins and outs of how those systems work, those RFQ systems and what can be done with them. Um, there's a lot of green fields there. And I that's where I would start.

[01:05:30]>> Yeah, I I totally meant to bring up RFQS because this is when we were talking about how can prediction markets ensure they compete with sports books in states where there are both clearly recreational players want to make parlays. They want to make parlays during the game. They want to make SGPs.

[01:05:44]They want to try to turn 10 into a million. This system that Henry is talking about request for quote. It fascinates me because you guys have probably seen me like we run the numbers when Port Noi or whatever these other guys tweet their parlays. I mean, we're looking at negative 30. We expect the people to return negative 30, negative 40, sometimes negative 50 or more percent on these parlays and SGPS that these books are printing. And so there is so much room to undercut. I could give you a way better price on Port Nory's parlay than you're getting right now and still make a ton of money and still expect to win 10% or 15%. And that's why that market has been like so interesting uh to me. So yeah, I'm glad to hear you say that because I I find that that market uh fascinating at all.

[01:06:27]Um last question I think is a joke, but E Exy says, "How do prediction markets make the hot hot dog stand business easier?" I have to get an insider joke here for the risktakers podcast. Uh SP, how does the how do prediction markets make the hot dog stand business easier?

[01:06:43]SP, >> well, I'll give the context on a joke, but you know, to lead into this, um I am curious like on the the comment that Nigel made about public perception and and not mattering to the Supreme Court.

[01:06:56]I am curious like what Nigel you'd be you'd be thinking or like what you would be doing differently if you were in the leaders of Koshi Poly Markets um shoes.

[01:07:05]Maybe I'll I'll give you a second to think about that and I'll just give the context on the the joke. So the the joke is is around you know like when these prediction markets were coming out and they were arguing like you know these are financial instruments these are hedging products you know they gave the the example of like you know I think it the actual example was something like a bar in Green Bay Wisconsin wants to hedge their financial risk to the game.

[01:07:26]Um, and so I've taken that to the, you know, the most extreme degree and, you know, pretended I'm a hot dog vendor, you know, who who is hedging out of my my 12 leg parlay. So that that's the joke. So they're they're intertwined now with the the introduction of prediction marketing.

[01:07:41]>> Okay, perfect. We're better off to end on your question to to Nigel. If you were in charge of Kowi or Pali, what would you be doing differently, if anything, right now?

[01:07:49]>> Yeah. So like first thing I say, I think they've done an amazing job. Like I you know, there's some things they've done which are incredible. they have built, you know, you might quibble their valuation, but these are companies worth tens of billions of dollars. To do that from zero in quite a short period of time, that's incredible. Like, and so they deserve all that success. I know how hard it is to build a business and and what they've done is is incredible.

[01:08:14]Um, I'd say there's certain areas that and and the other thing, and I don't criticize them for the very aggressive approach legally, I think they have to, right? I don't think that's not you don't have a choice. You can't just let a state try and roll you over if you believe you're federally mandated. So that I don't criticize them for. I also think they need to be super aggressive.

[01:08:35]Like they, you know, this is a big market. You're going to have to go for it. You know, you billions are going to be put into a competitor. So you don't really have the option of just sort of sitting back and going, "No, we're just going to build a good business." You're going to become roadkill. So I don't criticize them for any of that. The two that I would criticize them for, one is their marketing and much more calc than poly market, but I I just think it doesn't necessarily help like this the sort of person who's going to come and bet you because they think you can make rent money from it is not a high value customer, right? And so by not doing it, you're not really losing anything. This is a person who comes in. In fact, it reminds me of Skills. Skills ran very similar advertising. You only have to look at skills share price to know how well that worked and like it didn't.

[01:09:21]It's a terrible customer and it's it's it's unethical. I think they have corrected a lot of that but you know you still see it from time to time. And then the second thing is they need to work together. Like this is insane. Like they can compete like hell for market share but on the regulatory side they need to stop the kind of the sort of the sniping. What is it the coalition for fan you know prediction markets that doesn't include poly market that is so childish and it probably makes them all feel good and they beat their chest and I'm like yeah and you will beat your chest the day you know you know the the Supreme Court shuts you down because you as an industry just can't grow up and so that would be my big one is like look you can hate them all you want like I worked with DraftKings like I worked with them for years we were not friends but like we knew we had a shared interest. So that that's the big one.

[01:10:15]And you know, and I think if we go back and we go, okay, where did we all go wrong? That that could be a big factor in where this industry went wrong.

[01:10:23]>> Yeah. I mean, for people who don't remember, it was I don't want to say bitter and maybe I don't I don't think it was bitter between Nigel and and Jason, but it it was bitter. I know like the DraftKings people were like considered FanDuel like arch rival. How?

[01:10:37]However, when [ __ ] hit the fan, they came together and Jason and Nigel went together. Yeah. State by state by >> state joint lobbyist. We went I went up to Albany with Jason and we lobbied.

[01:10:49]>> And when you see what's happening in this industry where they setting up institutions which is everyone apart from poly market. It's just like this is stupid. This is really really stupid because what what the other thing that we discovered was being trying to like the industry doesn't think poly market and cali every time when it's reported it'll be poly market was actually in cali or up they're not going to learn and so whenever you the caly tries to say oh that's the stuff that goes on in poly market it doesn't matter no one cares and so they have to kind of figure out how to work together otherwise I just think it's going to be bad for the entire industry That's right.

[01:11:27]>> All right. Well, I really appreciate the time, guys. I I've learned a ton.

[01:11:31]Hopefully, all you guys out there in the audience learned a ton as well. Henry, tell the people where they can find you, where they can bet against you, anything else you want to let the people know about.

[01:11:42]>> You can install the Novig app on your phone and you can find me on Twitter.

[01:11:46]I'm big buck hunter on everything. You can message me on Telegram, Discord, whatever you want. Um, and inside prediction markets every Wednesday directly competing with SP's podcast.

[01:11:56]You can only It's like DraftKings Fandal. We're gonna kill each other one of these days.

[01:12:01]>> All right, SP, I assume you don't want to be found, but if you do want to be found, tell the people where they can find you.

[01:12:06]>> Uh, Twitter handle sports_p and then the risktakers podcast. I I it's amicable. I'll be the Nigel and uh and be amicable with the podcast. Okay, >> that's how you know he's winning the fight, by the way.

[01:12:24]>> Perfect. And Nigel, tell people what what you're working on and where they can find it.

[01:12:27]>> Yes, I'm Nigel Eckles on Twitter. And then most relevant to here, uh check out betex.com, which is a uh an international sports uh betting exchange prediction market.

[01:12:39]>> All right, perfect. Really, really appreciate the time, guys. Good luck with everything going forward for Henry, for Nigel, for SP, for everyone behind the scenes at ETR. I am Adam. Good luck everybody.