The Biggest Legal Scam Ever.

[00:00] - You've probably seen the ads,

[00:01] Kalshi Polymarket.

[00:03] The pitch is that you can bet on anything,

[00:06] the election, the Super Bowl,

[00:07] whether or not aliens will land in 2026.

[00:10] Well, I put $1,000 of my

[00:13] are prediction markets a scam?

[00:15] (upbeat music)

[00:16] with Polymarket.

[00:17] Let's see what we got.

[00:18] So there's $21 million in bets

[00:20] on what will happen before GTA VI.

[00:22] 55% that there'll be a

[00:25] We live in a world where

[00:26] or not a war will have a

[00:31] Actually, I'm kind on board with this.

[00:32] I feel like some stuff is dumb,

[00:33] but that's kind of funny.

[00:34] How it works.

[00:35] Buy yes or no shares

[00:37] Odds shift in real time.

[00:39] Place a trade, fund your

[00:41] debit card, or bank transfer.

[00:42] Oh, they don't take credit cards?

[00:44] I mean, that's probably

[00:44] for the best.

[00:45] - But, okay.

[00:46] Oh, "By trading you

[00:49] "and attest that you are not a US person,

[00:51] "you are not located in the US,

[00:52] "and are not the resident of

[00:53] "or located in a restricted jurisdiction."

[00:55] Wait, I thought you could do this in US.

[00:57] - [Alex] Well, remember how

[01:00] different platforms being

[01:03] - Polymarket aren't legal yet, are they?

[01:05] - [Alex] Not in the US.

[01:05] No, not really.

[01:06] - I am not gonna be doing

[01:08] I am a good, law abiding citizen.

[01:12] Let's go to Kalshi. (coughs)

[01:13] Okay, so quick context,

[01:14] because while they're

[01:16] Kalshi and Polymarket aren't

[01:20] Polymarket's the one

[01:22] and they're also the slightly more,

[01:23] shall we say, problematic

[01:26] - How do you feel about war?

[01:28] - And as we've just seen,

[01:29] they're technically illegal

[01:32] Now Polymarket US, which is its own thing,

[01:34] is coming, if you wanna

[01:36] But for right now, if you're an American,

[01:38] and you keep hearing about Polymarket,

[01:40] well, you've been hearing about a website

[01:41] that you're not supposed

[01:44] Kalshi is the one I can use.

[01:46] It is an actual CFTC regulated exchange,

[01:49] meaning it's approved by

[01:51] that oversees other futures trading.

[01:54] Now how betting on aliens is

[01:55] considered the same kind of futures option

[01:58] as farmers hedging against a dry season is

[02:00] a whole other question.

[02:02] But that's besides the point.

[02:03] So there were definitely a

[02:06] So they needed email,

[02:08] a phone number,

[02:09] my name,

[02:10] my address.

[02:11] They wanted to scan my

[02:14] And I also did have to give

[02:16] But after doing Rent-A-Center,

[02:18] I guess I'll just give that

[02:21] So why don't we take a closer look?

[02:23] I do have, as you can see here,

[02:25] $1,000 in my portfolio,

[02:27] which they apparently pay...

[02:29] "Please check the information

[02:31] "and try again."

[02:32] What?

[02:33] They take my money?

[02:33] What do you mean information?

[02:34] I gave you it all.

[02:35] Give me some options.

[02:37] What are we gonna bet on?

[02:38] - Pokemon.

[02:39] Where are we going

[02:40] to financially make

[02:43] - [Ken] Pokemon.

[02:44] - I don't think...

[02:45] Is there Pokemon?

[02:46] Whoa.

[02:47] Okay, so you can bet

[02:51] - [Ken] This is right up your alley, dude.

[02:53] Go. Go for it.

[02:54] You don't even have to buy packs anymore.

[02:56] - Who wants to buy

[02:58] Why don't you just bet on

[02:59] - [Ken] Exactly.

[03:00] - My goal for this video is

[03:01] not to just say, "These are dumb and bad."

[03:03] Like, I wanna understand

[03:06] I wanna understand how legal

[03:10] how they've worked

[03:12] and ultimately what it's

[03:18] and money, and effort into,

[03:20] can you win,

[03:21] how does it work,

[03:22] and what are the downsides?

[03:23] Because I'm pretty skeptical.

[03:26] But you can understand the pitch.

[03:28] No house, no bookie.

[03:30] You're not betting against Kalshi,

[03:31] you're betting against other people.

[03:33] Kalshi just takes a cut of every trade.

[03:35] To learn more,

[03:36] I spoke with Dr. Robin Hanson,

[03:38] the father of modern prediction markets.

[03:40] - I worked with this group called Xanadu,

[03:42] trying to invent the World Wide Web.

[03:43] And their vision, in part,

[03:45] was that the web would make

[03:47] and that would make public

[03:50] And I started to have doubts.

[03:51] And so I wondered, what

[03:54] You know, those of us

[03:55] that many public consensus were stupid,

[03:58] and misinformed, and misdirected.

[04:01] The idea was accessible to me that,

[04:03] why not have betting markets?

[04:04] And couldn't the betting

[04:06] healthier context in which

[04:09] to form a consensus.

[04:11] That was my initial

[04:14] - So that's the theory at least.

[04:15] Now, Kalshi and Polymarket aren't

[04:17] really what Dr. Hanson had in mind,

[04:19] but the core concept is here.

[04:21] In a market where people put their money

[04:23] where their mouth is,

[04:24] the prices are likely to reflect

[04:25] what the crowd actually believes,

[04:27] not what they say they do.

[04:29] - And of course,

[04:29] I started to read more about

[04:30] the state of literature

[04:32] and I learned that the standard story

[04:34] on financial markets is that,

[04:35] in fact, it's hard to find

[04:38] And then when we've had

[04:40] of financial markets to other institutions

[04:42] at the same time, same

[04:45] the markets just consistently do better.

[04:46] - Look, I'm not a huge fan of gambling.

[04:49] I personally believe

[04:50] that some friction in

[04:52] A trip to Vegas is a very

[04:55] casually tapping a few

[04:57] But let's do this.

[04:58] $1,000 to see how this actually works.

[05:01] (screen whooshing)

[05:02] I don't know if this is for me.

[05:03] (Austin laughing)

[05:05] So I've been using Kalshi

[05:09] and I just don't know what

[05:13] because look, I think what

[05:17] they take bets on things

[05:19] that they're really passionate about.

[05:20] But not only am I trying to

[05:24] but even the things that

[05:26] I feel like are really boring, right?

[05:28] Like, so I've made some bets.

[05:29] I'll actually show you

[05:31] which I am exclusively down

[05:34] So I bet on some F1 stuff.

[05:36] But the problem is, there's

[05:39] and most of the bets

[05:40] you know, what's gonna happen

[05:42] So they're not really exciting.

[05:44] I bet on a Pikachu card going up,

[05:46] which I am making some money on.

[05:48] I've taken a massive hit

[05:52] which at this point,

[05:53] at least as I'm recording right now,

[05:54] seems like they're about to,

[05:55] like, bring out a new

[05:58] So I'm way down on that.

[06:00] The one that I was doing

[06:02] betting on aliens.

[06:04] That's also not exciting.

[06:05] Like, I understand there's

[06:10] but to me,

[06:13] it doesn't click on betting

[06:17] I'm trying to get it,

[06:19] but I'm not really getting it.

[06:21] (screen whooshing)

[06:22] Here's what I keep getting stuck on.

[06:24] It's not that I don't personally

[06:26] resonate with this stuff so much.

[06:27] I mean, I get it. Gambling is fun.

[06:29] The bigger question is,

[06:30] why are prediction markets

[06:33] The ads all over sports on TV.

[06:35] The integrations on cable news.

[06:37] I mean, somebody decided this needed to be

[06:39] in front of all of our faces all the time,

[06:42] and it's working.

[06:43] Kalshi and Polymarket combined did about

[06:44] $50 billion in trades last year.

[06:47] They did that much again in just March

[06:49] and April of this year.

[06:51] Something else was going on here.

[06:53] So I reached out to a good

[06:56] who is an independent sports journalist

[06:58] and who has done some great reporting

[06:59] on the rise of sports betting.

[07:01] - At the beginning it felt like the small,

[07:03] kind of niche thing.

[07:04] And then,

[07:05] especially over the course

[07:06] it's really exploded in a way

[07:08] that I think it's been kind of surprising.

[07:10] I think that people within the industry,

[07:11] both on the sports gambling side

[07:13] and on the prediction market side,

[07:14] I think have been surprised

[07:16] And I think the breaking point moment

[07:18] for me was not even in sports.

[07:19] But I live in New York City

[07:21] and I was walking around during

[07:22] the Democratic primary of

[07:25] between Andrew Cuomo and Zohran Mamdani.

[07:27] And you would see these massive billboards

[07:30] on the sides of the subway basically,

[07:32] being like, "Look at the live ads

[07:34] "for the race between Andrew

[07:37] It felt like a kind of

[07:40] because it was like,

[07:41] "Oh, this is such a dangerous,

[07:42] "slippery slope when

[07:46] "and applying it to

[07:48] "which affects all of our

[07:50] "even if we don't want to think about it."

[07:51] - Yikes!

[07:52] The whole pitch is that these things are

[07:54] supposed to be different from

[07:58] You know, it's more transparent

[07:59] when you're betting against people,

[08:00] and not the house.

[08:02] Dr. Hanson's whole vision

[08:05] not about late-stage capitalism.

[08:08] But it never quite works

[08:10] Polymarket and Kalshi aren't blowing up,

[08:12] 'cause people are finding so much value

[08:14] in the information they provide.

[08:16] It's because of a serious marketing push.

[08:19] - Well, the marketing

[08:21] that the sportsbooks

[08:23] Kalshi is decentralized.

[08:25] You're betting against the people.

[08:26] The reality of that is

[08:27] that a lot of these kind of private equity

[08:30] and, like, venture capital,

[08:31] like, these major financial firms

[08:32] that control Wall Street are

[08:35] actually setting the markets for it.

[08:36] And so the odds on these

[08:39] aren't any different from

[08:41] what you would see on a sportsbook.

[08:43] But the marketing campaign,

[08:45] because of kind of the less centralized,

[08:47] less regulated nature of

[08:51] it kind of pushes people towards this idea

[08:54] that you're just betting

[08:56] when in actuality you're betting against

[08:58] these massive Wall Street firms.

[08:59] And so-

[09:01] opened my eyes to the biggest

[09:04] sports betting.

[09:06] By some estimates,

[09:06] it's around 90% of the

[09:09] which is far above betting on,

[09:11] if the president's gonna say

[09:13] or if those aliens are

[09:16] or not.

[09:17] So since I'm not having a lot

[09:18] of luck betting on the boring stuff,

[09:21] I have an idea.

[09:22] (screen whooshing)

[09:24] Let's see how it works, shall we?

[09:26] So right now the Angels

[09:30] So as always,

[09:32] especially when it comes to sports,

[09:33] there's 1,000,000 different

[09:35] the first five innings,

[09:36] a bunch of other stuff.

[09:37] I'm just gonna do something simple.

[09:39] So 2.3 times payout.

[09:41] So if I put $200 down,

[09:42] and the Angels win,

[09:43] I make $468.

[09:45] Sure.

[09:46] I guess with that,

[09:48] well, let's see how it goes.

[09:49] This is a lot of fun,

[09:50] but it helps it's a good game.

[09:52] Again. (laughs)

[09:54] (audience cheering)

[09:55] One inning left.

[09:56] Right now we're at 93%,

[09:59] so I'm feeling pretty good.

[10:00] I'm feeling pretty good.

[10:01] The score is five to seven.

[10:02] It got a lot closer than it was before.

[10:04] Okay, I'm gotta put my phone away,

[10:05] I've gotta put my phone away.

[10:05] I've gotta lock in here.

[10:06] I've gotta lock in.

[10:07] - [Announcer] On 13 is your agent.

[10:11] - That was a ton of fun honestly.

[10:13] I think it really

[10:16] that I was a little bit

[10:18] I still have somewhat

[10:20] and Polymarket,

[10:23] but it definitely did

[10:25] for the way you can enjoy sports,

[10:27] if I'm honest with you.

[10:28] It was interesting for sure,

[10:29] but...

[10:31] I've gotta think on this a little bit.

[10:32] I don't know.

[10:33] Look, the numbers don't lie.

[10:36] It's not just people against each other.

[10:38] Maybe Kalshi and Polymarket

[10:40] I mean, that's the whole legal argument

[10:42] for why these things exist.

[10:44] But the people you are betting against are

[10:46] not just regular people.

[10:48] More than 70% of users

[10:51] and only 0.1% of accounts take

[10:56] Just the same way you're probably

[10:57] not gonna pick better stocks than

[10:59] the big Wall Street firms

[11:01] The same thing goes

[11:04] - It's not just about kind

[11:07] that things actually work in the world.

[11:09] It's how these systems are applied

[11:12] to kind of the existing

[11:14] and the emotions,

[11:15] and feelings that we have towards sports,

[11:17] and the romantic idea

[11:19] - Who could have guessed?

[11:21] The odds are stacked

[11:23] (upbeat music)

[11:24] I have definitely seen enough.

[11:26] I closed all of my positions,

[11:27] and cashed out of Kalshi yesterday.

[11:30] And wouldn't you know it,

[11:31] the second I went to withdraw the money,

[11:33] Kalshi flagged my account

[11:37] 'cause of course they did.

[11:38] So I now need to contact customer service

[11:40] to get things withdrawn.

[11:42] But regardless,

[11:43] I've already donated the $265

[11:47] to the National Council

[11:50] Prediction markets didn't

[11:52] to $50 billion in trading volume.

[11:55] They exploded.

[11:56] Two years ago,

[11:57] this is a niche thing.

[11:58] But today there's subway billboards,

[12:01] ads all over YouTube and TV.

[12:03] I mean, we are looking at

[12:04] two of the biggest platforms in the world

[12:06] with valuations in the tens of billions.

[12:09] The idea of a prediction market,

[12:11] it's not necessarily a bad one.

[12:13] Dr. Hanson had some of the right ideas,

[12:15] but what Kalshi and Polymarket are doing,

[12:18] allowing anyone to bet

[12:20] it's just problematic.

[12:22] It enables truly wild stories like

[12:24] the soldier who bet on the

[12:27] to capture the President

[12:30] I mean, sure he got caught

[12:33] but I think it's a good snapshot

[12:35] of just how out of control things can get

[12:37] when there are no adults in the room.

[12:40] I am not gonna dance

[12:42] The rules have essentially been abandoned.

[12:45] The Commodity Futures Trading

[12:49] is the federal agency that's

[12:51] supposed to regulate futures,

[12:53] which is where prediction

[12:55] They're a small agency designed to ensure

[12:57] that nefarious behavior

[13:00] According to a New York

[13:02] the CFTC really has been

[13:05] I mean, there's so much here.

[13:08] People being fired for speaking out.

[13:10] There's only a single commissioner left

[13:12] who used to be a lawyer for crypto

[13:14] and prediction market firms.

[13:15] And there's also this.

[13:18] - Why did you guys make Donald Trump Jr

[13:20] a strategic advisor?

[13:21] - (gulps) We have a lot of advisors.

[13:23] - Mm-hmm.

[13:24] What kind of advice does he give you?

[13:26] - So it really is again about

[13:30] - What's his role?

[13:31] I mean, this is the son of the president.

[13:33] - Again, I mean, we

[13:34] The people-

[13:36] He has a direct line to the White House.

[13:39] - We have a lot of advisors.

[13:40] (speaker booming)

[13:41] - Well, I think that kind of

[13:46] So, are prediction markets a scam?

[13:49] Honestly... (sighs)

[13:52] Kalshi will let you bet on aliens.

[13:54] Polymarket will let you bet on

[13:55] whether the president says

[13:58] And those bets will resolve fairly.

[14:01] I mean, the platforms aren't lying about

[14:03] what they're selling.

[14:04] But these are not designed

[14:06] to make information more freely available.

[14:08] They might as well be casinos

[14:11] pretending to be a financial

[14:14] they're just growing as fast as they can,

[14:17] because the regulator who is

[14:19] asleep at the wheel.

[14:21] What do you think is more likely,

[14:22] humanity benefits

[14:23] from the information on

[14:26] or it all turns into Biff

[14:29] - Hello.

[14:30] - Hello. Anybody home?

[14:31] Huh? Think, McFly.

[14:33] Think

[14:33] - I know which one I'd bet on.

[14:35] If you enjoyed,

[14:36] make sure to subscribe to the channel,

[14:37] and ring-a-ling that ding-a-ling button.

[14:39] You can check out our deep dive

[14:40] on why AI has become such a huge problem.

[14:43] I probably need to go take a shower

[14:45] or something after this one.

[14:47] "Who?

[14:48] "The son of the president?

[14:50] "He's just an advisor.

[14:52] "Don't worry about it.

[14:54] "Meh."