New CFTC Chairman Michael Selig on How to Regulate Prediction Markets

SPEAKER_2 (0:02)

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Joe Weisenthal (0:18)

Hello and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

Tracy Alloway (0:22)

And I'm Tracy Alloway.

Joe Weisenthal (0:24)

Tracy, did you watch the Super Bowl? You know you're gonna ask that, didn't you?

Tracy Alloway (0:27)

I knew it. Actually, I was gonna start exactly the same way. I did watch the Super Bowl, and so I feel empowered to ask you a very controversial question.

Joe Weisenthal (0:37)

Oh, yeah?

Tracy Alloway (0:38)

Not which halftime show you watched, but did Cardi B perform at the Super Bowl?

Joe Weisenthal (0:45)

Oh, right, because this was a big thing. I forgot that there was, you know what? I'm aware of various sort of questions about prediction markets and things that people place bets on. Well, how did that resolve? What was the basic issue here again?

Tracy Alloway (0:58)

So I think it's still being resolved in various ways, but Cardi B, she was on set during Bad Bunny's extravaganza, and she was kind of like dancing and singing along, like mouthing words at least, along with other people like Pedro Pascal and Jessica Alba.

Joe Weisenthal (1:15)

Yeah, Lady Gaga.

Tracy Alloway (1:17)

Oh, no, she actually did sing, yeah, you're right, you're right. So the only reason this matters at all is because of prediction markets. So there was a bet, will Cardi B perform?

Joe Weisenthal (1:27)

Yeah.

Tracy Alloway (1:27)

And now the question is, does standing on stage and kind of bobbing your head and mouthing words count as a performance? Polymarket says it does. Kalshi says it doesn't.

Joe Weisenthal (1:38)

Oh, interesting. Yeah, there you go. Kalshi and Polymarket split over whether Cardi B performed. That's a great tension. I like that. It was striking to me, setting aside that I actually somehow seem to have missed the specific thing. Like how much prediction markets are now just part of the consumption experience. You know, even you look at all these different things that people are talking about. There was a, is Lady Gaga going to show up somehow? Like someone made a bet on it before it went public. But also just like with each score, you know, you check the line is like how much did this move the expectations of whether the Seahawks are leading? Like prediction markets are truly becoming part of like pop culture and how we interact with pop culture.

Tracy Alloway (2:19)

There were some weird bets around like color of Gatorade that was going to get dumped on the coach. Yeah. Length of like the national anthem being sung.

Joe Weisenthal (2:28)

Yeah.

Tracy Alloway (2:29)

Did you see that? Like I was tempted by some of those, but I stayed away.

Joe Weisenthal (2:34)

I haven't used Polymarket or Kalshi, probably wise. The interesting thing too is like how much the mood has swung, because a few years ago, I don't know, 2022, 2023, I think we did an episode like at that time, there was almost nothing and the regulatory 180, the degree to the liberalization of these markets has been pretty remarkable. Even going back to a year and a half ago, there was just a polymarket and it was just the offshore version that you had to fund with stable coins. And now it's like exploded at the time. Kalshi was very limited. They didn't have US access, et cetera, or very curtailed US access. Anyway, they're here and everyone's trying to wrap their heads around where this is all going and stuff.

Tracy Alloway (3:20)

Yeah, it feels like they're much more sanctioned, I guess, than they used to be. But that said, there are still some issues that people are trying to work out. You have ambiguous outcomes, like did Cardi B actually perform? You have concerns around insider trading, though not insider trading per se, because we're not talking about securities contracts, but maybe people with insider info who inadvertently disclose something material. I was thinking about this actually, so you can also bet on which companies are going to run Super Bowl ads. Oh yeah. And a lot of people must know if a company is going to run an ad like that. You have the agency and actors like everyone. And you could argue maybe that that's material non-public information, right? You run a Super Bowl ad, you get a bunch of attention. Maybe your share price goes up if you're publicly listed. So I don't know.

Joe Weisenthal (4:09)

There are so many things. Anyway, rather than us just keep talking about them, because we can talk for an hour. We really do have the perfect guest. We're going to be speaking with Mike Selig. He is the new chairman of the CFTC, the main regulator for prediction markets, who has just sworn in in December. We're going to talk all about this, maybe some crypto as well. So Mike, thank you so much for coming on Odd Lots, coming into the studio.