Some Of The Smartest World Cup Bets Weren't In Sportsbooks | The Brainstorm 137

**Sam** (0:00)
Welcome to The Brainstorm. Today, we're talking prediction market mania, or is it really just sports betting loophole mania? Nick, you'll let us know. And then Midjourney coming out with a new medical scanning device. I think this was a surprise to a lot of people and sparked a lot of conversation about whether more data is good or dangerous, I would say, in the medical community. But Nick, first to you, World Cup going on, lots of sports betting happening, lots of predictioning happening in the markets. Can you kind of break it down for us what's happening? And if there's been any updates in the Kalshi versus Polymarket duopoly here?

**Nick** (0:46)
Yeah. So to start on the World Cup, this has been a huge tailwind for the prediction market space. And just to set the stage in the US, prediction markets available in all 50 states, sports betting not available in all 50 states, notable holdouts, California, Texas make a huge portion of the population. They don't have access to legal online sports betting. So yes, there is definitely some arbitrage at play. But to look at the numbers, you're seeing an explosion in the volume. So total notional volume pre-World Cup was at around 7.1 billion on a weekly basis. Since the opening week, the opening week was around 10 billion, so up 40 percent from that pre-World Cup figure. Then this last week, the first full week of the World Cup, it was up to 13.1 billion on a weekly basis. So annualizing well north of 100 billion dollars on a yearly basis, up 84 percent since the start of the World Cup. So definitely seeing a huge product demand for this. Then also getting into these numbers, you can see that Kalshi is by far and away the biggest winner here. Their numbers alone on that June 15th, so the first full cup weekend, were up 117 percent from the pre-World Cup.
They did around nine billion dollars in notional volume just last week alone. Then the other main competitor here did have a strong week. It was up around 73 percent in Polymarket. But what's interesting is there have been a lot of new players to enter the prediction market space, and Polymarket, which once held essentially a monopoly, they were almost 100 percent, I think it was like 98 percent of the total volume, is now actually on a weekly basis at one of its lowest points in terms of market share that it's ever been.
So I think it's fallen all the way down to around 25-ish percent of the total market. So not great overall for Polymarket, but there was a Wall Street Journal article out there around Polymarket and some of the practices around their marketing, and how they handled influencers, and some fake spending that is sowing some distrust between consumers in Polymarket, and they're trying to build out their US presence, and it hasn't been going as well as I'm sure they like, but that's where we stand about two-ish weeks into the World Cup. People are definitely using these markets. I think Kalshi is the number one app in the app store from within their category.
So definitely seeing that.

**Sam** (3:33)
This is all World Cup related, and I think you've said the big opportunity here, right? If this is just sports betting, then it's not that interesting. The real opportunity here is much more interesting financialization of a lot of different things.
How are those numbers trending, or is it still bulk sports betting, and that's what's driving current market share?

**Nick** (4:03)
So I think what's interesting, just broad-based about prediction markets is because you can issue a market on essentially anything, right? If you have a question, you should be able to issue some sort of prediction market on it. You have these spikes in volume. So World Cup is a great example of this massive spike. You had it in previous elections, you had it during the NBA Finals, you have it in March Madness. So there are these global events or state events that do draw and bring in more volume. But I think what ends up happening is you have consumers come, they open up the Kalshi app, they see sports betting, or they see prediction markets relating to the World Cup, and then the question is, do they stay on the platform to then place a bet on something else?
Or do they invest in another prediction market? I think that's where we see the opportunity. To your question, Sam, crypto, and if you look at Kalshi's volume, has actually been a sneaky second growth driver for them. I think in the last week, their crypto volume surpassed one billion for the first time on a weekly basis. So there are other areas that are still definitely growing.