These Are the Sharps Actually Making Money on Prediction Markets

**SPEAKER_2** (0:02)
Bloomberg Audio Studios, Podcasts, Radio, News.

**Joe Weisenthal** (0:18)
Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

**Tracy Alloway** (0:23)
And I'm Tracy Alloway.

**Joe Weisenthal** (0:24)
Tracy, can I reveal a very boomer take of mine, so to speak?

**Tracy Alloway** (0:29)
Go on.

**Joe Weisenthal** (0:30)
I actually really loathe anything that's sort of like identified as like Get Rich Quick, or the gamification of stock trading, or like gamification of stock trading.

**Tracy Alloway** (0:43)
Gamification would be something different.

**Joe Weisenthal** (0:45)
That would probably be something different. I don't know why I pronounce it that way. Gamification of stock trading, gambling ads. I really don't like gambling ads that imply they're going to be a winner. I really don't like, even though I'm very interested in prediction market, I generally don't like a lot of the marketing. There was a really good Wall Street Journal article about Polymarket, and these ads that they had created, this idea that everyone's a winner, and there's all this free money out there. You just have to trade your knowledge of whatever rainfall or whatever.
It really viscerally bothers me. Yeah.

**Tracy Alloway** (1:19)
I think this is the key difference with prediction markets is it's zero sum. If you make a bet, someone is on the other side taking the opposite of that bet, and that feels a little different to me than traditional stock markets, where you would get some cash flows, some dividend, you sell, monetize whatever you got, and someone else buys.

**Joe Weisenthal** (1:40)
No, I totally agree. I mean, look, there are certainly zero sum. There are all kinds of zero sum markets in what we would call trad five. Futures are zero sum options, there are zero sum, et cetera. But on the other hand, but yes, zero sum games, even if we're talking about options or futures or swaps or whatever, that's not investing. That's trading.

**Tracy Alloway** (1:59)
That's trading, yeah.

**Joe Weisenthal** (2:00)
And that can often be speculation, and a lot of people lose a lot of money.
And when we know in a lot of these environments, a lot of, like most people lose, some people are very sophisticated, but a lot of people think they're gonna go into some of these new markets or whatever. Whether we're talking about prediction markets, whether we're talking about options trading on Robinhood, and they have dreams of making a lot of money, or just talking about crypto, which is also zero sum, I think, and they don't.

**Tracy Alloway** (2:24)
Yeah, absolutely. The other interesting thing about prediction markets, just from a sort of market structure question, and we've done episodes on this with Susquehanna, is the liquidity aspect. And as more professional investors get in, does that start to maybe arbitrage some of the edge that certain traders have seen so far? Because you read these stories, specific story, the average guys outsmarting Wall Street on prediction markets. Like average guys, I have a question over whether or not they're actually average, but you can imagine a scenario where more professionals get into prediction markets, and maybe it becomes harder to actually beat them.

**Joe Weisenthal** (3:04)
Absolutely.
I think everyone should actually go back and listen to our episode we did with Jeremy Mallich who runs the prediction markets desk over at Susquehanna before listening to this. Because the other thing he talked about is like how even some of these low liquidity markets, they put a lot of stock in the price, and therefore they can like feel comfortable doing OTC transactions based on what the price. So there's interesting stuff going on. Anyway, you mentioned this article came out in The New York Times, May 26, the average guys outsmarting Wall Street on prediction markets. And it is important, there are some people who are doing very well, and of like a handful of, they would say, sharps in various like other contexts who are like the sharks, very good. Most of us are minnows, and some people do really well.

**Tracy Alloway** (3:48)
And the vast majority are total idiots, right?

**Joe Weisenthal** (3:51)
Yeah, if I went on there, I would quickly lose $1,000, and some fraction of it would go to the house, and a bunch of it would go to some of the best traders, most likely, especially because it's peer to peer. Anyway, we have a very complicated special episode. I don't even know how this is going to work, but I thought it'd be fun. So this was a great piece.
We have the reporter on the piece with us, as well as a couple of the sharps. They are in a Discord together, a bunch of them. We're just going to be talking with two of them. The Discord is called the Maga Kiwi Club. That sounds fun. So we're going to be talking with Adam, the journalist, as well as some of the members of the Maga Kiwi Club. We have Brian Golden, who is in the article. He was identified as someone who is really top-notch in trading inflation contracts. We have Daniel Reichman, who also goes by Carnitas Taco, who does a lot of election and politics. Of course, we have Adam here, who is a journalist, reporter and producer here in NYC. He recently joined the tech company Notion, which all journalists might end up working at tech companies. Well, we do.