Thomas Peterffy on Interactive Brokers' Plan to Professionalize Prediction Markets

Tracy Alloway (0:00)

Hey there, Odd Lots listeners. Joe and I are very excited to announce that we will be hosting a live show in London on Thursday, May 7th.

Joe Weisenthal (0:10)

Yep, that's right. We've never been to London before. Well, we've been to London before, but in other capacities, we've never done a public episode, a public show in London. We've done them in other cities, New York City, DC, Chicago, San Francisco, and so forth. This will be our first London one, and I'm really excited about it.

Tracy Alloway (0:26)

Very exciting. So if you want to hear some fantastic conversations being recorded live on stage, if you want to hang out with Joe and me, or if you want to hang out with other Odd Lots listeners, you should definitely save the date for your calendar. It's going to be at Wilton's Music Hall in East London, again on Thursday, May 7th, doors opening at 6 p.m. And the key thing is, you know, every time we do a live show and they sell out, people complain, they're like, oh, I didn't see the link.

Joe Weisenthal (0:54)

I wish I would have bought them sooner. We're going to be putting the link in the Odd Lots Newsletter. So go find the Odd Lots Newsletter, just search for it, subscribe to it, and the link will be there before it's anywhere else. So this is your chance. Plus, if you like Odd Lots, if you're listening to the podcast, you probably really like the newsletter, you should really subscribe anyway. So if you like the podcast and so forth, subscribe to the newsletter, get the newsletter and get first crack at tickets.

Tracy Alloway (1:20)

Hope to see you there.

SPEAKER_3 (1:24)

Bloomberg Audio Studios, podcasts, radio, news.

Tracy Alloway (1:40)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Tracy Alloway.

Joe Weisenthal (1:43)

And I'm Joe Weisenthal.

Tracy Alloway (1:45)

Joe, sometimes, sometimes, I go on prediction markets, and I see some of the contracts being traded, and we hear the argument all the time that there might be a real economic reason why prediction markets should exist. So maybe you run a studio in Hollywood, so it's actually really important who will be in the next cast of whatever Avengers movie is coming out. But I have a hard time thinking that betting on whether or not Jesus Christ is going to return to the world is economically important, right?

Joe Weisenthal (2:21)

Yeah. No, I think there's a great point. I mean, I think you're being generous, actually, with the Avengers thing. I mean, maybe you could stretch. But, you know, for example, there is a market, and it's actually, you can track it on the Bloomberg, that says on Kalshi, will there be a recession before 2027? And that is at 33% right now. And that is something that, like, that's amazing, in a sense, that there is an instrument where you could bet on this very important question to investors and express it very purely in a way that if you were using other instruments like stocks or bonds, you would only be using a proxy for it. But so the potential there, in my mind, for some of these things is obviously quite high.

Tracy Alloway (3:00)

What you could say is certainly in our current economic environment, being able to bet on things like, is the US going to strike Carg Island or something like that, could be actually useful if you are a large institutional investor versus just betting on the price of oil or the direction of stocks or something like that. However, I have a hard time thinking that institutional investors are going to flock to a platform that contains questions that are both, is there going to be a recession and also some completely out there pop culture kind of contract?

Joe Weisenthal (3:33)

Totally, or obviously beyond the pop culture, they're dominated by sports betting and so forth. So that's another question. Also, the marketing tactics used by the major prediction market companies are very different than anything, pretty different than anything we see in traditional futures, et cetera. So I think we both, yeah, like I do on a fully think that like there could be legitimate use cases where there are natural hedgers, natural liquidity providers for some of these like swabs, some of these pure binary instruments, et cetera. But there are some pretty big chicken and egg problems and other things to like actually get there where there's volume. You know, for example, some of the weather related ones.

Tracy Alloway (4:15)

Absolutely.

Joe Weisenthal (4:15)

They're great. No one's betting, you know, there's like $20,000 on some of them. That's beneath any order of magnitude of usefulness to any economic or real speculative actor.