Risk of Ruin
Audio documentaries about risk takers.
Risk of Ruin
Betting on Chaos
Domer is a prediction market trader, and is one of the biggest bettors on Polymarket. He talks about his journey from Intrade, to Predictit, to Polymarket. He also talks about the 2024 election, which was a rollercoaster. It featured highs - like backing Kamala Harris before President Joe Biden had even dropped out of the race - and also lows, like being short Trump on election night.
Domer also talks about unraveling the mystery of the so-called French Whale.
Domer on Polymarket: https://polymarket.com/profile/0x9d84ce0306f8551e02efef1680475fc0f1dc1344
Domer on Twitter: https://x.com/Domahhhh
Support the show by subscribing on Substack: https://riskofruinpod.substack.com
Follow the show on Twitter: https://x.com/halfkelly
I'm actually okay with losing money with Trump because if Trump wins, he is so chaotic. It's so great for prediction markets in general that even if I lose XYZ dollars, I can probably make back XYZ times two within the next six months just because Trump is a loose cannon. So I'm not like... I'm not too worried about it in that sense.
SPEAKER_00:You're listening to Risk of Ruin. I'm John Reeder. This is Episode 41, Betting on Chaos. So, one of the great things about the modern world is that you can be aimlessly scrolling Twitter, looking for God knows what, and then find the exact thing you didn't know you were looking for. Like, freshly updated betting odds on which cardinal will become the next pope. Okay, and if you're wondering if perhaps I might be shocked by the collision of the sacred and the profane, um, no. I grew up Catholic, and our church ran a pretty professional bingo game, as in, they advertised for it on the radio. And once a year, our priests would mention that if not for all of the money they were making at bingo, things would be no bueno in the finances department. Okay, and this was the 90s, which meant that bingo night was unburdened. by our modern sensibilities related to secondhand smoke. They actually played bingo in the gymnasium, but the smoke was still voluminous enough that I would describe the air quality as being roughly on par with an establishment you would find on Fremont Street in Las Vegas. Also, the game was frequented by an unlikely group of rounders. Ladies who spent the week making casseroles for families of six, and then on Friday night they got down to business. I don't know how many cards these regulars played at once, but it seemed like it was, I don't know, maybe 10 to 15. And there was also somehow a pull tab machine, which are basically like lotto scratchers. I swear I'm not making this up, but there was a woman who could pull tabs with both hands concurrently. She was like lotto scratcher ambidextrous and she smoked and she still wielded a bingo dauber like a lightsaber. But all the players took the game seriously. Every folding table was administered with the precision and ruthlessness of a tin pot dictator. Two puffs on a Marlboro Light, G59, and then pink, purple, and blue dots multiplied across the room. And still to this day, no bingo has ever been missed. Also, I'm actually a little afraid to think about what the house edge on this game was. I mean, I have no idea, but if I had to guess, I'm going with north of egregious and probably just south of predatory. So no, it does not shock me if I see religion or gambling happening to stray into the other's domain. But to get back to this issue of betting on the Pope, pretty much nobody should be surprised, right? We kind of bet on everything now. Well, our guest for this episode also bets on lots of things, including the papal conclave market. He goes by Domer, and if you navigate to Polymarket, which is by far the biggest prediction market the world has ever seen, you will find that Domer is one of the biggest bettors on the site. Domer says he made six figures betting on the Papal Conclave, and the way he knew enough to back the right cardinal was by cramming, which he is pretty much always doing.
SPEAKER_01:I feel like when I'm really, really, really researching a market, like for instance, the Pope market, right? I feel like I'm becoming like one of the foremost experts in the world on this very thing, right? Maybe not like top 10, but maybe top 500, right? There are probably not more than 500 people on the planet who know more about this conclave than I do, right? And so I'm just buried in it. I know everything about it. And I know, you know, the biographies of people and I know how it's going to play out. And I have a sense of the timing. And it's just every facet of it I've kind of like tried to become an expert in. And then, you know, a year from now, I'll probably remember not a single thing. Right. I will be back to in the bottom 50 percent of knowledge of this topic because you're just like you're going in and out of these very esoteric events and like trying to become an expert. But then it's like you can't keep this in your brain forever. Like it just just floats away. So it's kind of like, you know, studying for a final exam and, you know. Pope and then you take the final exam and it's like, okay, I don't need to remember this anymore. I mean, you remember the vague outlines of it in case the event repeats, but you don't remember like the specifics of everything.
SPEAKER_00:Let me take a step back for a second and correct something from earlier. I said today we bet on everything and I kind of offered papal betting as exhibit a, but actually this isn't new. People have been betting on this kind of stuff for at least 500 years. And how do we know this? Because we have records of Roman banks offering markets on the result of the 1503 papal conclave. And I hope you're sitting down for this, but even then, there were whispers of insider trading, accusations of cardinals slipping the inside scoop to local betting syndicates as to which candidate had the favor of the Holy Spirit. So yeah, nothing is ever new. except maybe the volume of ridiculous things we bet on. Anyway, Domer may not have been around to short any overvalued French cardinals in the conclave of 1503, but he's also not new to this stuff. He started as a poker player and then ended up down the prop bet rabbit hole, everything from the Grammys to foreign elections.
SPEAKER_01:So I was clicking around on the websites and I see these prop bets and there's the election, there's Oscars, who's going to win the Oscars. And so I just started randomly betting on these prop bets. And then I discovered that there's a whole universe out there called in trade. That's a proper prediction market. And all they do is these prop bets, right? Who's going to win the election? Who's going to be the nominee? Who's going to win the Oscars? You know, stuff like big level stuff like is Brexit going to happen? So I joined that site and I think I deposited like 200 bucks and It all started from there.
SPEAKER_00:It's kind of a minor miracle that Domer is still a prediction market trader today, because the first thing to know about prediction markets is that they are notoriously sensitive to the headline events like the U.S. presidential election. But then Domer also had to deal with the exact same problems that any gambler making a living from the gray market has to deal with, which is regulators and maybe sketchy betting platforms. Domer mentioned the big platform at the time, which was an Ireland-based company called Intrade. Intrade had emerged from the primordial ooze that formed when some ambitious entrepreneurs looked at the early internet and figured, you know what? I bet we can use this to gamble. Okay, and if you've ever listened to our episode about Betfair, it was kind of the same thing. There were multiple companies working on exchanges, and Intrade tried to carve out its own niche by by pivoting to non-sports events. I think the strategy was basically, you know, let Betfair have football and we'll put up markets on Kelly Clarkson versus Justin Guarini. Also, the history of InTrade is pretty much the same as various other gray market sites. I mean, it kind of doesn't matter. The beats in the story are the same as Full Tilt Poker or FTX. InTrade's customers were 75% American. No regulator in the U.S. wanted to work with them. Eventually, that led to a crackdown, and then try to guess whether, when the whole thing folded, there were questions about misplacement of funds. Domer says there was no such thing as a prediction market trader at that time. He might have been the only one. But when Intrade folded, it was like a gut punch.
SPEAKER_01:Yeah, I was despondent. Yeah. And then I switched. So I took like maybe three months off and then, you know, not by choice. So it's kind of like unemployed. And then I switched to stocks for a couple of years and then predicted launched, which was like a godsend. And then prediction markets were back.
SPEAKER_00:It turns out that most gambling stories are really about one thing. liquidity, where's the money, and more importantly, who can we count on to lose it? The Chris Moneymaker slash rise of the internet poker boom meant every suburban dad with a pair of Ray-Bans was sure he was just one bad beat away from a PokerStars sponsorship. One way to describe these guys is hopeful. Another way to describe them is liquidity. Then sports betting was legalized and suddenly we're all experts on the Cover 2 defense, YOLOing five-leg parlays that fund the private jet habit of the DraftKings CEO. Prediction markets are subject to the same reliance on money flows. It really helps if there's a pipeline for cash to make its way from casuals to the serious folks. After intrade folded, eventually it was replaced by PredictIt. Think of PredictIt as someone gingerly turning on a faucet. So, not exactly Niagara Falls. But it was something, and it was just in time for the most unexpected political event of the 21st century.
SPEAKER_01:First of all, so when I joined predicted, it was like January of 2016. So things were like happening. This was this was Trump coming down the escalator type, you know, environment Trump, Trump in the Iowa caucuses. I think he skipped that or something like that. Anyway, it was it was very turbulent time in politics. So there was a lot of money and interest coming into predicted. So I joined it like the exact, you know, one of the early people. peaks of people using the site. I would liken it to like, you know, prediction markets are mostly desert and then there's occasional oasis with like an election or the Oscars. Like it very much revolved around these big events that people cared about and less so these like, you know, micro events that are happening, um, that kind of are the basis of prediction markets these days. So yeah, it was very sparse back then. And then predicted, this was also the rise of Trump. And so there was a lot of chaos happening. He was skipping debates. He was yelling at people in debate. It was just so chaotic what was happening. And so there was a lot of markets created around this and there was a lot of interest and people had very strong opinions about him. So it was like a boon for prediction markets.
SPEAKER_00:Prediction markets are similar enough to the other well-known ways to make binary bets, like sportsbooks, for instance, that I don't have to spend a ton of time on what is a prediction market. But I should point out one way that prediction markets differ from the menu you might see on a sportsbook. For instance, if DraftKings offers the Bills to win the Super Bowl at plus 700 odds, they aren't always offering a no bet. So one way that matters is that it actually makes it quite a bit harder to short the bills if that's what you want to do. And it also makes it pretty easy for books to offer futures markets with very high hold percentages. But essentially every prediction event offers a two-way contract. You can be long or short. So if you expect a lot of chaos, you can long the underdogs and short the favorites. Actually, that's kind of what Domer did in the papal betting market. And he's done that kind of thing before.
SPEAKER_01:As a first piece of context, as you pointed out earlier, all of the predicted wagers have a max limit of$850. And the way that predicted kind of went around this is that whenever like let's say it's a presidential race of Hillary versus Trump right so they would put up a market who's going to win the presidential race what party is going to win the presidential race who's going to be the VP so instead of one market where you can bet 850 there's like you know, 10 markets on the exact same thing. So one of these markets was who will be the secretary of state on January 31st, 2017, right? So it was Trump versus Hillary and Hillary was the huge favorite. So all of the Democrat potential Democrat secretary of states added up to, let's say 70 or 80 or close to that matching Hillary's odds, right? So when I went into this market and it's like, okay, it might not be one, you know, Hillary might not win. It might not be one of these people. And I shorted all the Democrats, right? Right. And then it ended up that Trump won. And then this market went absolutely bonkers because I'm not sure if people remember this, but Trump's Trump picking the secretary of state turned into like a huge reality show like Rudy Giuliani, Newt Gingrich, Mitt Romney. Like if I said, think of a random Republican, probably one of them interviewed to be secretary of state. So what happened in this market is as he was interviewing people, they went to like 50 cents or more. So like Rudy Giuliani, I think. Once Trump won, Rudy Giuliani went to like 50 cents. And then Trump was tweeting, oh, I'm going to interview Newt Gingrich. Newt Gingrich went to 50 cents. Mitt Romney had a famous interview snapshot. He went to 50 cents. Like six different people went to 50 cents. Right. And I shorted all six of them, luckily. And so in the context, I have this 80 percent short on Trump. All of the Hillary people. I'm 50% short on all of these Trump candidates that he went through like a reality show. And then he ends up picking this person that I've never heard of, 98% of Americans I've never heard of, this guy named Rex Tillerson, who is an oil executive, right? And flashing back to the market, so the market was about who is going to be Secretary of State on January 31st right and that's important because January 31st is 11 days after the inauguration and he has picked this random oil executive so one of my friends and credit to them it wasn't me did this like super deep research and like figured out the exact like tree of like who works at the Secretary of State's office and if Rex Tillerson encountered any trouble like who will this person be that assumes the office as a placeholder but before rex tillerson gets it right and there's this guy named thomas shannon and so all of us email predict it and we're like please add this guy named thomas shannon and by this point this market has like 80 people in it because it's just it was all the hillary people then all these trump people and they had to add rex tillerson because no one had ever heard of them so this market was 80 people and they're just adding another person named thomas shannon and we all bought tens of thousands of shares at one cent because everybody else is like obviously thomas shannon is not going to be the secretary of state of the united States, right? But it ended up that we were right. It took like, I think he ended up, Rex Tillerson took the office on like February 2nd or whatever. So this guy, Thomas Shannon, who we had begged, predicted to add to the market, we had bought tens of thousands of shares at one cent, ended up being the 100 cent winner. And Rex Tillerson, after all these people had gone from 80 to zero, 50 to zero, Rex Tillerson went from like 95 to zero. And so it ended up being that every single person that they added and that spike lost. And this one person that we begged to get added That one cent won.
SPEAKER_00:Domer says that in the early years, he wasn't making a great living. Then when Predicta opened, he started to make a comfortable living. He wasn't getting rich, but that did make him a pretty experienced trader by the time Polymarket came around.
SPEAKER_01:I joined Polymarket in January of 2021. And this was around the time that Joe Biden was going to be inaugurated. So Trump was still trading at like 10%. to be inaugurated as the president, right? There was all these conspiracy theories. Biden didn't actually win, et cetera, et cetera. So, you know, right off the bat, you have a great bet that's going to win immediately on January 20th when Joe Biden is inaugurated. And then, yeah, the thing with polymarket is, you know, predicted was very constrained. They were only putting up markets on politics, whereas polymarket, like literally they're putting up markets on every single thing possible. So it was kind of like the field opened up. And you can bet on a lot more things. And there was a lot more variety. And there was a lot more markets. And you didn't have the$850 limit. And so it was a lot easier to grow the bankroll very, very quickly.
SPEAKER_00:I said earlier that Polymarket is the biggest prediction market ever. But I really have to add some context to do it justice. Okay, there's a market on the front page right now with almost$200 million traded. It's for the Romanian presidential election. The market for the next NBA champion has$2 billion in volume. You can bet on which song will win the Eurovision Song Contest. Will Ethereum be up or down tomorrow? What will be the highest grossing movie in 2025? You can even bet on whether Gwyneth Paltrow will become a celebrity endorser of the Golden Corral. Okay, actually, I made that one up. Anyway, not every market on the site has crazy volume, but it's just much different than the old days of Predict It. Domer says that things are still sensitive to major events, but at least there are functioning markets more often than every four years.
SPEAKER_01:I mean, I think the way that prediction markets typically operate is that these really big events tends to draw people in, right? Presidential race, for instance. And even the presidential races in other countries are also becoming very popular in prediction markets and they're bringing like the Canadian election was just big. There was a French election a couple of years ago that was pretty big. So these national elections are bringing people in and then they kind of stick around a little bit. So the big events draw them in and then they end up trading the micro events. I mean, there's a lot of people that are using this website now. It's not like the days of in-trade where it's like, you know, you could probably hear your own echo if you talked in the room.
SPEAKER_00:Polymarket might be that 800 pound gorilla of prediction markets with a sleek interface and the implied promise that in the future, every opinion can be backed by crypto. But Domer still makes bets that are reminiscent of a bygone era where prop bets didn't enjoy the luxury of of a centralized exchange, and instead they meant having to size up the creditworthiness of a counterparty. One of his bets was against someone famous, or actually infamous is more like it. The alleged farmer bro, the walking, shit-talking embodiment of late-stage capitalism, Martin Shkreli.
SPEAKER_01:But I think it was something like my 70s. to his 30,000, my 70,000 to his 30,000, that there were, there's no proven Trump connection to this DJT coin that was launched in like June of 2024 or whatever. So it was not just that there was no connection, but the, the rules of the bet, like there had to be like a public, like a Trump had to come out and be like, yes, I'm associated with it. So it was, it was not just like, Oh, I, you know, cause Martin Shkreli came to, Claimed he had inside knowledge. I think he claimed he was there. He helped launch it, etc. And my bet was that no Trump would come out publicly and admit that they were part of it. Because the other factor is this coin decreased quite a lot.
SPEAKER_00:Just as a footnote, this bet was related to the meme coin that went by DJT, which, and it's sort of crazy that I have to point this out, is not the same as the other meme coin. that is simply known as Trump coin. So Domer had the winner in this bet with Martin Shkreli.
SPEAKER_01:When I made the bet, I was like, okay, I'm either not going to get paid and I can tell people that Martin Shkreli owes me money, which is almost worth more than being paid, or he's going to have to admit he was wrong and send me money. So those were two very appealing options.
SPEAKER_00:The foundation of prediction markets is built on the idea that anything can be turned into a binary bet. But when the menu includes everything, like, will there be confirmation of cocaine use by French President Emmanuel Macron? And unlike the Gwyneth Paltrow golden corral thing, I did not make that one up. Well, trying to sort through the everything on the bedding menu becomes its own job. Right.
SPEAKER_01:So when I'm scrolling, I feel like, you know, it's a little bit of a jack of all trades situation where I have at least a base level of knowledge about most things. Right. And if I do come across something where it's like, I have no idea what's happening here. Often I'll click on it on purpose and like try and learn what's happening. You know, the other thing to pay attention to is. you know, volume, right? So if there's some weird event and it has like$5,000 in volume, like you don't even need to pretend to pay attention to it unless it interests you because it's like, it's not worth the time. Like, even if you figured it out, like, well, what's going to happen? You're going to make 300 bucks, right? So, I do pay attention to the volume, right? So if people are super interested in betting on it, then that's one thing that will drive my interest in terms of trying to learn about it or trying to figure out if the price is right or not. Yeah, so liquidity and interest and things along those lines, I guess, is more what I focus on when I'm scrolling.
SPEAKER_00:One of the interesting things about gambling is this question of what role should your gut instinct play? And I will point out that recreational gamblers are pure intuition, right? They just know that Pat Mahomes is a lock to be Super Bowl MVP. But actually, pros also rely on their intuition. They have seen a pattern before. And deep inside their psyche, they have a light that's flashing green or red in ways they can't actually verbalize.
SPEAKER_01:I think one of my strengths is being able to look at a market and kind of getting a good sense very quickly of what I think it's worth. Right. So, and that's helpful. For instance, let's say there's 150 markets on poly market right now. You can kind of scroll through and be like, okay, this one looks juicy. This one, this one, you know, you can kind of quickly pick out ones that look amiss and then you can research it. And your thesis is either about your very rough thesis is either validated or, you know, thrown out the window or whatever. So I, I think from a, you know the first reaction i think i can i can usually have a good first reaction and then i can research it and really come to a reason conclusion but in terms of like writing down a fair value i really only tend to do that for like really really really big markets when i'm trading a lot of money because you know a lot of the fair value is bullshit anyway i mean you were talking about the twitter merger like you can come with exact okay the price is going to be let's say 43 if he buys it and if he doesn't it's probably going to go back to 28 and you can you you can really come to like pretty exact numbers, but in terms of like who Trump is going to pick to be as VP, like it's 90% BS, right. And 10% insight. So you can't get too married to any numbers, but, but, but I do try and write things down just so I have some sort of like guideposts. And that way I can think about it. And that way, if, if the price moves like a lot off of what I'm thinking in my head, then that way I can, I can react quickly.
SPEAKER_00:As someone who has made episodes about everything from card counting to poker to options trading to slot hustling to dice control, I will say that I get the appeal of scrambling down a new rabbit hole every day. I
SPEAKER_01:change my mind a lot. And then the other thing about entering a position is I tend to scale into it. So I'll often have a lot of very small bets on stuff that it's like, you know, you can view it... This is also my hobby. You know, it's my job, but it's my hobby. I like doing it. It's fun to predict stuff. So I'll have a lot of small bets on things, not necessarily trying to, you know, make a living from all these bets. Right. So I'll scale into stuff. And as I research it more, I'll bet higher and higher amounts and I'll pay more attention to it.
SPEAKER_00:A few years ago, when I was watching the Twitter merger, which I covered in the episode titled Rocketman, I basically created a Twitterless dashboard for myself that included anyone that might have a halfway informed opinion about the deal, and that especially included people who might have disagreed. It's years later now, and even after everything that's happened to that site, it's kind of crazy, but there still is no substitute on the internet for the way that Twitter can deliver information when news is flowing.
SPEAKER_01:So I have actually a lot of Twitter lists that I keep private that I use. That way I can follow like just very, very, very specific information. Like one of the most repeated is Israeli politics, right? So I have a whole curated list of people that I follow for Israeli politics. That way I can focus in on just that one thing. And then the other thing is like, if I'm really, if this is like the big market, like let's say there's an Israeli election tomorrow and this is the big market, then I'll also kind of, change my time schedule to where I'm trying to go to sleep nearer to where the Israelis go to sleep and trying to match my schedule to their news cycle because they're going to release news in the morning Israeli time or at night or whatever. It's like they don't care when I'm sleeping. So you have to kind of mold yourself to kind of what they're doing in terms of scheduling.
SPEAKER_00:While I was making this episode, I was scrolling some foreign elections on PolyMarket and it was basically like Don't know who that guy is. Can't pronounce that name. Don't know where that country is. Have no idea what language they speak there. And of course, couldn't tell you the parliamentary procedures pretty much anywhere, even if my life depended on it. On one hand, sure, I feel like a dumb American. On the other hand, it's like, should I be more interested in the results of the Slovenian parliament's no confidence vote? I honestly don't know. Anyway, that's not exactly going to work for Domer, is it? He kind of needs to be up to speed on the stuff that's happening outside of the U.S. and often outside the English-speaking world. Also, he has to know both the actual things that are happening as well as their cultural context.
SPEAKER_01:I just use Google Translate, but yes, I'm constantly doing things in other language and translating it. I'll make subscriptions to foreign newspapers where even signing up is difficult because like sometimes the, when you're signing up, it like won't translate and you're like trying to figure out like what buttons am I supposed to click? Hopefully this doesn't charge my credit card like a hundred dollars or whatever. So yeah, it can be a little, it can be a little fun and exciting when you're betting on stuff that's not in English. But when you also, when you think about it, A lot of the other people that you're betting against are facing the same hurdles. So it's not like you're jumping into some shark tank with other people that are experts in this. Everybody's kind of starting at the same starting gate and racing the same race. So it's not necessarily a hindrance to try and catch up like I am as an outsider.
SPEAKER_00:I pretty much always ask all of the guests, what happens when people want to know what you do for a living?
SPEAKER_01:it really depends whether i'm trying to like have a conversation with them or not if i'm just trying to like you know get past this part of the conversation i'll say i trade stocks right and usually the person has a blank look on their face like okay i'm not interested in this at all or maybe they'll ask like what stock i like and it's like well i'm not comfortable recommending stocks to people i just trade my own accounts or whatever but you know if i'm meeting a Friends or, you know, people that I'm going to be acquainted with, then I'll usually tell them, oh, you know, I trade events. I'll usually tell them, you know, Trump versus Biden as an example. That's the type of stuff that I predict. And then it usually clicks. And maybe, you know, a few people will follow up, you know, maybe their eyes will get big and they'll be like, okay, yo, what do you think of this? And. Then you can chat with them about it. But yeah, I take a little bit of a hands off approach. I mean, the other thing about it, I've been doing this for so long. In 2008, you know, if you told people you bet for a living, they would think you were some skeezy person, right? Whereas now, if you said it, like the younger people would probably think you were pretty cool, right? So the persona of like somebody who like bets has really changed dramatically. Now it's like associated with data and like, you know, oh, math and smarts, whereas back in 2008, it's like, okay, he's smoking cigarettes. I think
SPEAKER_00:that if you become knowledgeable in a domain, it can be kind of frustrating to have conversations with people who are pretty much flying blind because we as humans don't really hold ourselves to any standards in terms of our willingness to pop off on a subject relative to what we know about it. And Domer knows a good amount about a lot of topics that most people know nothing about, but are happy to have opinions about anyway. But he says that doesn't really bother him.
SPEAKER_01:A lot of the people that you're betting against are casuals. So you're encountering these people already just in the nature of what you're doing. And then the second part of it, in terms of interacting with people, I don't really view it as a bad thing where it's like, oh, I'm holding this information over you, or oh, you know so little, ha ha ha ha. It's kind of cool to be able to chat with people on a variety of topics, right? So for instance... If somebody was Italian, I can mention, oh, what do you think about the Italian prime minister? And they'd probably be a little bit surprised about that. Or if I met someone from the UK, I could ask them about Harry Kane or something. So it's cool in conversations to be able to talk about a wide variety of things and know at least a little bit about a lot of things.
SPEAKER_00:For years, Domer had been used to extremely cyclical prediction markets. So if you're trying to make a living at it, then you'd probably wake up every day, praying for more action well in 2024 he got it and it wasn't just an election year polymarket made a business choice to start offering incentives so just think about every market has buyers and sellers and usually the two groups are separated by some amount right let's just say the buyers have regular offers two percent away from where the sellers want to sell okay well polymarket said that if you as a user go in and make a new offer that's close to the midpoint they would pay you a rebate because they need users and they need for those users to find markets that are very functional. So Polymarket just said, fine, it's important enough for us to improve liquidity on the site. We'll just pay users to do it. Well, Domer saw that and basically chained himself to his desk for the year.
SPEAKER_01:It's this week. They're trying it as an experiment. Next week it'll be off. And then next week it'll be like, okay, next week. And then it's like, well, next month. So I was constantly thinking that the liquidity rewards were going to be turned off in the next month. And that's how I ended up. working so much during the year you know if i had sat down with my wife in january of 2024 and been like okay they're going to do liquidity rewards all year my year probably would have unfolded very differently where i take a more slow approach but i was always thinking that they were going to turn it off and so i was always just like working my ass off
SPEAKER_00:These liquidity rewards should sound very familiar if you've ever listened to the show, because we have heard a lot about making money off the rebate. In our episode with Bill Zimba, he talked about horse betting syndicates that pretty much break even on the horses they back and then make their money on rebates. We've heard about casino APs going after free play, and we've heard about credit card hustlers that hammer the bank's It's an idea we just keep coming back to. In this case, Domer says that he made about as much on liquidity rewards as he did in the actual market. But these rewards also turned into a be careful what you wish for situation. I
SPEAKER_01:mean, yes, going to the bathroom can be a risky proposition. Talking to your wife can be a risky proposition. proposition, like doing anything, sleeping, sleeping is the enemy. Like the news does not go on vacation. The news does not sleep. The news does not have a spouse. So it's a very different experience being a, like a prediction market trader and liquidity provider, and then having to revolve around the 24 seven news cycle. You really just need to be paying attention at all moments of the day. And then, yeah, sometimes not sometimes pretty, pretty fairly recent, um, a good amount of the time, you'll end up missing stuff, and it's just something that you have to get used to. I mean, it can be stressful that you miss something, but you just have to move on with your life.
SPEAKER_00:Domer says that as time has gone on, and as prediction markets have become more active, the amount of time that you have to react to news has dropped.
SPEAKER_01:Yeah, so I have a watch that buzzes me, and then I have alerts set up, so there's a lot of things that alert me when something happens, but if you look at prediction markets, like let's say eight years ago or something like that, if you got news, you could generally react to it in like 10 seconds or 30 seconds and you'd be fine, right? The price would not have moved that much. But now there's so many people doing it that like if you're more than three seconds, if your reaction takes more than three seconds, like sayonara, you've missed the boat.
UNKNOWN:So
SPEAKER_00:Hey folks, I am going to briefly interrupt this episode to say that I've been working on radically streamlining the production of the podcast so that it can be more sustainable over the long run. And so if you would like to support the show and also vote for more episodes to be made, as in vote with your wallet, Then the way to do that is to subscribe to the Premium Risk of Ruin sub stack. Over time, I'll be moving the past episode catalog behind the paywall. And then I'm also going to think about ways to grow the premium offering. Maybe we'll release episodes early to sub stack or something like that. The show's expenses aren't a lot, but they also aren't zero either. And then obviously the biggest cost is my time. So I think eventually it has to make some money. considering that it's going to be very problematic to take ad dollars from gambling adjacent businesses right we can't run ads for bet on sport 69 one episode and then the next episode's guest is a guy who throttled them for seven figures that's not going to work so yeah i think direct listener support is probably the way forward anyway if you want to raise your hand and say that you enjoy the show and want more episodes to be made then that's the way to do it and now Back to the episode. Have you ever heard the one about the Las Vegas sports sharps that used to spend their time cold calling local bookies in like Chicago? And the theory was that the local bookies were taking so much action on the bears from their regular customers. They might need to offer a good line on whoever the opponent was that week just to lighten up their risk a little. It's this sort of perfectly formed anecdote about the power of bias and the value that you can get by exploiting bias. Well, politics in this country has turned into a thing where there kind of aren't any folks left who just call balls and strikes. So it seems like it should be subject to the same opportunities to pick up easy edges by betting against homers with blinders on. Or it kind of seems that way at least.
SPEAKER_01:You know, politics has in many ways, even over the course of my not, I mean, my career hasn't been that long in terms of the politics of the US, but just in the span of my career, like politics has become so much more team oriented, right? And it's like turned into a bit of a sport and people are on one side. And the way that they think about the race is that they're betting on their team, right? It's like the same way that they would think about betting on, you know, the Bulls versus the Spurs. I like the Bulls. I'm going to bet on the Bulls to win. I want them to win, you know, and then if the Bulls win, then it's like, okay, my theory about my team being good is validated. Therefore, I'm good at predicting sports. And it's the same thing with politics where it's like, okay, I've predicted this correctly. Therefore, I was right, you know, it is. minute little changes in the electorate have validated every theory that they've had about the race, whereas, you know, maybe they just got a little bit lucky.
SPEAKER_00:We have already stipulated that the Trump effect has been very good for prediction markets. And we have said that prediction markets have been very good to Domer. But that doesn't actually mean that Domer has traded Trump very well. Actually, that's like the asterisk on his record.
SPEAKER_01:You know, my, my weak spot is betting against Trump, which I, which I, you know, even in hindsight, I still think these are good bets. I think something weird is going on. I'm not sure what type of spell he has on the country, but, but yeah, so, so my weak points are betting on Trump, but other than that, so we, if we remove that from the equation, I do feel like I can be very, very, very dispassionate and that I'm able to change my opinions very quickly. And maybe that's due to the fact that, you know, I've stopped, looked at politics for such a long time at this point it's kind of like almost like a movie or like a comedy where it's like it's very like you you know all the players and and it's lost its mystique and i can be very dispassionate about it and it all seems very ridiculous and you're you're not as you're not as caught up in the day-to-day um like it doesn't really matter who wins So if the Democrats win or the Republican wins, things don't really change that much. Now, things change a bit in terms of the presidential race. But in the grand scheme of the day-to-day of politics, things aren't really modulating that much. So I guess being so close to it for so long has really numbed me to having a cognitive bias or rooting for something. I've just been so close to it.
SPEAKER_00:Domer's job is to scoop up every data point and run it through his own mental model, then try to decide if the past is a useful guide or is historical analogy just a head fake. But then how would you apply that to the 2024 election, which, just as a reminder, had a bunch of truly batshit stuff going on? Like, crazy enough, you could be forgiven for not immediately recalling that one of the candidates survived an assassination attempt. Well, to get back to something we said earlier, all of that volatility is good for the prediction market. I mean, if you're a trader, would you rather see Biden hit 99 cents to be the nominee and then that number just stays there? Or would you rather have months of speculation that the guy might drop out of the race and a market to bet? Well, in the case of the Biden dropout market, the price had fluctuated between about 15 and 25 cents for almost a year. On the morning of June 27th, which was the date of the Biden-Trump debate, it was 20 cents. But Dahmer said he wasn't sure there was value on either side. He was more interested in watching the debate and then trading based on Biden's over- or underperformance relative to expectation.
SPEAKER_01:It was trading around 15 to 20 cents, right? Which was too high. But I wasn't touching it because we hadn't seen him yet in this environment, right? And let's say he showed up and he stumbled on just two words, right? It probably would have stayed at 15 to 20 cents. So there was no upside to doing that, right? Because if it's a conspiracy that he's worse off, right? And he stumbles a couple of times, it's going to totally validate their opinion and they're going to want to buy more or whatever. But if he stumbles more than a couple of times, Then this, then this contract could go up quite a lot. So to me, this was like the perfect, like no upside bet. And a lot of people were betting a lot of money. Like somebody I know, but I think$2 million that he would not drop out. And then the debate rolled around. All of these bets have
SPEAKER_00:multiple implied decisions in them. It's not just which side to take, it's also when should you put your trade on. If you look at the market and think prices are pretty accurate, that doesn't mean they'll stay accurate.
SPEAKER_01:I was a little bit frozen because it was almost too hard to believe what I was watching. And I tend to be a little bit contrarian. And I think the odds of him dropping, let's say they were 15 to 20 cents before. I think during the debate, it probably hit 25 to 30 cents, right? So people were starting to push it up. They're like, well, he's not going to drop out, but maybe he might. So they were starting to push the odds up and I tend to be a contrarian. So I'm like, oh, do I want to short this now? But I was kind of frozen because it's like, what am I seeing on my screen? Like this person should not be, this person can't be president for another four years. So it was, it was almost like I was kind of scratching my, my eyes in terms of like making sure I was actually watching when I was watching. And it wasn't until right after the debate. So as the debate ended, I had made sure to turn it on MSNBC very quickly because these are the people that are going to be the most friendly to Biden. Right. And these people right after the debate were like, I'm not sure what we just watched. It was a reaction kind of like that. And that's when I started betting big time that he's going to drop out because it's like, if that's the reaction from the people most friendly to Biden, this is no longer a conspiracy. This is no longer a right wing thing. This is all across the spectrum. And so that's when I started really, really, really hammering it on Biden. And I was actually like, almost too confident that he was going to drop out because it took three or four weeks and it was touch and go there. But that was probably one of my most confident trades of 2024 was that, you know, he had to drop out and he was going to drop out.
SPEAKER_00:Domer touched on this earlier, but he's also not limited to straight bets. There are also derivatives.
SPEAKER_01:The thing that I kept my eye on, I'm not sure that I traded it I think I mostly just added to my bet. And the reason that was the case is I remember distinctly that Nancy Pelosi never came out and defended him. And if there's going to be one person who's like you listen to, like everybody listens to, it's that person. So it's like as I was waiting to hear from her, and if she came and defended Biden, it was like, okay, the jig's up. But if she doesn't come and defend Biden, like he's in deep doo-doo. And I was actually traveling a bit during that time, so I also couldn't really trade it and it's funny thinking back on that in hindsight it's like i'm not sure if i would have made more of a correct decision or if i would have abandoned my bet it's got it's kind of like when you're away from your computer it's very easy to second guess yourself and be like oh i would have gotten this so right but then also i could have you know totally bungled it so because i was traveling i also didn't really touch my bet at all and i was betting a lot against it and then the other facet of this is there was the market on him dropping out which was the very straightforward market but then the real market in terms of where you could really make money was on the democratic nominee right and that was going to be kamala harris and i had luckily been acquiring hundreds i might have had more than a million shares of her to be the dem nominee that i bought at like one and two cents right and so and At this point, that was also fluctuating wildly because she was seen as the most likely to replace Biden. So her price was going up, you know, went from two cents to six cents, maybe right after the debate. And then, you know, it could have been as high as 50 cents even before he dropped out.
SPEAKER_00:The gambling story of the 2024 election was the so-called French whale. He bet tens of millions of dollars on Trump. And for weeks, in the corner of the internet where you find gamblers who are also conversant in politics, it was all anyone talked about. Probably the biggest question on everyone's mind was, does this guy actually think Trump will win? Or is this an attempt to juice public opinion by dumping money into the market? Okay, and if this just sounds stupid on its face, let's think about this for a minute. Think about the kind of greasy operatives that work for these campaigns. Now ask yourself, are they either too ethical or too smart to try to manipulate the market? Of course they're not. They're political hacks. Their job title is literally hack. So if you're connected to a campaign and you know that the news can be relied upon to breathlessly report who is favored in the betting markets, then it might make some sense to use some political slush fund to bump your guy's price. Or maybe not. Again, I'm not saying that's a good strategy, but it's a strategy. And lots dumber stuff has been tried in politics. Actually, there was a paper written in 2013, and it was about the 2012 election prices on InTrade. The authors of the paper were convinced that one account had dumped$4 to$7 million in an attempt to boost the story that Mitt Romney could win. Anyway, this French whale was a complete mystery. And since Domer was active in the market, he wanted to understand it for himself.
SPEAKER_01:I mean, it was interesting because he spread his bets over multiple accounts. So first of all, you had to connect that the accounts were all the same. I mean, so there was a lot of order flow on this, obviously. People cared who was president. It was Trump versus Harris at that point. So there was a lot of big bets coming in. So it wasn't out of the ordinary that somebody would come in and bet a lot of money on something. But he just kept buying and buying and buying and buying. And then there was multiple accounts that just kept doing it.
SPEAKER_00:If you're betting into this market, then just answering this basic question, is someone betting their own opinion or are they up to something else? That would be a very key thing you would have to understand.
SPEAKER_01:So the first step was figuring out that all of these accounts were connected, which was like a big step because it's like, okay, this is one thing. Is this a company doing it? Is this like a rich billionaire? A lot of people, their first reaction was this is Elon Musk. I mean, he was pouring so much money into it. in terms of like donations. And then he was also promoting Polly market. And so a natural conclusion was that, okay, he deposited, you know, Trump change for him, which is a, you know,$50 million. And then he's, he's betting it on Trump. So people's first conclusion that I was, it was a rich billionaire, right. And that the accounts were connected, but then, uh, there's a comment section below the market and 99.9% of the comments are junk, right? It's just like people chatting or posting BS or whatever, but he posted and, and the poly market associates the, the commenting account with the position. So you can't fake being the person, right? So it shows up this person with, let's say 19 million shares of Trump is like, Hey, why is everyone betting on Harris? I think Trump should be a lot higher. It's like, what, what is going on here? This guy is posting that. Like, I don't think this is Elon Musk anymore. Right. I don't think some billionaires like posting comments just as a, like on a lark. So it's like, what is this a psyop? Like what is, what is going on here? Right. And the way that he was talking was very odd, right? So he would use like a slightly wrong word in a sentence or like the punctuation was a little bit off. And it was like, what? This person seems like they're English as a second language, like ESL. So I actually plugged it into ChatGPT. And I'm very skeptical of ChatGPT in general, but for this, it was really, really good. And I posted everything that this guy had posted, right? He had posted, let's say, six comments. And I posted all of this in there. I was like, what can you tell me about this person? All I know is that this person is betting a lot on Trump. Help me figure this out. And the person was looking at the way that they were spelling things and the punctuation, and they determined that it was probably somebody from France. And I was like, wow. It almost doesn't make sense because it's like, why would a person from France care that much about Trump versus Harris? So then I responded to one of his comments saying, And I was like, Hey, do you want to, cause I was a big holder of Harris, right? So I was quote unquote, you know, his adversary or whatever. And I was like, Hey, do you want to chat about this? And to my surprise, this guy, who had 50 million on Trump or whatever, logged into the Polymarket Discord and was like, hey, I'm looking for Domer. Can you help me find him or whatever? And then I DM'd him and I was pretty nice, right? I was kind of direct, but I was trying to figure out what his deal was, right? I wasn't so much interested in debating Trump. You know, I could turn on Fox News or MSNBC and hear debates of Trump. Like, I didn't really care why he was doing what he was doing. I was more just trying to figure out who he was, like, why the 50 million? Like, what was going on here? What's the story? Like, are you trying to juice the odds are you trying to is this an actual bet right and so i was talking with him and he just would not shut up about why he was betting on trump right even as i tried to steer it towards that he i think he's french etc and he was just accusing me of being rude etc etc and and finally the the conversation cut off from there but i i think i figured out from that and then i made a long twitter post that the person was likely french it was likely he a true believer and that the person was like kind of single-handedly pushing the odds of trump because i think when he started buying it was like right around where i thought the race was which was kamala 60 and and trump 40 and he thought the race was like 80 20 for trump and i think he personally moved the odds from like 40 for trump to like 55 for trump because there's simply not enough money even if the whole even if everyone on polymarket thought that Kamala was worth 60, like there's just not enough money to match$55 million worth of order flow coming in on Trump. It's just like never ending. So the price had to go up, right? Because there was too much demand for Trump and not enough supply of people betting on Harris. So yeah, I made a big long post. And then the guy from the Wall Street Journal, kind of pivoted off my post and was like hey do you mind if i run with this and i think he got in contact with him and kind of verified that he was french i'm not sure he verified the identity and then polymarket ended up confirming that this was one person and that they were french so
SPEAKER_00:This French whale is fantastic. If for no other reason, then his existence gets at one of these very basic issues in gambling and trading, which is what inferences can we make about whether our bet is good based on who is on the other side of the trade and how confident can we be that our understanding of that counterparty is accurate. Let's think about some examples here. Imagine you're a professional poker player and you walk into the poker room one day to notice that the biggest game is now features a guy you've never seen before with a monster stack in front of him, and he kind of fumbles with his chips when he bets. What assumptions would you make as to whether or not you could win money from this person? Or, imagine you're a trader for an online sportsbook, and on Super Bowl Sunday, a brand new account deposits$100,000 and then unloads the whole thing on favorite point spread right before kickoff. Would you expect to win or lose from that account long term? I think the mental steps you have to go through in each situation would be roughly, what's my first reaction? And then what does this opponent know about how I might react? And are they using that against me? Or maybe it really is just a donk. The kicker here is that in each of those cases, the situation is probably polarized. It's either really good or really bad.
SPEAKER_01:He ended up being right. I think he was right for kind of the wrong reasons, but that's neither here nor there. He was right. He won money and he was correct to push the odds of Trump up. So, I mean, he did a service to prediction markets in terms of making the odds more accurate. You know, if we went into election night with Kamala at 60 instead of at 45... People would have been like, oh, prediction markets are terrible, et cetera, et cetera. But because of this one French guy who really believed in his theory that Trump was a favorite and Trump won, all of a sudden prediction markets are vindicated. They were ahead of the polls, et cetera. So it was kind of like also a feel good story in terms of making prediction markets better. Right. And also perhaps. for the wrong reason because it was just kind of one guy.
SPEAKER_00:The impact of this French whale can still be seen on Polymarket today. If you look at the top accounts in terms of volume, it's Domer and other accounts that have almost 400 million in lifetime trades. But the volume leaders also have, you know, 2 million in lifetime profits or 1 million in lifetime profits. Basically, ROIs that you would expect to see in a game with multiple trials versus other smart competitors. Also, Domer's account has participated in 6,000 markets. And remember, the website has only been around for a handful of years. But then, if you look at not the leaderboard for volume and instead look at the leaderboard for profits, you can see the French whale. Like, one account has$20 million in profit on just$40 million in trades and only 14 markets traded lifetime.
SPEAKER_01:Yeah, so all the top P&L, like, not all of them, but maybe five out of the eight or something like that is the French whale, the guy who bet on Trump. So he just showed up, dumped all of his money into Trump. As soon as Trump won, he took all of his money out. So he was just there to win that game and then, and then leave. But that's, that's not, that's not as common. You know, a lot of players, especially if they come in and they win big on something, you know, They verify that they're very good at predicting stuff, and they usually stick around and try and predict more things.
SPEAKER_00:The canonical story as to how the French whale came to his position is that he commissioned a poll which asked people who their neighbors would be voting for, and that led him to believe that Trump would win. Domer says that, yeah, sure, Frenchie was on the winner. That is true. But it does not necessarily follow that the whale's methodology was better. It could be. Or this could just be one election. And I think to understand the broader point here, it might be helpful to try to think about the sources of error in polling. There are multiple explanations available. It could be that most polls miss on Trump because they don't correctly model the electorate. It could be that pollsters are just in the bag for Democrats. It could be that Trump voters are shy and just lie to pollsters. And it could just be variance. It could be some combination of those factors. But if you're trying to make bets on this stuff, then it would be really helpful to correctly diagnose the problem so that you can make an adjustment.
SPEAKER_01:I mean, having chatted with him, having seen his comments, he genuinely 100% believed in that. And to be fair, there's probably some credence to be paid that his theory was correct, that people were a little bit shy about being supporters of Trump. But overall, I'm not sure... that the theory quite holds up i think it was it's much more accurate to say that polling called the wrong people that they you know that the trump's voters don't really trust pollsters and don't pick up the phones so i think it was more of like a bias in terms of the pollsters not picking up the voters rather than his methodology being necessarily more accurate because i mean that has its own pitfalls in terms of asking who your neighbor's voting for or whatever
SPEAKER_00:Even if you have the wrong idea going into an election, you can imagine a Bayesian process where new information comes in and it's so far from what you expected to see that you update your beliefs very quickly and then get on the right side of things before too much damage is done. But that idea is also very sensitive to what the new information is and how fast you update. Domer has been doing this for a while and he's had instances where that worked and For instance, in 2016, he got away from his Hillary position very quickly because he was watching the New York Times election needle. And he's also had times where it didn't work out so well.
SPEAKER_01:I think the first significant results were like a rural county in Indiana. And then as you're looking at it, you're like, well, this could be a rural oddity. It might not necessarily be reflective of reality because what happened in 2020 was the first significant results to come in were from Miami-Dade, right? And they were very misleading. They showed a tremendous Trump strength and it ended up being anomalous. And I think Trump on the night, right? So 2020 was a mess of an election. It lasted for like a week, but I think on the night Trump hit like 70 cents or 75 cents, even though he eventually lost because the initial results look so positive for him. So with that in the back of my head in 2024, even as the initial results weren't looking too good for Kamala Harris, I wasn't really moving my odds too much. Right. It was looking, it was starting to look bad and then it increasingly looked bad. And then, you know, as we were justifying and it's like, well, this could be an anomaly and ended up not being an anomaly and it just ended up being a total wipeout. So the 2024 election was not a good day. I'm not like stewing in regret about it, but, you know, there was some bad decisions made.
SPEAKER_00:One of the most frustrating mistakes to make is the I knew better error. The non-stupid error. I remember that I was once long a terrible company and, you know, an even worse stock called Spirit Airlines, and I was betting on their merger with JetBlue. I actually went to see the closing arguments in the antitrust trial, and I was like, for this merger? They didn't allow phones in the courtroom, but after the trial wrapped, I walked out of the courthouse and reduced my spirit exposure to almost nothing. I knew it was just not good. I called my wife and told her it was not good. I just had this sense that the judge in the case could reach into the facts and pull out whatever decision he wanted, and that wasn't the kind of bet I really wanted to make. But then, over the course of a few weeks... Domer says that he didn't plan to go into election night 2024 heavy on Kamala Harris, but that's what ended up happening.
SPEAKER_01:Yeah, 2024 was very tough because I had that position that I would not take a position, right? I was trying to go into election night with no position. And even like a week before election day, I was like, I really just need to have no position on this. And then my, you know, the way that I can profit is by trading the event live. And in fact, in 2020, and in 2024, I hired like a team of people that were like helping me make sense of election results. So it wasn't just me, because I'm, I'm not that smart on in terms of interpreting election results. So anyway, that was the plan in theory. It did not pan out in reality because as I was analyzing the race, and obviously this is very wrong, but hindsight's 20-20, I analyzed that Kamala Harris was like a 60-40 favorite. And I think Trump was like 55% to win or maybe even 60% to win. So if you think the odds are that far off, Right. So my position was, OK, I'll go in with that position. And if things are going wrong, then I can sell out of it. Right. Because there's just so much liquidity, even with a big position. But. As the night unfolded, you know, the odds moved faster than I could. The odds were moving faster than my odds were moving, right? Even with a team of people, right? So they were like, okay, Kamal is probably 50-50, not 60-40. And then Trump's at 65. So Trump was like always just right ahead of where I thought he should be. And so it ended up being the case that I lost a lot of money on that. And if I just listened to myself from, you know, nine months earlier or a week earlier, like I shouldn't have had any position at all. I think the events around Trump, I've traded really well as far as whether Trump would be successful in his elections. I think I traded that as poorly as possible. Like, you know, for instance, when I joint predicted, I think my very first bet was that Trump would not win a single caucus or primary. Right. So I lost$850 within like two weeks of joining the website. So, you know, as far as betting on him, I've done very poorly as far as betting on what he is choosing to do. I feel like I've done a lot better. That's a lot more in my wheelhouse trying to predict what he chooses to do.
SPEAKER_00:I guess it is fair to say that predicting whether Trump will win is a different thing than predicting what he'll do. In one case, you have to figure out what the American public's response to Trump will be. So basically get inside the minds of 250 million people. And in the other case, you just have to get inside the mind of one person.
SPEAKER_01:So it's probably a pretty big aspect of what I do because there's so many big markets that are based upon solely his decision, right? And I think a really good entree into or entry into his mind is thinking about him as like he's making a TV show. So very often he is casting people in these roles, right? So for instance, Trump picked a whole bunch of Supreme Court nominees in his first term. If you looked at all the candidates... And you printed out all the pictures and you showed it to some random person. You were like, please pick the person. who most looks like a Supreme Court justice, they would probably end up picking the guy that Trump eventually picked. So there's all these sort of odd variables that go into what Trump is thinking about versus what somebody like Obama would be thinking about where they're like, you know, analyzing the resume and trying to figure out their opinion on X, Y, Z. You know, it's a lot more granular, whereas Trump is a lot more like ABC, like very simple minded in terms of how he makes decisions.
SPEAKER_00:Even though election night 2024 was a hard pill to swallow, being dialed into Trump meant that Domer was ready to dust himself off and make some money.
SPEAKER_01:So right after Trump was done picking his cabinet, which I think was like the near the beginning of December, I kind of took a break just because I was providing liquidity all year and it was like such a time commitment that cause I'm married. So it's like, I can't be, this can't be the rest of my life. So, so that was the end point was once Trump had picked his cabinet and I kind of took a step back from it. But yeah, in the, in the three weeks right after he was election, right after he was elected, I made a ton of money. The same thing was true in, in 2016 cause he's just so chaotic in terms of the decisions that he made. I mean, the people he nominated for the cabinet are, you know, even from a nonpartisan angle, they're, ridiculous people and it's very unexpected. So, I mean, he, he's just, you can make a lot of money even if you end up losing it on him, uh, winning the race.
SPEAKER_00:One way to describe the guests of this podcast series is that they get paid to learn and to learn faster than everyone else. More specifically, they get paid to learn in highly random environments because every gambling game is just take some process and inject some amount of randomness into it. So on one hand, Domer's job is unique because he is trying to look at a reality TV circus and try to learn the hidden meaning. And in some sense, he's doing what every other gambler and trader has to do. I
SPEAKER_01:mean, it's really, really hard because there are so few repetitive things. Like, for instance, this papal conclave, it's once every 12 years. The U.S. election is once every four years. So if you're shorting something every day or if you're betting on sports games, it's easier to dissect where you're going wrong, whereas in these events that aren't repeated very often and that are very qualitative in nature as opposed to quantitative, it can be very hard to break down if you got it right or if you got it wrong. Now, I do think about bets afterwards. I do think about wins. I do think about losses. I would liken big losses to kind of like you know a breakup you know because it's not just that you've lost money it's also like It's like an insult to your intelligence, right? You've not just lost money. You've also like, you've been wronged as a person. Like you were, you were, you had this idea and it was not correct. Right. So it can be very hard to like break down. Okay. What went wrong in this relationship? What went wrong in this bet? Like, how do I fix this for next time? Right. So there is, there is some soul searching in terms of when you get bets wrong to try and analyze it and break it down and figure out, you know, for the next time this comes around, even if it's four years away, like I'm not going to repeat it. It's worth
SPEAKER_00:acknowledging that we are now 41 episodes into this podcast experiment, and the next normal guest will also be the first one. It's just been sicko after sicko, or I guess I hope the guests won't be upset if I say that. Anyway, take Domer as an example. He was so dialed into trading in 2024 that he basically couldn't do anything else. Then he said, This isn't just his job, it's also his hobby. Although, if you talk to someone who is on pace to bet half a billion in the prediction markets, they're not going to be like everyone else.
SPEAKER_01:Yeah, so I think the markets are getting more efficient and harder. I don't keep track of it on a granular level, but I do feel like I have a good grasp on how I'm doing. And one realization I made a few years ago was that I wasn't like taking enough risk like there wasn't enough variation like I was looking at my graph and it's like oh this is very impressive it's like up only it's like oh great like I'm a success in my career and then I was reflecting on and it's like you know if it's just going slowly up and up and up and up and up like you're not taking enough risk. You're just going for singles and doubles and not really swinging for home runs or whatever. I made a little bit of a sea change in terms of how I was looking at betting and willing to take a lot more risk and willing to be a lot more creative and willing to bet. I call them stupid bets. Right. I'm not like a stupid person just going around betting on stupid stuff. But but bets that are very counterintuitive, like creatively counterintuitive, like if X, Y, Z happens, then this will go up a lot. Right. And I'm just hoping and praying that X, Y, Z happens. And I'm not as risk averse as I was when I first started where, you know, I was doing a lot of arbitrages where it's like, okay, this sports book has McCain at 20 to one. And this, this one has, you know, X, you know, this person at 15 to one, I'm going to bet both of these and trying to make 20 bucks on the spread. And it's like, nowadays I'll just bet on the thoughts that I think are really good. And I won't arbit off because it's like, you're just costing yourself EV trying to, trying to create an arb. Right. So I, I take more risks than that sense not trying to nickel and dime my way up but trying but tolerating downswings and that way i can have higher upswings so
SPEAKER_00:Thank you. Thank you.