The Risk Takers Podcast
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The Risk Takers Podcast
Exactly How to Start your First Automated Trading Project + PM Doom & Gloom | Ep 148
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This episode covers a lot of recent news, walks you through how to get started with automated API interaction and muses on would you rather have a beer w/ the PM doomers or evangelists?
0:00 What would your first API project be?
24:45 News (Worst two weeks in PMs?)
1:05:30 Q&A
Welcome to The Risk Takers Podcast, hosted by professional sports bettor John Shilling (GoldenPants13) and SportsProjections. This podcast is the best betting education available - PERIOD. And it's free - please share and subscribe if you like it.
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Right. Like imagine telling your friend, like, hey, this isn't like I joke with my friends. I'm like, no, it's not sports betting. You know, it's just like a hilarious joke that everybody laughs at. But if I was to tell my friend, like, yeah, the advantage of this is like if DraftKings is offering a price, you know, I couldn't go in and offer a better price, but like now I can, if I wanted to. And they'd be like, oh, okay, I guess that's like better.
SPEAKER_01Right. Yeah, I mean, it's like how Uber and Airbnb worked. It's their arguments weren't like this is this isn't an alternative to cabs, or this isn't an alternative to hotels. It was like, no, this is just better for people.
SPEAKER_02It's GP and SP, our third attempt at an hour and a half episode. The haters will say. Yeah. Unfortunately, this one's cooked. This one's cooked. So actually, we're not even going to count this as an official attempt. Um, because of the lot of news since we've been since we, you know, since our last uh just the two of us episode, which is when we cover the news. A lot of good questions and a fun main topic. So let's let's get into it. Uh, main topic was a lot of the main topics are like repeated questions. This is one that I think we've gotten a few times. Um, certainly I've gotten in in private. I think we've talked about it briefly on the pod. But like, what is a good first project on prediction markets for somebody who's a listener of this show who's coming from a we'll assume a winning sports betting background? Um, I have two like really specific examples. One of them I've actually given out in private when people have asked me this. So I'll be interested to see what you think. Um and I don't know, should I should I kick it off or do you have a yeah?
SPEAKER_01Why don't you start with with with your your if you have two examples? I have more like interspersed thoughts. So why why don't you give your first one?
SPEAKER_02This will be this will be good. Okay, so this one is is very, very specific. And I've sent this to a few people who've reached out to me on getting familiar with the call she api. And I call this the print balance project. So the point of this balance of this project is to create a we'll call it a program, you know, a code file that when you run it, it shows you your balance on on Call Sheet. So and the and I'll attach this when I post this episode on Twitter, I'll attach this prompt because I send along this prompt with it. And the prompt is this, and this is for Python. So you want to give this to an AI agent. I'll say the prompt here. It's not really you know, it's not really about the prompt, but just in case you're not on Twitter and you want to know the prompt, the prompt is I'm looking to build a client class to interact with the Call Shi API. The documentation is and then you insert the link to the Call She uh API documentation. My API key is blank. That's where you insert your API key. After you build the client class, please use the class to print my balance as a test. I want any functionslash endpoints to be methods in the class. Explain to me in detail what you're doing so I understand how the client class works. So that's my prompt I send to people who want to do like one thing with the call she API. Why I like it is that so basically we talk about this a lot, SP. It's like you want, like when you build your model, you want it to spit out something. You know, that first step is like have it do something. So I don't know what everybody needs to do with the API, but like I found that this is a very good first step to have something spit out. And then after that, then you're kind of like energized and feel confident. You've seen something go through the hoop, and then you can kind of build from there where it best suits you. But as far as like just connecting to the API, I think this is a very good short project to start with. Um and yeah, and it's worked, it's and I've seen it work for people who haven't done anything with the API, reached out and uh tried that.
SPEAKER_01Okay, so we two two totally different approaches. I was gonna say, you know, just start trading live, make no mistakes was gonna be my you know my prompt. No, I I I it's actually funny because that's effectively what I did. I think when I'm talking about this, I'll give a lot of the lens like how I thought about this problem. I'm you know, I'm one guy, not uh I'm an average, you know, coder, you know, relative to other average guy working in the model. I'm just an average guy, but I'm not like I'm certain, like I, you know, I can code like math and logic type things, but I'm very not like a web scraper API. Like I have, you know, very minimal experience with that until until some of these prediction markets. So I mean, I think that's that's basically what I started with was some of the base stuff of just like getting getting balance, getting uh like the tickers and the markets and all that stuff as like a very first basis. Because one of the very first projects I did at first, so when I start on CalShi, and maybe it's even worth, I think it's really important to focus on this API stuff because long term, I think everybody should be trying to, like truly everybody should be trying to go in that direction just because how low the barrier of entry is now on that stuff. But like when I first started out, it was taking stuff that I was betting previously, um, some college football and NFL stuff, and just like posting it at times when I thought it was safe to post, and then just sort of letting it sitting sit there, and then you know, having it cancel at game time or canceling it myself prior to games or something. So that's what I did in like the beginning. Um once I once I had that framework set up, basically the next step for me was to was similar to what you're saying. And like, you know, some people might not get fired up about checking the balance. I do think that's a good step. But like one, like the way you hop from that to the next step could be as simple as you have an Excel file, which a lot of people are comfortable with, and you're just like manually punching in prices or whatever you want to plug in, or maybe you have some some file that's outputting prices already, and you're all you're asking, you know, uh the AI tool to do is like take these prices and post them. Don't do anything else, like just take CSV or Excel and post it to Calci and give it similar documentation. And it'll be able to do that quite easily to put to sort of like place a single order and leave it, leave it up there or whatever. Like that's that's pretty simple. Um, and that that's sort of like what I was doing in the in the beginning um as well, like just to automate the the flow so I wasn't having to like type in things as frequently, and I can get a bunch of stuff up and a bunch of stuff down quickly. Um, obviously it progresses to more and more about like actual market making like logic and things you want to consider about like jumping and and and width and all these things, but just as a start, I was just like, I'm willing to take this price, post it, and like I'll track and see what happens.
SPEAKER_02Yeah, I I think you bring up a good point about the CSV. Uh starting with the CSV for that. Because it's it's like when I first tested RFQs, I think I don't know if we talked about this in person or on the podcast, but I just gave like a bunch of things in a CSV and I said just quote somehow like quote this as an RFQ, basically. There are there are other steps to get there, but like it started with a CSV upload for the pricing aspect of it. And yeah, I think like CSVs have always been the easiest like visual um the easiest thing to kind of like visualize as far as you know getting things up, but it's not as intimidating as working in the command line or or something like something like that, which I've always found to be it's taken a got a lot of getting used to. So I think using CSVs in the beginning is a really good point, SP. I like that.
SPEAKER_01Yeah, because even even when I was doing like when I started, I like when I was trying to do live, you know, people are probably like already rolling their eyes that I was trying to do live with a CSV and like plugging stuff in. But what I was what I was doing originally was like different sports that I was watching at breaks. So like the game would go to break, I would just like plug in the numbers I want to offer, um, or just you know, you know, pull from some other source or whatever, and then you know, run one line of code or whatever, and it it gets to the you know, goes to the API and gets posted like immediately. Um, and so that was a way for me to like interact with even live, like in a in a relatively safe way where I'm not gonna like continually repost or like all these things that you have to think about when you're or take, like that, that's also like a problem if you're you're not thinking about that and you're just like building a bot, like you you don't want to cross the order book and just you know take a bunch of stuff. So I I think for me, this is how I started, and like I I'm obviously somewhat technical, but this stuff is out of my wheelhouse until until very recently and still is. So I think any of these like mini projects where you're just confined to like what you're watching or um you know one individual market at a time, like where you can post and see what's happening, and like you run the you run the script or whatever it posts and you see where you are in the order book. Are you always like so far back you're never gonna get filled, and like you can actually look at it, is is how I would start.
SPEAKER_02That kind of that transition transitions nicely to my project number two, which it won't uh I promise this won't just be a claw prompt. It'll be slightly more interesting than that. Um, but yeah, one thing if you follow me on Twitter is I've kind of posted a couple of like big masters fills that have come in. Um, some for comedic effect, like one of them was was uh someone ripping Tiger Woods or whatnot. But when I when I posted that, the thing like I think actually the comment I got most was like, How how are you seeing this? So uh the thing I would build if I've got my balance to print and I'm somebody who like kind of has a sport that they specialize in is what you would call trade tape. So like I remember you know a million years ago when I was you know doing kind of a more normal trading job, you kind of you'd see information basically three ways on the same market, which would be like the the chart, which we all know, the order book, which we all know, and the tape. So the chart and the order book are already on Call She, but there's no trade tape. What the tape is, um, it's basically uh transaction log. So you would see like price, time, uh quantity, and what exchange that uh it was executed on. That doesn't matter for Call She, but like the thing I was showing on Twitter was our own version of a trade tape for uh golf. So what I would build and why I like this project is because it's always informative, no matter if you're manual or if you're automated, you're gonna you need to see the you want to see all the activity, not just your traits. But why I like it, and we're going very we're kind of going different different routes because I'm like easing people, I I'm like don't do anything that sends anything out. But I like this because it it's just information gathering, you know. Yeah, and you're like you need to be making live right away. But uh the my my pitch on this one is it's a very important thing that you're always gonna use, but it's it doesn't send any orders. So if you're kind of still trying to, and I think one thing that you mentioned, which is important if we're talking about call she is like how the tickers actually work. Because you have like your series ticker, your market ticker, you know what what even are all those? So doing this, you actually get to see like what the call she information looks like, and then you using that, you're gonna better be able be able to understand the steps where you're sending orders and then like what SP is talking about with kind of actually doing stuff that's trading strategy as like how you want to be in the order book. So my second project is the trade tape project. Build it for a market that you like to to follow, um, and and just watch it. It gives you a lot of information. I always keep my tape up if I'm at the computer.
SPEAKER_01Yeah, it's a that's a much so one of the things I had jotted down. Your your version is a much better version of one thing I had jotted down. So I don't I don't even know if you're familiar with this. On on Calci, there is like a extremely glitchy version of the the ticker or the tape. Like, oh really? If you go to social and then go to I don't know, live trades or something, they have like all the trades that I I don't know how they actually populate it, but it's in theory, like I think all the trades that are going through, like at any given time in a specific market, or it's it's like no, it's like a complete fire hose of so I I you know, like I said, it's it seems quite glitchy and we'll pause all the time. Um, and I'm guessing you don't actually see every trade. But one of the things I've done before is I've looked at that at like different times, like otter time. Because if you go look at 7:30 p.m. on a weekday at this time, like you're just it's gonna be a ton of like live NBA, live college basketball, like stuff like that. But if you look at some of the like otter times, uh you can see what people are actually trading on sometimes. Like, because sometimes there's so many markets on on Cal she or any of these sites. Like it is for the exact reason you said, like the ticker, it's helpful to see like what people are actually trading on. Um, because I've seen you know stuff pop up there that I'm like, there's no way anybody's actually betting on this. But then you see you know, people, then you go check it out, and maybe it's worth exploring. And I think that parlays into like what I was gonna, maybe, maybe my my overarching uh piece of like where to where to start. Because I think a lot of people who probably listen to this this um podcast, either top down or maybe originating like smaller stuff. And so for the originating, like the smaller stuff, it's quite hard on Calci right now because there's just not that many, like there's not that much smaller stuff. It's really like mainlines for the most part, and some some props, but mostly mainline stuff. Um and so I I think like that that makes it hard to like have an origin, like you have to be quite good to have an origination edge on the most of the stuff that's on Cal She, right? Like you can't bet like uh you know, obscure prop like you could on DraftKings or whatever. Um so I I think from that respect, like I try and look for where like markets that are being traded more than maybe people would think by using like the ticker or what's on Cal Shee or whatever. Or um, and or I look for markets that like in general, like uh wider markets are gonna be better to get in there and have like easier opportunities to access um good prices than markets, right? Like if you go on any NBA game on any given night, it's gonna be like one cent, um, like on the main on the moneyline or the main spread or whatever. But if you go to like some more obscure sports or niche sports or whatever, like that's not gonna be the case. Um so like I think that's another. Um if if we're just thinking about like maybe next steps beyond, you know, your I think your two projects are are great starting points. And frankly, that's basically like how I started. I probably just jumped ahead when I'm describing this. But like if you're thinking about like where to actually like start posting or whatever, like you might be betting football or whatever your whole life because there's like good football stuff on DraftKings and Fandle. It's much harder because there's fewer markets. So you might just want to try like sports that are less competitive, um, or something like where you can post wider and still get fills early.
SPEAKER_02Yeah, I I I think that's a good project is some kind of like I I think in general, like a lot of good projects are kind of like alerts or like things because when we talked to Foster, um, a lot of like the stuff he talked about was like he was doing a lot of stuff by hand, but he would have a lot of automated like alerts that would let him know where to focus his attention or or whatnot. But something like that where you have like you can create some kind of metric that's like volume, you like some you can create some kind of like opportunity score that like the wider the market, the better, and the more volume the better. So like if you can find a market that is doing a lot of volume, but it has been pretty wide, like maybe just it points your attention there, and then you can kind of even just hand trade it, right?
SPEAKER_01Yeah, we so we actually got a question that that that made me think of this. It was something along the lines of, oh, it was this one. It was from Wolf JB, and I'll just bring it up now because it was it was something I was gonna talk about on this question, and you you exactly said it. It was uh a question for next week. I think it was SP who said prediction markets surge in popularity, the EV sharp better is mostly gonna disappear. I consider myself in that category. So I'm wondering if you anticipate something like EV maker apps or sites. I have no idea if that's even possible, but envisioning a service vaguely like um GP Pix Plus, but instead offering bets of take, recommending to make. And what so just to clarify, I don't think they're gonna disappear. I think what I was trying to say, and maybe I used the wrong words, is they're gonna get like squeezed by the sites. Like I just don't think they're gonna be those type of like the EV takers are gonna be a high priority to please by the prediction market sites themselves. Um so like exactly what you were saying is like the tool that I think would be helpful. Because when I was thinking about this, I'm like, how would you design a tool that would be helpful to make? And it would be like, it would be like an alert that says this market is getting like a ton of flow right now, and the spreads are like 10 cent wide. I would like I don't care what the market is, I would want to like just jump in there, right? Because in theory, if you're given equal flow, right, you're just you're just collecting like 10 cents or whatever. So like that would be the spots where I would want to be. So so yeah, I do think, you know, I I've not seen anything that's even remotely. I mean, I'm not like in the there certainly could be stuff that that exists, and I'm not aware of it. It's not like I know every single tooler, but I'm I've not I've not seen anything like this. But that would be like, you know, to make something yourself that does that, I think would be extremely helpful. Like it does remind me of Foster, like looking at the like it would be helpful to just see these 40 markets are live, and here's the average width of you know the strike in each one of these markets, and which one should I like set up and and start working on?
SPEAKER_02Right, right. And like at like even as we talk about this, like this is something that can get better and better. Like I'm already thinking, like you said the thing about can you get fills on both sides? That's another metric of like how balances the flow, right? Like, are you gonna be able to take around for the spread pretty quickly? Um what's is it live? What's the what's the actual like what's the take what's the volatility of the market? Like, does it make you know 15 cents every minute and you have to go for that price, or is it actually pretty few? Like there's all these things that you can think of while you're trading that like, oh wow, I like this market better than that market. Why did I like it more? Oh, because like when I got filled, it didn't move 10 cents against me. So like maybe there's some way I could kind of put into rules like what would be a market that's less likely to move against me. So I I love I think it's a great project.
SPEAKER_01Yeah, yeah, I agree. Honestly, like the the question and the topic as we got talking about it, like have me wanting to work and think about some of these things.
SPEAKER_02The show's bad for you because of your shiny objects and yeah, I know.
SPEAKER_01You know, we we talk about it. It's like every time we talk to someone on the the show, I'm like I have like a million ideas go through my head as we're talking to the person, and then like I I write them all down, I jot them down over the next two weeks, and then we talk to the next person, and you know, the list just completely different.
SPEAKER_02Yeah. When I woke up after we recorded the uh foster episode, I saw you had. That you had posted in our chat with foster a uh mention market slip immediately.
SPEAKER_01You know, I I was I was feeling motivated. I was I was I that that was my second I'm I'm now officially 0-2 on the mention market. So we may come out of retirement uh again soon, but uh we'll probably need another mention market trader on the podcast to be reignited. Yeah.
SPEAKER_02Um yeah, I mean I think I don't want to, I know we have a lot on the back end here, so we don't have to hammer this into the ground. Uh but I think my general, you know, I gave the two specific examples, and then I think what you're talking about a lot of um, you know, stuff that's gonna be uh you know, not too daunting at first, whether it's the ex whether it's not daunting because it's you know you're putting Excel prices out, or it's not daunting because you're not sending orders out, like, you know, start with start with start step by step. You know, you don't want to immediately launch um into like live RFQs, right? You know, but make one part the part that is easy and the other part the part that's kind of a stretch, I think.
SPEAKER_01Yeah, that's that's that was the last note I had, and I think we touched on it. It's just I I would start with something like pregame, you know, relatively stable markets, uh like long enough breaks in play, you know, half times, uh whatever, like where there's enough time to get it posted and pull it down, like not in running. Just start with stuff like that. If you're if you're doing this for the first time, like I know on this podcast we probably are over-indexed to the you know, the live, the RFQ, like especially recently, all this stuff, but uh that's certainly not where I started, and honestly, like you know, I still have a good a good mix of of stuff.
SPEAKER_02So yeah, that and to your point, just to hammer it home on like the learn the API, I think everything we talked about was about the API, and I think like that I'm with you where it's like it's kind of at this point. And if you're listening to this show, like it's something you should take a stab at. And the the stuff that I suggested is pretty simple, and I'll post that prompt again when I tweet this out. So you can uh you can give it a stab. Let me know if it works. It's kind it has a good record of working, so let me know if you use it and it sucks. Um, and then I can I'll help troubleshoot it.
SPEAKER_01I think we're good then. We could probably hit the news.
SPEAKER_02Um, all right, let's go with I I would say you know how it swings. This has been this has been bad two weeks, I'd say. Would you say?
SPEAKER_01Yeah, I mean I in terms of prediction markets, I'd say what I have there been a worse two weeks? No. Probably not. Yeah, probably not.
SPEAKER_02Unless you count like sweepsack stuff.
SPEAKER_01Yeah, yeah. No, I would you know, just talking about the CFTC prediction markets, I would say this is probably as bad as it's the news as bad as it's gotten the past uh two weeks.
SPEAKER_02So the big news is there's a bipartisan bill to outlaw uh sports contracts on production markets. And there's some p and I think just even more broadly, like it's seemingly like broke contain. Like AOC was tweeting about it. Um John Arnold, who's like this like respected energy trader, was like tweeting about this bill and how like this is a good bill. I don't know, just like people that like I know who aren't at all connected with prediction markets, I now see like are tweeting about prediction markets.
SPEAKER_01And not in the good way. Yeah, I mean it's it's hard to do counterfactuals, but you wonder you wonder like what how much of this negative how much of this negative press is driven by like these companies, these these specific companies decisions on how they've marketed it, gone about it, like all these, all the like what has been in like the Calci, the poly market, et cetera,'s control, and what isn't. It's obviously a like a blend of both. I would say even before these um these companies like got big or whatever, like there's the trend line has been, I would say, like net negative on gambling, certainly. Like I remember you like early days of this podcast, we were talking about like these same sorts of things about like the the negative stigma around gambling. And it certainly like seems like I'm not an expert on worldwide gambling, you know, um culture, whatever, but it seems like that's like the trend line everywhere it's going. It's like net bad, more limitations, more regulation, all that. Um, so it's hard to parse it out, but like when I when we talked originally about like you know the commissioner C Lig and taking this approach of like what I'd broadly call is like the own the libs approach to to communicating this. Like I wonder it's hard. It's again, it's impossible to know, but like it can't be helping like the like alienate, you know, people like AOC or otherwise, like to to frame it as this. Because you're gonna get, you know, like we've talked about it, like gambling is like a purple issue, right? Like there's there's blue states that like you know that that are okay with gambling, there's red states that are okay with gambling, vice versa. And so because like I think this this this was a bipartisan bill led by Republican Utah, I think, and uh Democrats. Democrat California.
SPEAKER_02So yeah. Yeah. Yeah, I mean, I don't know. The thing the one thing I don't know is like the likelihood of this making an impact. I mean, my experience with bills, since the only bills I followed were the repealing bills of the 90%, is that they never work and nothing happens.
SPEAKER_01Zero percent, it's a lock. No, I was I I actually did I was trying to do some research on this. Um and so you know, apologies if this I it's been a long time since I've taken like a civics class or whatever. Um, but it seems like it has a lot quite a long way to go, right? It we need to get through you know, Congress and everything, Senate. And then it would also either need my understanding is it either need the president's approval or it would need two-thirds of Congress, uh, one or the other. And it's to me, if that's true, and you know, don't hold me to that, if that is true, uh it's it seems extremely unlikely that either of those things would happen to me.
SPEAKER_02Um there's no way they would I think president's approval seems almost impossible.
SPEAKER_01Like, like basically unless there's and if you don't have the president's approval, there's no way you're getting two-thirds of lawmakers in like states. There's enough of people that align with him, and there's enough states that like you know, like the pro-cre like every state that's like you know, pro-crypto, anti-regulation or whatnot, that's like aligned with the way Commissioner Seelig and all this stuff is talking, like they're there, they would go along with this. So um I think you're gonna have a mix of states that have gambling uh be against this, and you're gonna have a mix of like the Utahs and probably like Hawaiis of the world who don't want gambling.
SPEAKER_02Um Yeah, it's gonna be a it's gonna be a hilarious alliance of like the most DGN states and the most like Puritan states.
SPEAKER_01Right. So I mean I don't I based on that, like it seems if again, if that's true, it seems like there's it's it's very unlikely. Um on a new president, it seems exceptionally likely that it would pass then. Right. And that's why I think this like to me, it's like Calchi and Polymarket and this whole coalition, like you got like two years to lock in and make this not a red and blue issue. Um, because if it if it if this becomes a red and blue issue and you dig your heels in, like in my opinion, you're all but cooked in like two years. Um if you know the the party transfers or whatever.
SPEAKER_02So right. Which I mean, if you wanted to get a price on how likely the party is to transfer, where would you go? One of these places, come on now, they're so useful. Like, like if we wanted to price that, we'd go right there.
SPEAKER_01Uh yeah, I mean, I think they're in a really tough spot though, because like what I don't know how you I was gonna ask. They're trying like every angle of like how to talk about this sports betting specifically, like on like how to and I I'm honestly like I think the part you need to lean into is like a couple aspects. If I was them, like you clearly it's not gonna work to say this isn't sports like betting. I think that's like a horrible losing argument. I think I think what you need to like sort of come at it from is almost like the DFS argument, which is really stupid. I think you need to lean into sort of like peer versus peer, game of skill, trading. Um, you know, like different like states aren't equipped to handle these contracts, like the legislation in states can't hand like they're not written to do this, and the federal is the only way to deal with like DCMs and order books and clearinghouses and all these things. Like that's what you need to come at it from. Like that, and you need to get the people like on your side about this. Like, um you you you can't be like rage baiting on Twitter and alienating like half the you know the country anymore. Like you really, in my opinion, have a couple years you need to lock in and change like the whole um framing about this.
SPEAKER_02Yeah, it was like I I I made that that tweet recently and it was kind of about like this is kind of how I see it being framed, is like it's obviously sports betting, but like make the case that sports betting is like more fair or acceptable on an open order book system where like you could be peer versus peer or whatever, but you could be the person posting the liquidity, you could be taking the liquidity, you compete on a price for the the orders, and it's not like now this thing where basically like recreational gamblers are bought and sold by the states to like you know people at B. I think there's like a case there for sure.
SPEAKER_01Yeah, I I would wonder if so if you're Calci and you got extended the offer, like you can basically effectively keep doing exactly what you're doing, except you have to get out of the states that don't want you, uh, or the states like like like Utah who don't want any gambling, you have to get out of those states. But in like states where there's gambling, you obviously can do it. But yeah, you're subject to the same types of like I can I can't say regulations because obviously like the way the laws are written in a lot of states is what prevents companies like Calchi doing like what they can do, but like you have to pay the taxes and all of that. Like, is that is that something you would accept today as an accept? Like it's like an EV calculation, and I don't know.
SPEAKER_02Well, if because yeah, yeah, I'm trying to think like it's all about like what you'd make, how the taxes would work out for you, right? Like that's the whole key. And that I don't actually know, but I know like I feel like I've seen Alex Kane, um, CEO of Sport Trade, talk about how hard it was to operate like an exchange under the sports betting like taxation in certain states. I don't I don't know why.
SPEAKER_01I'm like it's something that we could research, but you know, it seems like it has to do with like um it's just the broader point of like the probably just the excise tax, and that can extend to to sort of all parts of the the sports betting taxes, because like there's there's a clear disincentive in most states to be like a low margin gambling product right now. Like an excise tax clearly uh disincentivizes low margin, right? Uh, because you're effectively playing paying like a higher percent of tax on your profit if the lower margin you are. And so like the exchanges obviously are like very low margin relative to like fanDuel and whatnot. So I I think it it would be onerous. So maybe that you know my hypothetical is is is totally dumb because it it wouldn't work with the taxes. I just it comes back to like the same thing I've been saying. Is it it feels really strange to me that it's gonna be five years from now and the CFTC is gonna be regulating sports betting? Um I I could be totally wrong at that. Nah, I hear you. It just feels like a really odd outcome long term, especially if like your prior is what's happening in the rest of the world and and like the the trend line prior to all of this. Like it seems like it would be a very big update to say like gambling is getting worse and worse press every year, more and more regulation. But here, you know, like in the US, we're gonna actually like totally open it up, and you know, states that don't want it are gonna have it, and all this. It it could be the case, it just like it doesn't align with with what my prior would be.
SPEAKER_02I think that's a good point. I would agree. That brings true to me as well. Because yeah, I I think like I mean, you clearly just have like a you have a CFTC that just is kind of like I don't give a fuck what you say or think. We're just doing this and I don't care. Like most places like don't operate, like can't don't operate like that for long. Like, right.
SPEAKER_01I mean, very few industries in the US operate like that for long. I mean, you had you you could think of like the obvious ones that always come to mind for me are like Uber was basically like a free-for-all for a while, but now it got regulated severely and costs are higher and everything. Same with Airbnb. Um, so like yeah, I've I mean it's it could be it's it seems counter to how most things work in this country and the rest of the world. Um the only other things I had on this was they, you know, the what Calci responded is like like to this is the argument like banning sports on prediction markets would push this behavior offshore. I don't think that's like a winning argument um at all. So I would ditch that one. The motivated by casino interest one made me laugh because it's like, you know, they talk about where a paradigm for this whole time they're like, we're not sports betting, we're not sports betting, and then you know, as soon as the negative press, it's like the the casino, we're not we're not we're not betting, but the casinos, you know, they don't want us. We're wholly different products, but supposedly I guess we're competing for the same same.
SPEAKER_02But do you think that that argument kind of works or no?
SPEAKER_01I I yeah, that's what I was saying. I agree with I I I think the one argument they're in a really tough spot with the sports, and I think you nailed what they should do is basically be like, it's unfair. Like lean in, like the the casinos and sportsbooks like have all this bad press, right? Like we've talked about. So you need to lean in and be like, no, like this is more fair. It's peer versus peer. It's you know, Yannick Sinner is my peer. Like lean into into those arguments, because that's like sort of what DFS did, right? Was like game of skill, peer versus peer, you know, all these things. And I know it's two totally different situations, but I just don't I've not heard anything else that would like remotely resonate with uh what you know, if I'm trying to put myself in like normal person, like nothing else resonate, right?
SPEAKER_02Like imagine telling your friend, like, hey, this isn't like I joke with my friends. I'm like, no, it's not sports betting. You know, it's just like a hilarious joke that everybody laughs at. But if I was to tell my friend, like, yeah, the advantage of this is like if DraftKings is offering a price, you know, I couldn't go in and offer a better price, but like now I can, if I wanted to. And they'd be like, oh, okay, I guess that's like better.
SPEAKER_01Right. Yeah, I mean, it's like how Uber and Airbnb worked. It's their arguments weren't like this is this isn't an alternative to cabs, or this isn't an alternative to hotels. It was like, no, this is just better for people. So like we should make it legal and regulate it and whatnot. So like that's calling it like not ride, you know, like a ride service or whatever. That that's effectively like what their their playbook to this point has been.
SPEAKER_02So I think it's a good comp too, because in Uber and Airbnb, they're both capturing transaction costs, and then like the customers are on both ends. Like part of your customer is the driver or the person and Airbnb the place, which would be in this example, like the market maker, person posting liquidity, and then like the taker who's buying the place or whatever, buying the ride share. Now, the utility of it is up to debate, but I don't like that's obviously um I don't even know if that's necessarily like critical to the argument, in my opinion.
SPEAKER_01No, I mean that they will certainly try and make that critical to the argument. I also think it falls mostly on deaf ears when you're saying like like I'm I don't think most people will think of this, whether whether it is or not, and I tend to think it is, like, very helpful about like predicting the truth and like knowing what's actually happening and all this stuff. Like people are not gonna view it that way, generally. Like, if there's odds on like uh obviously this is extreme and they're not doing this, but like president to be assassinated or something, like people are not gonna view that as like, oh, this is critical important information we're getting. You know, like they're not gonna think about it that way, right?
SPEAKER_02They're gonna be like, oh, somebody can make a hundred grand if they killed the president.
SPEAKER_01Right. So like those that like truth machine argument, I think is like an actual, like it's one of their strongest arguments for me.
SPEAKER_02If you actually want to check the odds for something that like isn't a sporting event, or check the probability, like that's where you go. And you know what irks me is like these like academics who like think that these are just like not good representations of the truth, and they're like, Well, they're actually just what a bunch of people betting think it is. All right, get in there and betting fucking jackass.
SPEAKER_01But that's my point. So, like if the academics like don't even get it, like certainly, and maybe you can make the argument that academics are like more full of themselves than like you know, the the normal person, but like I've seen a lot of those. Like, this is just it's not indicative of anything beyond like people betting like that that uh sentiment. And it's I I wholly disagree with that, but like that's how I think a lot of people are gonna think about this. Um at least in a short term, it's gonna take like like a long time to I think change. Change. I mean, just think about how people think about sports betting. Like, people who've been betting their whole life still think that way. They still hate themselves. They're like they still think they still think like odds don't mean anything, right? Like, so I don't think like the average, like it's it's not like the average sports better knows it like cares or thinks like the odds really like 110 is equivalent to 115 is equivalent to minus 120 for those people. So like to think about the odds mean something for most people who aren't even betting on a day-to-day basis, like they're not gonna get it.
SPEAKER_02That's true. Like, what's the Venn diagram of people who like put a lot of value in the information from a prediction market, but also do not interact with like the order book? It's probably pretty strange.
SPEAKER_01Probably. And I mean, you just see it in every example, like you know, every time there's a presidential election or any election or whatever, or the weather, you know, it says it's 20% to rain and it rains and like people lose their mind, right? So, like this idea that like we're helping the truth, I just don't think the average person is gonna isn't ready to consume truth efficiently.
SPEAKER_02No, fair enough. Um all right, should we get on to some of the other stuff?
SPEAKER_01Yeah, yep.
SPEAKER_02I also saw some absolute hilarious takes around this. They're like, polymarket has now like ruined. Their product, which was you know supposed to be this place that like was uh efficient way to find out the truth. It's like, dude, you think it's like free? Like the truth has a price, man. Yeah, truth has a price, dude. Um I don't know. To me, this is almost like not news, but we obviously have to talk about just in case like you haven't been on poly and you use this for some crazy reason to keep up to date on news. Um they interact they introduced like a fee schedule that is it's like kind of I mean, I you know, they show it all of the different graphs and whatnot, but it's kind of like the the Colchy schedule where it's not like a flat fee, of course, like it varies based on the price regime, um and and whatnot. But yeah, I I you know obviously I think we both I think everybody who listens to this podcast was we all knew that Polly would need to generate fees to you know continue to operate and it's good good for them, I guess.
SPEAKER_01I don't know, like you know, they did like of I business charging money of like all the stock depresses, like it's like an onion article, right? Um, yeah, I mean I you you I guess the only thing that I think is potentially interesting because I saw a couple other things from Bali Market about like being more forward about like trying to not offer. I think I saw an article or two about like not offering like insider trading limitations and other stuff. It seems like maybe they're getting closer to um trying to really compete in the US and trying to be a little bit more uh serious about some of this stuff. So um yeah, it'd be good. You know, more competition will will be good. I hope I hope they like you know make a real push to because right now it's it feels for me quite one-sided, but I don't feel like they've actually gave like a serious effort from my vantage point quite yet, you know, in the US.
SPEAKER_02Yeah, and actually there's like I don't know if you saw this, but they offered up a lot of um like liquidity, added liquidity pools for the US stuff recently. So I know like they offered like a bunch for each like March Madness game and and some other stuff. So it does seem like it's all kind of coinciding with with the big the big push for the US uh facing stuff, is my guess. That makes sense.
SPEAKER_01Yeah, yeah. Do you want to go to the next one?
SPEAKER_02No, next one's bullshit.
SPEAKER_01So I I the next one I had I put in a question mark. I don't I was trying to do some research before you're gonna have to fill me in. So Calci introduced decimal pricing. Was this like two weeks ago? Is this is this when they got it?
SPEAKER_02Kind of. So it's like they they've had it before, and then they've like taken it away, and they've always kind of had the ability to price in decimal, but if like kind of on the back end, basically, like they did actually a big kind of API change that I think a lot of people uh got got caught by a little bit. That's why I asked.
SPEAKER_01Was it two weeks ago? Like everything was broken two weeks ago, and I it wasn't I clearly didn't read like the patch notes or whatever.
SPEAKER_02Well, yeah, exactly. I don't know if any of them did. Like I didn't read them, and then when I was reading them, it was like they renamed the columns, like it was like from okay. This is what happened to me. I forg I forget what the exact rename was, but it was basically basically just being like instead of just being in uh you know sense, like we're basically recreating everything, so each column theoretically could be in uh the extra decimal pricing. And that, yeah, that's everybody I think got kind of fucked about that. I think yeah. Um, so anyway, that oh yeah, it was when the players was going on. It was like the first, and I was like, what the fuck like is going like the players is uh kind of the first big golf event. And anyway, that was like a a fun little like fire drill. But the the main point is yeah, they're adding the capability to have decimal pricing anywhere. Um it's rolled out selectively, uh seemingly to the politics futures markets more. Um I think it probably won't come for moneylines and sports for a long time. Like obviously the makers don't want it there, like or I would say the makers who are posting a lot of liquidity or have their own pricing, like don't want it in the moneyline spots. If you're a maker for more of like a penny jumping structure, like HFTing, like you probably want it. So I guess you know, whoever has cost your zero a bit more, but yeah, I don't think it's gonna come for those. I could see it um in the futures, which means I could see it happening in in the golf outrights. I don't really care at maybe like the you know the high 90s like stuff is I I totally see the case. Like you could have a guy who's 300 to 1 and you can only offer him for 100 to 1 on Culchi, and like at that point, like people don't even want to take a punt on on the guy, even if it's minus EV. So that there's some case there, but yeah, like obviously the closer it goes to 50, the more frustrating it would be, I think, to have the decimal pricing. But you know, I'm one obviously I'm self-insuring, I have like my own interests, and then other people would want it. So but what what it means is like it's kind of uh available for them, it's a switch available for them to pull in any market.
SPEAKER_01Yeah, I'm I'm with you that I think I'm hoping selfishly like they would keep they would apply it to the tails, but not at the median for most things. I mean, I think that we've talked about tick sizes. It's it's probably been a good month since we talked about them, at least. Crazy talked about them ad nauseum in the past, so we won't we won't go into the whole thing, but I think it needs the the tick size needs to be relative to the probability like you're at in the distribution. So like a 1% is way too big going from 1% to 2% in general. Um but it's not too much.
SPEAKER_02That's a hundred percent increase.
SPEAKER_01Right, right. In my opinion, it's not too big going from like 49 to 50. Um so I think like making it that way uh makes sense. And the other thing like it would do is you would you would actually get um because there's some sports I'm sure with golf where it's like you said, it's probably hard to get any bets on some of the biggest long shots um as it currently stands. I I mean a couple sports with with stuff like that. The other thing it would help is it would like free up more money because um right now I think a lot of people don't understandably wouldn't want to like pay one percent to free up their money. If like interesting. I I think that's probably a big reason for it, is like uh and the markets they're doing it in is like probably like the mentions and stuff where it's like or whatever, like politics.
SPEAKER_02Yeah, because it makes them because they're liquid now, you're not trading in and out as much.
SPEAKER_01Yeah, and if uh the way I was seeing it is like a game, like let's say let's let's say it's a mentioned market, and and the person literally said the word, and it's very clear and it's agreed. Right now that market's gonna go to 99 cents, right? Um, and like only really probably like not sophisticated people or people who have like extremely high edges and low bank rolls would like get like sell at 99. But if it was 99.9, then it's not that costly to sell, right? It's it's like so getting out is like far less. So I think it could help like churn in some markets, um, which could be good, but yeah, hopefully they keep it to like the tails, right?
SPEAKER_02Right, like you'll close it, you'll be willing to like pay a little bit to close a position to have the liquidity.
SPEAKER_01Yeah, to bet again, like in the middle of speech or whatever.
SPEAKER_02Fair enough. Fair enough. Kind of like that. And then all of a sudden now you're doing a service by placing the 99.9.
SPEAKER_01Well, that's right. The 99 the bonders think they're doing, but like they're just you know, it's like two, it's a very expensive bond.
SPEAKER_02Yeah, that's an expense. The cost of capital there, it's quite quite high.
SPEAKER_01I think if they lowered it though, it'd be you know, it'd be more reasonable.
SPEAKER_02You could kind of see like, oh, everybody's kind of happy at that situation getting out, and then you get your free whatever. Um, and then think about how much money Foster's gonna make because he said he'll buy anything for a cent. Well, he'll buy imagine what he'll buy for a tenth of a cent.
SPEAKER_01Yeah, he posted I I think he posted his his profit the other day by like ban, and it was like all in the one percent, it was not all, but a lot in the one percent and a lot in the 99. So he would obviously be worse in the 99. That's even better in the one percent.
SPEAKER_02That's true. Interesting. Interesting. Okay. Um all right, uh back to less good news. Nevada bans sport, they so they banned sports contracts, was it politics contracts and entertainment contracts? Okay, so this happened. Like, I don't again, I still have no clue how the law works, but there are certain things that were like filed and you know, countered or whatever, but seemingly now like Call She actually has stopped offering sports. I think they stopped offering all of these. Someone posted something where it was like they offered this kind of like, will so-and-so be at the Met Gall or you sent me that, but and they're like, Well, that's entertainment. I don't know. So I think like you're kind of there's kind of maybe some things that were like nitpicking, but it seems like they've actually stopped offering this stuff, which is you know, it's the first time this has happened.
SPEAKER_01Yeah, it's the first first state to officially get it um stopped or shut down in in that respect. I mean, I did see stuff like the attend the Met Gallen. I saw, you know, our favorite um, you know, lawyer who we have a question about later, was tweeting about like people getting around it by saying they're non-Nevada residents, um, like basically just saying they're not from Nevada, but being in Nevada. So but yeah, this is the the first state to get it, get it uh shut down. And this is probably like more honestly, and you know, this is take this for Westworth, this one seems worse than like the bill, in my opinion, because in my look, like I said, based on my uh you know, two minutes of research prior, it seems like a long road for that bill. But what seems more likely is you know, like this continues to get escalated and goes to the Supreme Court, like on the, you know, without an actual law, it's gonna be a determination on like the current law and whether states have the right to rule this as you know, like un or they don't want it or is that unconstitutional or whatever, or the interpretation of the law, what states can and can't do. And um so yeah, I mean, I think this escalates it, right? Because as soon as one state, you know, not knowing anything about law, like as soon as one state sort of figures out the key to turn here, it seems like other states could could copy similar arguments. Obviously, you know, judges and decisions could be different, but it seems like it's uh it's gonna it seems like it is gonna move in that direction prior to like any bill being actually like signed to me that like the Supreme Court's gonna have to decide something here.
SPEAKER_02That would be that's the risk, right? Because that's feels like you don't know. Like it feels like too uncertain to make it feel like you're you're like if this goes to this, if this were to go to Supreme Court, like the value of your equity in like Apollo or Colchy is is is much less because of the uncertainty around it.
SPEAKER_01You obviously to you and I talking about how to how to handicap Supreme Court decisions. But like I I don't know the recent decisions, I do I do pay some attention. Like the what the language they used on the tariff decision um seemed bad generally for um for prediction markets. Obviously, they're two wholly different things, but some of the language about like um rule of law and whatnot, uh, about like not hiding like elephants in mouse holes or whatever, like stuff like that. Like clearly Congress didn't has not at any point expressly said like we want sports betting nationwide. And so to interpret like this in sort of a loophole, it seems it seems like it hasn't been good. If you even go back to the original, um, you know, when sports betting was legal, uh, like legalized, it was it was really framed as a state's it wasn't it wasn't like sports betting is allowed, it was like the states can decide what they want to do and what they don't want to do. And so this would be basically like a reversion of that, right? Of saying states really can't decide whether they want sports betting or not. Uh now sports betting in quotes or whatever, maybe that's the key factor, but right, um, this is true. I think I yeah, I think going to the Supreme Court, like I think the way you framed it, I think your equity is is certainly down, like as of compared to today.
SPEAKER_02Right, right. You want some way to work this out without having to like flip a coin at the Supreme Court, it's just like so bad for your EV. Um okay. We got uh we got the the five cc fund uh from Audi and Noah. Uh I know Audi uh pretty well. Like he's you know writes a great uh column about prediction markets. They raised 25 million to invest in uh across like PM. They did they mentioned a number of companies, right? It was like to invest they had some number they wanted to do, but I think it was like 20 companies, yeah. Um, yeah, so I guess across the ecosystem. So, you know, I don't think it's like I don't know. I wouldn't imagine it's like the first prediction market focused fund, but maybe it is. Like I I actually don't know. Did you have any did that that was that mentioned?
SPEAKER_01My impression was it was like the first um fund that is because they're very specific. They're they're funding like um they're not funding like they're funding like ancillary things around prediction markets to help grow the ecosystem. And I've not heard anything about this. I mean, I think it's it's really good when I think of like like a good idea from the people who are backing them, because uh, and it's like uh backing them as a bunch of people who are gonna be much uh more wealthy if prediction markets really kick up. Right. Well, it reminds me of like when in early days DFS, like the the companies, DraftKings and FanDuel, put a ton of money into companies like Roto Grinders and other similar sites through like affiliates and all this stuff. And it was such a a big boon to grow the ecosystem as a whole. And like the deals were ludicrous back then in terms of like Rev share and everything, but it it worked, right? It got so much um so many new players and people like engaged with it. So I think I don't know exactly like what direction they all are you know gonna want to. Obviously, it's very dependent on the quality of the investments they that that they make and what they're doing. I mean, I I have things that I think would be good and things that I think are like total traps. Like I think the I think like the asking, yeah. So I think I think like any of this media stuff. I I saw like some stuff written down. I think any of this like media stuff is a total trap.
SPEAKER_02Like what would be like a media thing? I didn't I didn't see this. So like we do like a show, like this.
SPEAKER_01Yeah, do not if they if you hear us funded by FC or 5C, you know this they've they've made up the um no, I I think one of the ideas that I think could come to mind, and I I have no idea what they're thinking of. But one of the things like when you hear the prediction markets people talk about is like redefining media, like and you see some of like the integration with CNN and stuff that or CNBC and things people get mad at, like I I think that's not a to me, that's that's like a losing strategy for the reasons I talked about. Like if you just equate it to sports betting, like it's that's an industry where there's been odds forever. There's been like you you have this truth machine telling you the probabilities of winning. And like if you just think about those markets or you know, like that market, like nobody cares to listen about sports betting or odds or who's gonna win. Like, just compare like what's the ESPN show, Daily Wager or whatever. Like, compare the ratings of that. There's a reason that shows on, you know, no offense to any of them. I'm sure they do a great job. There's a reason that shows on at like 3 p.m. in the afternoon on a Tuesday, and you know, Stephen A gets, you know, drive time main hours, right? It's like people people don't watch the news to be like, oh, there's exactly a 64% chance, you know, the economy is gonna go into a recession. That's not like they don't watch sports for that, they don't watch the news for that. So like this idea that you're gonna like bring truth to media, I think is a total uh like money suck. What I think is like a better idea is the stuff that's like worked in gambling, like tools, communities, um, stuff like that to get people into the prediction markets and like doubling down on people who are already into it and turning people into like evangelists over it. Like that's what's worked for like Odds Jam. That's what's worked for like all the DFS content sites that have been really big, Action Network, that's what's worked for them, like um Roto Grinders, big sales, like all the like that's and and those have had huge positive increases on the ecosystem. So I mean, to me, that's like what I would it's also what I know.
SPEAKER_02So like obviously I'm biased to it, but like that's that's what I would be leaning into, and like not also like the uh the picks and shovels type of thing of like helping with settlement rules and like just not sexy things, like of like honestly, like we've seen there's a market for like writing these contracts and settling them on like these ambiguous things that that haven't gone well so far.
SPEAKER_01So stay away from the media, I think otherwise there's a lot of good ideas.
SPEAKER_02There you go. Um yeah, I you know I think they're both very sad and cool to see what they scoop up. I think the Stephen A thing is a good point because I was just thinking about it. It's like he almost wants to say things that he probably is the reverse. Like the further he is from the true probability on something he says, like if you were to ask him this, he'd probably say, like, the further he gets from the true probability, like the better feedback he gets. Like the more ratings he drives. Exactly. Exactly.
SPEAKER_01That's the thing with media. Well, that's the thing with media. That's that's why like these this idea that you're gonna like fix the news with prediction markets is just you know, totally unfounded to me. Like you can provide truth to people who are willing to take it, but like people don't want to watch that. That's not what media is. Like media is like entertainment primarily, and it's not entertaining to talk about you know, true probabilities for for the vast, vast majority of people. They like like hot takes, disagreements, arguments. Like that's that's what they want to listen to. Fair enough.
SPEAKER_02Uh, let's hit the cues. It's actually a perfect transition because we you did a good job here with setting this up. We had prediction watch come in. I had asked her spicy questions, and he just really took that to heart and came in um with some burner. So on the last one, he said, What is the X ROI of a fundraise to invest in AI slop on top of prediction markets?
SPEAKER_01Well, why don't we just read out three of these and then we'll respond to because it's a good trifecta here.
SPEAKER_02Right. Yeah, because we don't want to think like he's picking on anyone specifically, he's picking on everybody. So here comes for us the uh the market makers. What percentage of market makers break derivatives laws on a daily basis, and what sub percentage are aware they are doing so? That's actually Those are very different probabilities, I think. And then the third one was does Victor Broca care about anything as much as he does? Victory laughing, his opinions on Twitter. Does Daniel Wallach self-promote more than an OnlyFan model? I mean, you know what? I'll give you you pick which one you want to answer first. So then I'll take one, and then we can maybe settle on the third.
SPEAKER_01Okay, I can take uh I'll take I'll just do them in order. The the first one. So the we talked a little bit about the fund. Obviously, like that's a shot, uh, a little bit of a shot, I think, at uh at this uh 5C fund. I mean, like, I think with with sports, there's like good stuff to do. I think if I was in their shoes, I would be very nervous, like sports is gonna go away and it's just gonna make it hard to invest in companies that are big enough to justify those, you know, like the amount of money you're putting in. But I could be total, like they know way more about prediction markets in the ecosystem and whatnot than than I do. But um I think I think there's gonna be good opportunities. It's I think it's gonna be really easy if I'm trying to put myself in their shoes to get sucked into like what they think is cool about prediction markets. Because like anybody who's worked like early stage Calci employee probably is like a true evangelist about prediction markets and like the you know, the the idea of them and like the the utopian qualities of them. But I think a lot of like that is is probably really bad money spent uh if you're you're you're trying to like foster that. And so um I think where the money is at is probably like leaning into all the gamblification. Um so uh you know that's that's maybe pessimistic, but like I do think there's there's there's gonna be big assuming assuming sports is here to stay, um, and even not probably there's gonna be big um companies that help support prediction markets, and it's just about finding the right ones. There's gonna be a ton of garbage too to that point of like AI. I mean, there already is, you see like loads of prediction market garbage on Twitter and stuff.
SPEAKER_02So what's the XRY? Nah, it's I mean like it's hard to say for a VC fund. I mean, like I I actually am just so like unaware of like the return profile of a VC fund that I think it's it's a hard, hard thing to price. That's my cop-out.
SPEAKER_01But that that can be my cop-out too.
SPEAKER_02Appreciate it. But I do think they those two are not like AI sloppers, like they actually know what's going on. So I would I would say that they have at least as good of a shot as as anybody, if not, if not more, with their kind of connections and whatnot. So good luck to you, Audi and Noah. Okay, which one do I want to do? I actually I know which one I want to do. I'm doing the third one.
SPEAKER_01We gotta both answer the third one. So let's just do the second one. Okay, you can you can take a shot at the second one.
SPEAKER_02Okay, so what percentage of market makers break derivatives laws on a daily basis, and what sub percentage of people are where they're doing so? So I would say like almost we're talking about market makers in prediction markets for this, and I would say like no one thinks they're breaking derivative laws, and that probably the one law that I think people may be breaking would be what I would call what's known as spoofing, which is to like put up a big order to influence the order book when you're not actually intending to want to buy it at that price. It's a really I think it's actually like a stupid law because I don't think it's it's like not allowing like check raising and poker or something. Like there are times when you want to like when people are doing annoying shit and like a good counter to that would be spoofing, but it is actually um uh not allowed. So now how do you define I don't want that price, you know? I think a lot of people who put up an order to impact the order book or to quote unquote spoof, um would say that you know if they got filled, you know, they would be happy to get filled, and it was part of their their calculus. Like uh, so I think it's like a very hard thing to prosecute and whatnot. But if I had to guess as to like which one people are doing that would be actually against the law that they don't think is against the law, it would be spoofing, yeah. And it's a hilarious name.
SPEAKER_01I don't know any of the laws, so tell me prediction watch, you're gonna have to tell me which one I'm which which ones I'm breaking.
SPEAKER_02Prediction watch can respond to like the actual episode drop with because I'm pretty sure they know better than either of us. So, like, do you think do you agree with me that you think spoofing is the number one um contributor here? What did we miss? Um and why are SP and I going to jail as Market Bakers?
SPEAKER_01All right, let's do the third one. You want to go? All right, so I'm not gonna attack any. Is the third one just to repeat is just did does Victor, uh, I don't know if it's Roca or Rosha care about anything anything as much as Victory lapping his opinions on Twitter. Does Daniel Wallach self-promote more than an OnlyFans model? I'm not gonna attack, you know, we have an ethos on this pod to not attack individual people generally is our goal. But when I read this question, it it it what I thought of was who I think both sides of like, you know, the the prediction market, like badgers and meaning like the people who have badges and like you know, shill for them nonstop. And then you know, this group that's very anti-prediction market tagging, like both are you know not my favorite follows on Twitter all the time, but like which one would you which group would you rather like have a beer with or go out to eat if you were forced to?
SPEAKER_02Wow, what a good question. Is this like anybody who has a poly or call she badge or like this crew?
SPEAKER_01We gotta we gotta consider like the most the most So it's not like Foster, it's like no, like the most egregious, like can't do anything wrong, like dude, like you know, like the true like this is changing society, like because I that would be the equivalent, right? That yeah, the most staunch supporters, the most staunch people against.
SPEAKER_02So brutal, but like I think it's obvious. I I also think it's obviously like it has to be like Victor and Daniel and whatnot.
SPEAKER_01Oh, I was actually gonna go the opposite. You were?
SPEAKER_02Oh my god, yeah, the real like I don't know if I I mean I don't uh I mean Daniel's tweets maybe told me like as much as anybody's tweets, but like I don't know, man. Like the the true, like I feel like we've kind of lost some of those people, but if you remember some of them from like the early days, like how infuriating their tweets were, at least to me. Maybe maybe it's it's it's his recency bias. Um wow, I thought you were for sure going the the the opponents. Okay, SP is way more of a a prediction market um bull or like a truther than me, I guess. Like if I'm I guess so. I I would you would you consider Dustin to be in this group?
SPEAKER_01Um, yeah, he would probably be in this group. I mean, like to be fair, like I would have a beer with any of these people. Like I think it would be fascinating either way.
SPEAKER_02Um I think people like if you actually talk to them, because look, I mean, these guys are talking their own book at the end of the day. Like I get on here, I talk my book. I don't want, you know, we'll have a question about the live delays or whatnot that you know didn't go my way. But like, you know, certainly like our opinions here are influenced by our state, you know, our interests in the industry. So, you know, if you were to have talk to Victor, you know, obviously he has interests that are opposed to like having easily accessible gambling in the states that his tribe operates. And so like he would it probably tell you that, and then he would tell a funny joke about sweepstakes, and now he's gonna like turn them into like a rug or something, and then like it would kind of be funny. I don't know.
SPEAKER_01Yeah, I yeah, maybe you swayed me. Maybe it would be more entertaining. I I don't know. The listeners are gonna have to tell us what they think, what but they think the better. This is a good poll.
SPEAKER_02Should we do our first ever Twitter podcast poll?
SPEAKER_01Maybe we'll see. Yeah, it's uh it could go either way, but um yeah, I I I agree. Everybody's like just doing what's what's in their best interest. I'm sure everybody's everybody's you know like deep down a fine person. So yeah.
SPEAKER_02There we are. We're we're just so afraid to take a stance. Now, here's something that that is perfect for us because it really has no real um consequences to have an opinion here. China, China maniac, says pizza, straight cheese or toppings. Was this like a subject of discussion anywhere? Or he just kind of like no this this morning.
SPEAKER_01I don't even know how this is like a question. I mean, like it's like any pizza is fine, but like obviously if you like any sort of toppings, toppings would be better. So I agree.
SPEAKER_02I agree. Like, cheese is if you had like a random, like the only way I see cheese winning is like if you have two options, one is cheese, and then the other is just like topping somebody decides for you, but you have no idea what they are control. So I probably and you're pretty picky, right?
SPEAKER_01Like, because even for me, I'd probably you know you'd roll a dice with that, yeah. I would definitely pick it. Like, there's not that many bad things that could be on there.
SPEAKER_02So I just am afraid onions are gonna be on there. Like, I can't take that risk.
SPEAKER_01The tail risk is you out of yourself as a uh picky eater.
SPEAKER_02I feel like people probably saw that, they probably wouldn't pick that up. Yeah, um, okay. Shipper had one that was real was kind of relevant to what we were talking about before. Is the presence of prediction markets good or bad for DraftKings and FanDuel? And then I I responded, I said like another good question would be if they think it's good or bad for them because they're obviously taking steps into the space. And then he said that we can't we can do the top-down answer, but we got to put our big boy pants on and have an opinion. And he's referring to the fact that when the um the bill that we were talking about was announced, the stock of a lot of the gaming companies, including DraftKings and FanDuel, went up. So that's obviously the top-down version of is this are they good or bad for uh DraftKings or FanDuel? The market would say they're bad for DraftKings and FanDuel. What are your thoughts?
SPEAKER_01Yeah, I mean, obviously this is uh, you know, contrary maybe a contrarian opinion in light of that top-down. But like I I think it's a mistake to equate DraftKings and FanDuel with like this, like they're to me, the prices should not be moving in like lock, and I don't pay attention to any of this really, but they the prices should not be moving in lockstep with like the Bed MGMs and Caesars. Because I view this as two like wholly different things. Like if prediction markets were just like snap legal everywhere and DraftKings and FanDuel could do whatever they wanted basically in the whole country, they just increase their like total addressable market by like 40% or something. I was looking this up before, like between California and Texas alone, it's like 30 some percent. That's so crazy. So like two states. So yeah, so if you just do like some basic math, how much would they have to lose? So obviously, like the flip is how much are they gonna lose in their current, like sort of monopoly states, like you know, where they they can offer sports betting, but um, I obviously Calchi is as well now, but like where there would be no no restrictions and everybody could compete freely. Like, I find it hard to believe that the prediction markets in the short to medium term would take a dent big enough to outweigh what they would gain in the other states. Like it would have to be a large, large dent, right, into the current regulated states for for it to be bad. And I just don't see that. Or it would have to be like, you know, DraftKings isn't competing in FanDuel, or DraftKings isn't competing in California or Texas or whatever. And I also don't see that. I mean, I'm not saying they're just gonna come in day one and be 90 plus percent or whatever, um, but they probably would be the majority, I would guess, right off the bat. Um so I mean, I I I sort of think it's good. And and you can sort of take two, the the market obviously seems to think like they move in lockstep with the prediction markets and their interests are are misaligned. But if you if you follow like the actions of DraftKings and FanDuel, like they don't really seem to be thinking that way. Meaning, like they were very quick to be like, okay, we'll we'll drop like the whatever the alliance we're in. I don't know if it was AGA or otherwise, but they were just like, we'll we'll drop that. We're happy to you know, like compete in the prediction markets. We think we'll do like a fine job here. Um they're talking about like how their margins will be higher because of taxes and stuff. Um, whereas like the Caesars and Bed MGMs are the ones that are like you know, whining and and not wanting to really compete because probably they can't. So like, no, I think it'd be good. Because the the customers are like, there's obviously some crossover, but they're at least at this stage, like eventually there could be a lot of crossover, but at this stage, like who is in I don't know, some legal state, who's in Illinois like using Calci besides someone who's been limited everywhere or someone who wants to bet on things that like DraftKings and FanDuel isn't allowed to?
SPEAKER_02Like Yeah, just maybe maybe a couple of crypto truthers.
SPEAKER_01Yeah, yeah, that's fair. Like, like but I mean how many of those are there?
SPEAKER_02I mean yeah, I don't know.
SPEAKER_01Like your average sports fan still isn't going to like Calci, I don't think.
SPEAKER_02My guess is no, but you know, I don't I don't know. I you know something Ferris, you know, Ferris on Twitter? He's uh he works at a high school, and he was saying like Cal she has, and this is not a not a necessarily a uh compliment to them, but a lot of name recognition there. So there might be uh there might be a younger generation that uh chooses um differently than our generation that kind of tends to pick DraftKings and FanDuel. That's kind of the only other thing I was thinking. So okay, so I'm gonna do the top down first because I think there's two aspects to it. Like obviously the market, but then there's what FanDuel and DraftKings think. Like you said, they decided to leave the AGA, um, they decide to you know roll out prediction markets. Uh it looks like they're doing their own, you know, internal ones eventually, or you know, even I think DraftKings is is kind of starting as their own thing. Um and you know, they seem to think that this is worthwhile. Now, is it worthwhile because they think that it's good for them or that the likelihood of success is so high that they have to start, like the likelihood of success of prediction markets and like is so high as far as like getting into and staying in the states that they want access to that they feel like they need to start. I don't know because if I'm DraftKings and FanDuel, I want California and Texas to open um maybe a sports betting, but like I also I also think that my product is so good that I don't want there to be like any chance that it's like Caesars just like gets the two California licenses, like Caesars and MGM get it because of XYZ. Like I'd rather be like, okay, I can enter um California, I can enter Texas, and I can go in there and compete with like all of the advantages we have addressing uh sports, and I can do it now. I kind of more swayed like you that way. That like they like if anything, it feels like it's more up to chance and it's less like because DraftKings and Fandu basically want to play a game where like a uh game where like skill is deterministic to the outcome as much as possible for sports, because I think they're clearly like the two um premier like sports you know, whatever, wagering, betting, whatever you want to call them companies, if you include Polly and Caulch in that. So they want to play that game. And like if the game is kind of being controlled by maybe like special interests or something where they feel like, oh, they might not get a fair shake at Texas or California, then like maybe they're thinking it's just like, you know what, fuck it. Like, let's let's go. Like, we're ready to be there. Um, we'll accept some challenges from like call shoe and polymarket to kind of bypass the rest of this this bullshit, and our product's good and our team's good, and we're gonna go out and see what we can do. So I agree with you. Like, my bottom-up feel is like it is good for them. Um, obviously the top down seemingly is is bad, but I don't know. I agree with you.
SPEAKER_01I mean, even in in your example, like you extend this to a state like Florida, right? Where you know, like now they have Florida where they could compete. So I mean, I don't I think you hit the nail on the head. I don't think DraftKings and FanDuel are scared of marketing fights with anybody, you know, marketing sports betting fights. Like I think they're like, this is our home turf. Like we're we're happy to play this game. Like I think they're they'd be happy to go in any state with any number of competitors, right? They don't they don't really care, they think they're gonna do well. Whether that's that's what plays out or not, we we would see. But yeah, I I don't think they're particularly scared to get in a state and and let the best you know marketing and product win.
SPEAKER_02I agree. I agree with that. Um okay, this guy Chucks. I feel like they've asked the question before. Is that's a great name and it seems familiar. Any tips for a call she bot that continuously trades the 15-minute Bitcoin price up or down market? My bot has been running for about a month and seems to have a small edge. Just looking for any non-obvious insights into order book dynamics. Yeah, so I thought about I thought about this for for a while. Like, I think that my gut reaction is that people probably are more inclined to to like rec are probably more inclined to buy the price to go up. But there could be like a little no-run first inning here, you know what I'm saying? Like, uh, I I don't know. I don't know if that's 100% true, but you know, obviously in this situation, like you want to be exposing yourself to capture the rec flow while not capturing the uh sharp flow. So like you'd probably want to figure out what side of the market is the side that the rex like to bet and try and mainly quote there. And then like the other side, maybe you're quoting for risk management purposes, but I don't know. What is your gut that the rex would buy price up?
SPEAKER_01So I I I thought about this too. I actually think this is probably one of the few times you know a normal person can use it's not really using calculus, but a little bit is. Um I I actually don't think they're gonna in general, like from other, I've not done this market, but in markets, it feels like what the rex do is they they're like all you know technical analysis traders, meaning they all want to just like buy the trend. So if you if you like if price between time n and n plus one went up, I'm guessing there's more rec flow, uh, you know, n plus one to n plus two on the up, and vice versa on the down, is what I'm guessing.
SPEAKER_02I like it.
SPEAKER_01Like, I I don't know if you see this in golf, but I'm guessing you do if like someone makes a putt or whatever or gets in the lead and they're probably over traded relative to what they absolutely should be. Yeah, so I've seen that.
SPEAKER_02And if somebody wins the uh golf tournament before, the next golf tournament just getting traded. It could be whoever.
SPEAKER_01It's funny to see like what what sports books like flow because like that stuff has that the those types of biases have been weeded out and like stuff like DFS, because like that happened where it was like someone went off last game, they'd be super oh. That stuff mostly is like dead just because like people are really good now and use tools and stuff. So it's it's funny to see that. But yeah, that would be that would be my guess. The other things I had on this would be like just trying to build like um like additional layers of logic of like when you want to jump, when you'd want don't want to. Uh in a market like this where it's so frequent, I would be very scared of being like predictable. So maybe I'm, you know, to prediction watches uh point committing a crime here, but like adding randomness to what you're doing a little bit. Um that's not a crime. Okay, randomness is good. This discourse. Okay. So I I think adding some sort of randomness so you're not like doing the exact same thing every time could could potentially be good. Um, and then potent, you know, just just other stuff to make make sure you're um it it just when it's every 15 minutes. I feel like that's much easier to gain. Maybe that's wrong, maybe that's not, but like I've I feel like you're just gonna have so many more data points um than something once a week or whatever. You just know you would it'd be easier to see like what a bot is doing if you have 10,000 data points than if you have a hundred.
SPEAKER_02Yeah, and the the other thing that like not that I don't I have no idea how this exactly settles, but like one of the oldest, like arguably question questionable trades in the uh in the book is like manipulate the underlying thing to win at the derivative. And like I don't know like what this BTC price tracker tracks or like where, you know, or whatever, but like if if the derivative market, it seems like this market does a lot of volume. I don't know if you've kind of like checked it out, but this is a popular one.
SPEAKER_01Yeah, it does.
SPEAKER_02This is a popular one.
SPEAKER_01If you look at the live trades you will see all the time, yeah, yeah.
SPEAKER_02So like it, I would say like if you're listening to this and you're looking for something, like I would get involved with that. I think that's a that's a cool that that's a that's one that is getting getting a lot of rec flow, a lot of volume. Um but yeah, like certainly if this market's so big that you can, you know, do some uh like make some moves and manipulate the derivative price, you know. I don't think it's absolutely outside the uh the question of happening. So something to watch out for. Not that that's really like useful advice to this.
SPEAKER_01I think for I mean, I know nothing about crypto. If it feels like unlikely for Bitcoin, but there are ones for like smarter coin coin. Like I've seen I've seen like I've seen stuff about like on polymarket specifically about stuff that looks shady about this stuff in the past.
SPEAKER_02So makes sense, yeah. That makes a lot of sense. Um to DB best advice for break-even originator, originator better to get profitable. Um, I would say like, you know, bet as early as you can is. I mean, obviously that's like like uh that's not unique advice, but definitely you want to start, it's like video game or whatever, you want to progress. So like if you're like I think one example, it's like let's say you do really well top-down, and you have a pretty big bank role, and you've started originating. So your bet size for top-down, like, is you're betting like five thousand dollar units and you start originating, and you're like, my unit is you know, a couple thousand dollars. Well, I can't bet that unit size early. Well, the point with originating, I think, is to do everything you can to be winning, and then from there go. So win, you have to win, and then you scale. So like go all the way back to the beginning and like find the lowest, you know, you know, the like a low minimum or a low max like early market, and then if you actually break even, turn yourself into a winner there, incorporate you know, other market prices, incorporate the close from the last, you know, the last day of the market, whatever. Like, do everything you can to figure out how to beat that opener, and then move on from there.
SPEAKER_01Yeah, I think I had two points. You hit one of them. One was going to be like move into lower or easier markets. I guess said differently, you could also bet earlier that would be sort of like an easier market, obviously, same market, but different time. So that'd be one thing. On the on the same market, I think like I would think about it as like plugging your leaks instead of like trying to get like way better. So basically, like avoiding the bad bets is probably is is basically always always a higher return than like incrementally making your model better, I guess, is like if you can avoid the really bad ones. Like one really bad one, it takes like several, depending on like obviously the math, how it works out, but like it can take several good ones to make up for one really bad one. So I think if you can if you can like subset your bets, um like if if your if your edge threshold is whatever, 3%, maybe if you went up to 5%, it would be good. If if that's like not the case and your your highest edges are actually bad, then like plugging that leak of why that is would be a high high value thing to do. Um, so that's that's how I would I would think about is like what are the what are my worst bets like in retrospect, like when I'm looking back at these, like which one of these were like really bad or I was missing something, and how can I how can I not be doing that?
SPEAKER_02So it's a lot like the point you made on the foster episode, which was like if you track something in your journal and you write it down, like it's hard to not win if you're doing that in a thoughtful way. And you're so that could be another piece of advice, I think, here because it kind of goes hand in hand with what you're saying, which is like not make this ginor, like this huge, you know, complicated change to your model or whatever it is. Like, what are things you know? I always think our our first look is always like, how can we make more money without changing the model? Because changing the model becomes like very, it's hard, and then B, the probability of success is actually not that high. Most of the changes you make actually don't really unfortunately return uh any more money, like most of the things you test. So yeah, I think what SP said is good. Um uh this one I think is for you from Kendrick James at your current uh poker playing abilities. How much would you play a rec player heads up for?
SPEAKER_01I am the rec player. What are you talking about?
SPEAKER_02Well, I would, I mean, you know, if somebody comes to me and they're like, I'm a rec player, I want to play you heads up for like a hundred thousand dollars, I'm gonna be like, no, you're not. Like, I know it. So, like, I'm sorry, Kendrick, I'm not playing you heads up for whatever you're trying to play me heads up for. Um if it was like if SP, if like you came to me and you're like, I want to play you heads up right now for a lot of money, and I'm weighing the fact of like you're pulling this like really long con on me or not, um then I don't know, like I would, you know, obviously I'd want to play you for a lot, hopefully in a way that like reduces variance or like allows me to get to the long run. But like my current ability in poker is is I feel like it's really not that high. Like, obviously, it's it's high compared to like somebody who just casually plays, especially heads up, because that's why I play it, but like compared to somebody who's like studying or who's studied in like the last month, like I'm probably trash. So like somebody could be a rec player and then start studying for a month and try and like finagle my money. So I I guess what I would say is like I I'd be very skeptical of this challenge. If I felt like for sure that I was getting the best of it, I would bet a lot of money um and try and play a lot of games. So like, you know, I think I would size it similar to how I would size a sports bet. Like, but yeah, I don't think I'm like I'd be very skeptical because my level's not very high. And it wouldn't be that hard for like a player who likes poker, plays a lot, and decides they want to like study for like a month or two, they'd probably just become better than me. So I wouldn't, you know, it would the barrier to entry for beating me is like too low right now for me to like want to risk a lot of money on this.
SPEAKER_01I guess no games coming your way. That's but you're willing to take my money. That that would be that I appreciate you clarifying that.
SPEAKER_02So I'm like, if you suck it, but no, but what I'm saying is like I have known you for a long time now. So for you to and if you wanted to play like right this day or tomorrow, like I wouldn't want to play you in like a couple months, um, or if I had known you'd been studying or like getting coached, but like for you to have been like doing this elaborate sandbagging would require you to be able to do that.
SPEAKER_01This is a bottom play to do a podcast for a year like a year and a half just to get in again.
SPEAKER_02That's why I mentioned you, not to say it's nothing about your poker skills, it's more about like I believe I think you're a trustworthy person. All right, I'll take the take it as a compliment. Um, SC and beer. Uh this act, I actually at first I laughed at this question, but I think it's it's a good question. Um, when you fat finger and bet the wrong person or over instead of under, do you log the bet? On one hand, it doesn't help track your model performance. On the other hand, the whole thing is a system. If you're steam chasing, it'll happen more than originating, for example. Uh I mean, we lot like every bet's logged, obviously, more for like accounting purposes and whatnot. I I think the heart of the nature of the question is you kind of uh use it to evaluate anything out or like evaluate performance. Um, I wouldn't use it to evaluate like model performance from an originating standpoint, like if you accidentally like click a bet, but like over a year, you know, you want to over like the course of a year or two, like not making misclicks. I've made some dumb misclicks. I made a stupid misclick today. Um, these are all things that are like partially a skill issue, like it's never gonna be completely avoided, but like being careful is you know part of the game. So like I would say if I'm evaluating like my the performance on the year, um, I'm including them. If I'm actually just kind of thinking about the performance of the model uh without me, I'm I'd probably remove misclicks.
SPEAKER_01Yeah, that was basically what I what I had for me. Like if for accounting and taxes and everything, everything would be be tracked in some way, but um, you know, I I wouldn't use it to evaluate anything beyond like looking at it and being tilted over money I cost myself for clicking the wrong the wrong button or whatever.
SPEAKER_02So uh we did the wolf wolf JB. We have the so this question is ridiculous. The answer is so obvious. Um, this is from the Christoff Prazingis fan club. What will the newly created prediction market addicts be betting in the summer? And their uh their money's on mention markets. Golf! Come on!
SPEAKER_01The great game. I don't know if golf is like well, yeah. I mean, you would know. You'd you probably do get a ton of live. It probably is conducive to live because live is good, actually. Yeah, yeah. The answer I had was the World Cup. I think the World Cup's gonna be electric, uh, yes, on Calci.
SPEAKER_02So and I think I think baseball, like you know, I actually feel like it's almost like the simple answer.
SPEAKER_01I think baseball's a good prediction market sport, right?
SPEAKER_02It's every day. There's breaks, there's props, you know, the game span from early to late, like it's just like kind of there, which is actually the main thing for prediction markets.
SPEAKER_01It's like table tennis, but less degenerate, right? It's like always happening and there's always something, you know. So yeah, right.
SPEAKER_02But you can say, like, I'm betting on skating baseball, and you're actually patriotic. Whereas if you're up at 2 a.m. betting table tennis, you're a degenerate. Like, come on now, right? Oh, the double standards. Um pads. Okay, how excited were you to find out that Polly is trialing one-second speed bumps for live market making? And why do you think they elected to do this now? Do you think this puts pressure on the other up-and-coming PMs to do similar? Also, is court citing now just truth finding at the speed of light? Um I mean, obviously, you know, I had a belief and a stance that was I wanted delays, and you know, seemingly I'm certainly seeming to be losing the battle. Obviously, I'm a very tiny, tiny, tiny player in the battle, but like, you know, obviously I wanted delays. I think I've been pretty public about that. Um, so one second speed bump, like, why? Like, you might as well at one second, I feel like you might as well just be live personally. Because like what I think needs to be done to combat courtsiders is you know, probably something in the four to five second range. Like Polly's going from a three to a one. Um like they could just go to a zero, I guess. I don't know. But uh, why did they like to do it now? Uh probably to I don't know. I mean, it seems like a lot of what Pauly's doing now has to do with being competitive in the US. So it could be a it could just be like a realization that like Call She is not adding a speed bump. They probably thought Call She would. They're kind of in like an arms, they're kind of in like a um uh game theory situation, right? Like, you know, they could be both forced to do, you know, if they both had a speed bump, maybe it would be overall better, but like if somebody has one and somebody doesn't, the one who doesn't starts to do like exponentially better. So they you know, I think there is a game theory aspect to that, and what pads is alluding to with putting pressure on other um entrants. I think it certainly does. Like, I think you know, for the rec better, the speed bump isn't a good, isn't a positive experience. Nobody's like, oh wow, that was better, that my bet, you know, didn't get taken or whatever. I think the speed bump was just it's just kind of like what's been needed to make things operate with the reality that court siding is, you know, a thing and it's not going away.
SPEAKER_01So yeah, I mean this coupled with the fees makes me wonder like what conversations are happening behind closed doors about like are they this all just sort of like random decisions, or are they like part of a more comprehensive strategy about stuff we've talked about on this podcast about like what levers to pull to optimize the ecosystem? Because I think you and I both sort of think these things have benefits like the the fees and the um delay has like benefits to increase liquidity overall. So it's speculation, but you know, maybe trying to do something different to to increase like um you know, you you talked about how they they added to the liquidity pools for live March Madness. Maybe they're maybe under the current situation they were just struggling to get live liquidity. I honestly don't know.
SPEAKER_02Yeah, I mean I think I think like obviously if you're gonna do it this way, there's gonna be uh you're gonna like I I think what's true is like it's not gonna be a situation where like courtsiders are just going to take all the money out of the market and it will still operate. So like whether that means putting a delay in or the exchange subsidizing the makers um is basically the two options, right? And seemingly like with the new uh you know liquidity pools that that Polly's offering, like yeah, I think like what you said, like this going hand in hand with with uh that does feel like okay, like well, we're gonna kind of take the delay off, but we're gonna pay the makers to get punched in the face, you know, or whatever.
SPEAKER_00Right, right.
SPEAKER_02Um BTT Sports, what percentage of makers on PMs are making entirely without an opinion on the underlying markets they trade? I feel like there needs to be a third term to differentiate originators who make from pure market making. Uh yeah, I I think more than you think. Like, I I actually think basically everybody who's not coming from sports falls into the pure market making thing. Like if you come from an HFT background, uh if you're SIG, I could be wrong about them. They've been in sports for a while, but like if you're not SIG, but you're one of those firms coming in, you're basically looking to take like the stuff you use to market make silver and like you know, change a couple things and plug it into prediction markets.
SPEAKER_01I mean, am I way off? My guess would have been like 98 plus percent of the making right now is not originated.
SPEAKER_02Like the volume.
SPEAKER_01Like in terms of money, yeah, volume.
SPEAKER_02Yeah, that I mean, yeah. Maybe that's a maybe it's slightly high. Because like, what would you call somebody who comes in and posts a big level on a side who's like a big betting group with an opinion?
SPEAKER_01Are they where it's it's sort of is like yeah, gray, right? Um it's like much more gray in in something like Gaushi than it would be in like you know, the profits or Novigs or something, because like you can't just like post on market and get filled. Right. Uh or I don't want to say in the past you weren't able to do that. Maybe you can more these days. Um, but like yeah, so it's it's great, but I I I think it's it's definitely the vast majority of people are doing like not originated. The thing is, there's so few market like for the sports, there's not that many markets in their major-ish stuff. So there's just gonna be very few people who have good originated opinions into a lot of the stuff, like yeah.
SPEAKER_02Yeah, I think I I think you're right. Yeah, I mean, it's definitely the majority, it's definitely a huge majority, I think we can figure out. Um unhinged sport. What areas of golf slash golf data slash modeling do you find to have the worst small data problems off the back of that? What areas would you then stick to priors the hardest if pumping in play? E.g., whole score, round scores, uh, course, whole and course ratings prior. Um to the first one. I kind of think like play under pressure and like play in majors is kind of the hardest small data problem in golf. Uh, I think the obvious person who comes to mind is Brooks Kepka. Uh I think it's quite hard to really know what really is signal and what's noise. Like, I think everybody can probably agree that Brooks plays better relative to the field in a major at this point, but like how much actually does he play better? Like, is it his full like 0.75 strokes or is it like 0.2? I think it's really hard to tell. And then like by the time a player's played, you know, five rounds near the lead on a Sunday, you know, they could be a totally different player. It could take two years to do that. So I think, but those are the most meaningful spots. Because the most the biggest bets you can get are like on outrights, and you know, especially if you're thinking about Colchie, you know, you're gonna if you're making, you're gonna get a lot of volume on the couple of people who are in the lead. So if you had this opinion on that actually kind of held water on who would be better or worse, because pressure and nerves, like these are very real things. Like I don't think anybody who models golf would say they don't exist. I just think it's a very difficult um problem to do in a way that is robust at least. But I think like that's a good area where you might have a feel for somebody where it could actually be valuable. So I think those are the the small data problems that are the most impactful. So probably like the most interesting. And then like the whole score, core score stuff. I mean, you want to kind of move off your priors pretty quickly on that stuff just because adjusted for weather, just because like they could have grown the rough out a lot that year, um or or whatnot. And then you want to obviously know like on a whole score. I mean, this is now just gone so far down the weeds, but like where the pin is and stuff like that. And now I'll shut up.
SPEAKER_01All right, we could jump to the next one. And I don't honestly know. You're gonna uh Doug might have to fill me in because I I don't understand this one. It's uh would you consider playing the lottery scratch off tickets using the card counting method to tell when your odds improve? I would love to be a part of like a lottery play. I've heard podcasts about lottery plays in the past, and I think they're fascinating. I don't understand how this one would work. So uh Doug, you're gonna have to, you know, fill me in. I don't know if you know how like the I I I I would do it though, if if there's like a ledge. I think the lottery thing is fun.
SPEAKER_02Yeah, I mean, I you know, obviously Jellicoe. We talked about the Texas one, that was my still probably one of my favorite news things. Um I don't know what like I don't think it's necessarily a card counting method. Obviously, there are methods to to win in the lotto. I would love to be in one and you know, yeah, hit us up.
SPEAKER_01Okay, next from uh I'll give him his right name, Stratify Sports. He had two. How do you balance not wasting time sweating your bets with watching the sport you're betting on to keep ball knowledge sharp so you can ask good questions of the data? A takeaway from last solo episode really seemed to be that not sweating was a skill in and of itself. So for me, I I think I just try and be honest with like what I'm watching and like why I'm watching. So I just jotted down a handful of questions for this. So, like, what specific thing are you watching for? Like, are you looking for something specific or just watching the game? Have you been betting this thing for years? If so, you know, you're probably gonna pick up less than if it's the first time watching something. Uh, how many games have you watched? Uh, do you know what, do you know like what to look for? So, like certain things, you know, like if I'm just watching like an NBA game, I've watched a ton of NBA games or whatever in my life, uh, know like a decent amount about basketball, but uh at this point, like I don't know, like I'm not gonna gain more by watching because I don't know what I'm looking for. It's not like I'm consuming, you know, like deep analytical NBA content. So, like, are you looking for the right things? And then the last thing I I wrote down is what type of of watching are you actually doing? So are you just like are you just like watching the NBC broadcast or are you watching like all 22 or whatever? Like those are two very different things and could have different purposes and different uses. So I think just being honest about like why you're watching this, what would I would do?
SPEAKER_02Yeah, I can't can't agree more. Like there, like I said, like sometimes if I want to go, sometimes I'll take a notebook, sit down, watch, watch golf. But yeah, I mean what SP said is true, like how much golf would I watch at this point. Like you do pick up things, but like sometimes I just like to watch golf. I don't know how much I like to to actually sweat my bets. It's like not, I don't think it's that fun, but it's kind of fun. I mean, there's the there's a size where sweating is good, it's like this like Goldilocks size, like not too big, not too small, and you're like that's that's pretty fun. And you actually want to watch the event. I think that's kind of the the sweet spot.
SPEAKER_01All right, next one from yeah, you want me to read it?
SPEAKER_02Yeah, go go for it.
SPEAKER_01Next one from Stratify was if you were in a March Madness pool, um basically the question was like strategy around uh these survivor pools for March Madness, uh, and like how to take advantage of basically like teams ownership. So you can only pick one team once. It's like an NFL survivor pool that everybody's familiar with, where you can just pick a team once. Um but the really interesting thing, and so he's asking about like how to how to utilize like ownership sort of percentages to to make optimal picks in future rounds. I I think these uh these survivor contests where and we talked about this when we were out to dinner last week. I think these survivor contests where like NFL Survivor is not that interesting to me as a problem, just because it's like somewhat interesting, but there's only like there's less levers because like you do have the ownership, but you don't have this phenomenon where teams are eliminated. So like you there's like uh an additional game theory element on these bracket survivors, um, like NFL playoffs, March Madness that make it really, really interesting because team like it would be like you know, the Saints are were no good or whatever this year. It'd be like by week 16 or whatever, when they were playing bad teams, like you can't pick them because they're just like not available. And and so it's it's almost like each week turns more and more into like a Christmas week or whatever in the NFL season. So it's actually really, really interesting. Um, I guess to answer the question, I think you just want to think about paths, is is the way I think about. I mean, you could do like full math and like simulations for these types of things. Um, but I think I think the way I generally think about it is like paths and keeping as many paths open as possible and also winning on a path that is uncommon, um, is like the two things I would think about. So like this tournament has been pretty horrible, I would say, for anybody who's been playing well. Um basically there's been very few upsets. Um, you know, like an example of like a bad selection, in my opinion, was like um Arkansas last round. So Arkansas, they they won their first round and then they got to play high point. And high point was the only you know underdog that won in round one, uh, or like you know, big underdogs. So Arkansas was a much bigger favorite in round two than their pre tournament expectation was. And if Arkansas beats high point, they have to play Arizona and all this stuff. So a lot of people think they have like very low future equity. But and and so like that's how people would think in a normal survivor contest. The thing that makes this different is that in that round, yes, Arkansas is very likely to win that round and then lose the next round. Like the probability is very high, but there's there's like eight other teams that also have to face that scenario because like they are going to be eliminated next round, too. So if you just looked at like Illinois and Houston, two very good teams, next round they're gonna play each other. So like there was not there's not as big of a cost in using one of those teams. Because I think people think, I gotta keep them both open or whatever. And to some degree, there's truth in that. But I don't think people think about um leverage in the right way in these. And I also don't think people keep think about like keeping entire swaths like of the bracket open. Um, so it's more like I could talk about this for for a long time. I think it's like really interesting, but uh that's like how I I think they're fascinating with the path dependency and stuff.
SPEAKER_02Yeah, I don't I don't have too much to add to that. I I find it like I would my gut would be like I have to build this out. Like I don't trust myself to like vibe this well. So I'll agree with you. I think what you said all makes sense. Do you want to do because we're probably I don't think we were gonna get through all the questions, but the next one I thought uh the next one got a a bump. So two people wanted to know the answer to this one the uh Benjamin Chern question and then hit the the out outro stuff, and then we'll get the rest of them next episode. And then we'll get the rest of them next time. I'm so sorry to to I guess you don't exactly know if you asked the question how our list is is ordered, but if you know you're on there if you asked it. Um Benjamin Chern, would you say that trying to be a professional sports better slash PM trader is plus EV lifetime in comparison to focusing on traditional career paths? Uh feels like gambling has low career longevity, plus it would be hard to pivot to work in corporate after losing edge. To clarify, we're talking about someone who's qualified for tech data science actuary, um, as well as professional better. I assume this is for you or like more your way. I think you have a good insight on this. So maybe I'll hop in.
SPEAKER_01Well, I mean, I think I think we'll both have different perspectives. I mean, it's hard because I think the the betters you interact with, most of them are like on Twitter. And so that skews this view for me. Because if when I was originally thinking about this question, I thought about it a couple different ways. Like the but the first gut reaction is I thought of like a 25th percentile happiness better versus like and when I'm talking about like winning pro better, like at basically every spec at every percentile, I would imagine like self-reported happiness is for is higher for like a a nor quote unquote normal job, like a like a average, like the median actuary, I'm guessing has a higher self-reported happiness than the median professional better.
SPEAKER_02Do you agree with that? I would, yeah. It would take I would yeah, it would be hard to change my opinion on that. I would definitely agree with that.
SPEAKER_01So, I mean, from that perspective, that with that sort of lens, it seems like, you know, I don't know how you measure happiness or utility or whatever, but like that, I think there's a lot of underdiscussed like positives in life to having like a quote unquote normal job. Obviously, I'm biased, I have a normal job. Um, everybody talks about like the downsides and like you know, working for yourself and having all this freedom. I think, you know, like as a in a society that is structured primarily around normal jobs, there's a lot of benefits to having one and being like in line with society. Um, you know, that could be like you know, a normie take or whatever, but I I think there are benefits. You gotta do what SE does. This is the thing. I have the worst of both words, worlds, right? I'm like jaded like a uh you know a gambler, but then I have a real job, so you know, get bossed around for nine hours a day, too. So it's you know, I have the worst of both.
SPEAKER_02You get paid. You get you get the the the perks are there. Um yeah, I I agree with you. I think like I don't know if like you're alluding to this or going this direction, but maybe the tail might be better on the better. Like, I don't know. Like, is Haralbab happier than the best actuary? I actually don't know. He's like on Twitter a lot.
SPEAKER_01Well, that's the other thing I was gonna say. It's like the example I gave might be true, but you could also make the argument, well, that's because like of self-selection, like the people like there's a certain type of personality that's gonna self-select into pro better versus actuary, and those people are just like predetermined to be like jaded, more angry, you know. Like, I I think that's probably true. I I think very bent to like want to work for yourself and freedom and whatnot, like those traits probably align with like a little lower reported self-happiness or whatever.
SPEAKER_02You're probably searching, right? Like you're probably searching for happiness, and you're like, well, freedom will give me happiness, right? Like, you know, you're more likely to, if you're unhappy, to take this path because if you haven't kind of worked it out, you think maybe this is a way. And I think like that's something I've dealt with where like I realize that like I do like this and I like the freedom, but it doesn't maybe correlate exactly to happiness, and that's something I kind of have to do separately. Um and like I think a lot of people do realize that. So you know, I love the freedom and I love doing interesting problems that I'm excited to work on. Uh and I think like you know, I you know, you kind of cheat the system because this is you're not capped here, you know, because you do both, but like you are there is a nice thing to feel like you have a bit more upside. Uh so you know, if you're we're talking about if kind of like in your stance, if you could only pick one, like that would be maybe a a deciding factor, or like a a factor would be kind of the upside, and you'd say that betting probably, especially now, has has more upside, I would imagine. Um, so there's that. But yeah, I do think you're right. I think it kind of I do think that there's probably a self-selection thing here and like happiness. I think there's an amount of money that correlates to happiness kind of around security, but like I think it's more determined by probably like biolog biological factors and kind of your life experience too. So I don't I don't know. I would say like you're right. The median it's less stressful, I feel like like gambling's stressful. Like when I like like I've been doing this for a long time, and like it's taken a long time to get to a point where I don't feel like insanely stressed about like where my next like six months of dollars are coming from and like full-time bedding.
SPEAKER_01So, yeah, I mean it's only even one part of it, like, and that's where the like hidden costs are. Obviously, that's the part I think it's talked about the most, but like the I think there's a lot of hidden costs to doing this full time in terms of like society basically hates you. Uh, you know, like you get negative places.
SPEAKER_02What are they saying about me?
SPEAKER_01You know, like it's just which I don't think are you know justified, and obviously within the show we don't, but like it's it's just gotta be it's it's taxing when it's like you can't just go to a dinner party or whatever. Like it's just all these hidden costs of just like the you know not being a normie. You know, there's a reason that so many people are normies, right?
SPEAKER_02So right, it's nice, feels good, yeah.
SPEAKER_01It you know, it does, it does.
SPEAKER_02Um all right. I have a I have a quick I have a quick Bayesian update. Uh so you chirped me on skewing towards uh not you know, let's say being a little bit on the cheaper side, not trying to spend a lot of money. Um I don't actually think this was on air, I think this is actually at our dinner. But um uh one thing that I've decided I kind of like to spend money on is like good desserts. So I I tend to eat healthy, um and like but sometimes I just like at the end of the night, I don't drink, I don't, you know, like I kind of gotta like let I kind of have to have some kind of leak. I've cut out, I'm only on flat water, as we all know. It's brutal. But one thing I found is like getting some good um like a nice chocolate or good like gelato, dairy-free type thing, and just like enjoying that and kind of like instead of just like crushing gushers, which was kind of my old old move, uh, is now like be like, oh, this is like a fun thing to spend on. I know it's like useless calories or whatever, but you know, I'm a man of the people, I'm a normie now. So this is this is what I do.
SPEAKER_01It's funny that your leak would be like me, you know, trying to lock in and and be like, you know, not you know, like like actually not have a leak. You know, your your your dairy-free gelato is probably like the healthiest thing in my uh freezer craft. There's a lot of sugar and gelato. Well, you're you know, you you you're you're you you our diets are slightly different. So, you know, you you run more than me, you know. Come on. I gotta uh you know, I I struggle with the uh the portion control, but that's all right. But my uh my update is to turn off like every single ping, buzzer, notification, um, as much as you can. So like at work, it's take I I've never had my like emails and stuff on my my phone. It's always just been on my computer, which um has I think has been good. I think you know a lot of people don't have that uh luxury or whatever, but like it's so much easier to get work done when you don't have constant like buzzes and and sounds and flashing lights and all these things. Um, you know, your phone, your computer, whatever. So uh my update is recently I've I've gone into basically every application and found ways to uh it's fine if it like you know when you're looking at your phone, if it or whatever, like it's there, you don't want to like miss stuff. Um, that's important, but like it shouldn't break your your train of thought. So that's that's my update.
SPEAKER_02So would this be like teams at work? Like yes, yeah.
SPEAKER_01Okay. So like don't have the mess because if the message like pops up in the right, you know, the corner of your screen, yeah. You just read it and then it's like immediately in your head, right? So like it's fine if it you know shows the one notification or whatever, but I don't need it like lighting up, I don't need it, you know, telling me what the message is.
SPEAKER_02Do you find like it's kind of hard to like figure out how to easily like manipulate your notifications on the computer to make it like easier?
SPEAKER_01Yes, it was very difficult for me to figure out how to how to turn it off in Teams. Some of them are easier than others, but on my phone, I've basically always had make it pretty easy to just like turn everything off.
SPEAKER_02Um you can just do do not disturb it on your phone. Yeah, it's like one you you know, it's on like kind of that flip-down screen. But on the computer, I've just been like, I thought I turned that off. I'm still getting that. Like, I'm just like Kyle, she's still giving you a screen. She's still telling you the score of every NBA game every single second. Yeah. Um, okay, I like that. Well, actually, you'll probably have to come back with a second version of that take where you kind of explain to all of us how how to achieve this enlightenment because I think a lot of us would would love that, especially us uh you know, betters with telegram and whatnot, like that becomes quite um, you know, pop-up heavy too. So that's uh maybe they'll maybe I'll ask you some questions on that next uh next time. But thanks everybody. Uh sorry for the the cues that didn't get aid. Um we will get to you on the the next QA. And uh yeah, we'll see everybody on the next episode.