be in Chicago tomorrow?

Well, U.S.

forces enter Ron next month.

How many tweets will Elon Musk post this week?

If you think, you know the answers prediction markets like Polly Market and Cal, she will let you put your money where your mouth is.

Users win or lose money depending on how their real world predictions pan out once a niche interest prediction markets have broken through to a wider audience.

Now the public and lawmakers are trying to adapt to a world where people can bet on almost anything.

Joining us to talk about it all are Todd Henderson, a professor of law at the University of Chicago, Carla Lockhart, professor of law at DePaul University.

And doctors, a noun EA and addiction specialist at Rush University.

Gentlemen, thank you all for being here.

Very interesting topic to dig into.

>> Okay.

So tight.

Take us through it.

How exactly did these prediction markets work?

So the idea is just to simply capitalize on the wisdom of the crowds.

You've probably seen a game show or someone asio.

>> Can we ask the audience for their opinion?

And the audience helps out and what we found is that if you pull a large number of people, you can get surprising accuracy on complicated things.

Us one person how much the space shuttle ways you're not going to get the right answer.

Even if that person an expert.

You asked millions of people and take the average are likely to get it.

So it's capitalizing on that.

And the simple setup is company will like Cal share Polymarket.

We'll set out a contract.

How many tweets will Elon Musk next tomorrow?

And they'll say if he makes more than 1000, this contract pays one dollar.

If he makes less than that, it paid 0.

And then those contracts are traded in the market.

And if you the contracts trading for $0.52 and you're sure that he's gonna make more than 1000 tweets tomorrow you'll buy that at $0.52 because that contract will pay you a dollar.

So it's a simple contract for a prediction of the future and then let those trade the market and capitalize on the wisdom of crowds.

I'm not sure it's possible to count how many to that?

it can be determined be about to the world that it's You know, so, Karl, these prediction markets become much more widespread since you know 2024.

So what changed from a legal standpoint that led to this?

>> Yeah, from a legal standpoint.

So back in 2024, and May the Biden administration put out a rule trying to ban prediction markets?

>> For sports and political related that rule never it was just proposed.

It never became a final rule.

And in.

Later that year in the summer, Cal, she tried to offer its first contract on the presidential election and who would win the presidential election?

And the CFTC tried to stop them from offering that contract.

Cal.

She litigated that and they won in a district court in the District of Columbia.

And so that allowed them to House prediction markets on the election in 2024.

And that was a big publicity boost for Cal.

She and once they've done they moved on to sort of the next thing, which was sports related contracts for the 2025 Super Bowl.

They started offering prediction market contracts on the Super Bowl and have expanded to all sorts of sports related contracts.

Now.

>> So even if for example, your state has legalized sports betting, you can sort of work around that with Something like polymarket or county, perhaps.

>> That's absolutely I'm originally from Texas, Texas says no sports gambling allowed in at all.

if you're 18 or older in Texas, now you can use callous your point market to place bets on sporting events.

>> You know, doctor Manny, when it comes to the public health risk are the, you know, personal potential personal problems.

Is there a difference between say traditional gambling and predicting on a market like this?

Yeah, I think that from an actual public health standpoint and a medical standpoint, the way that affects your brain is pretty much the exact same.

So while the semantics of its policy nature may be different.

The approach of how kind of we take from like doctor is.

Your action is basically the same as us being done in different way.

But the way it's an affect, your brain is the same exact way.

So I think biologically biologically, it's the same.

So, for example, if someone is aware that they have, you know, a gambling issue, this is the kind of thing that they should be staying away from, even though it's technically something are, you know, referred to as something different.

Definitely will activate the same parts of brain as any other You know, Ted, prediction markets, they offer bets on everything from, as we just said, sports games.

2 things far more consequential like military strikes.

What types of things do you think are appropriate for these prediction markets?

>> So what's amazing is this came out of research that was inside of companies.

Hewlett Packard wanted to project how many printers they would sell.

And you could you could ask salespeople you could ask the executives you could pull your customers.

It turned out making a market of just those same people was very good at predicting much better than any other method predicting what printers will be sold.

Something as prosaic is that but really important for Hewlett Packard and then other companies, Google, lots of companies have deployed prediction markets to predict any number of internal things that bled out of companies into things like politics.

And now they're used for everything.

I think personally, I'm a huge fan of prediction markets in the sense that they mobilize the wisdom of crowds to predict things that are hugely consequential, whether it's foreign policy or elections or how much it's going to rain in Illinois this spring, something very impactful for farmers.

So I think they can be used in a whole range of things where I would probably agree with.

My colleague is the realm of sports, the realm of securities prices like what the price of Nvidia is going to be tomorrow.

We already have markets for those.

The stock market predicts the value of Nvidia.

They're are gambling markets already with rules.

I just got back from Las Vegas.

There's a world of gambling.

Some states have legalized them.

That seems like a separate category.

So I think we should be in favor of prediction markets for the power.

They have to predict things.

But for areas that aren't the stock market that are in sports betting.

And focus on because it is a hugely powerful tool that will several bets with unusual timing have raised questions over insider information that includes $400,000 bets.

Nicolas Maduro's ouster in January hours before it happened.

>> 6 accounts made 1.2 million dollars on bets placed hours before strikes on Iran and also 500 million dollars in total bets on oil prices.

Minutes before a Trump tweet, the delay a tax on Iran's energy assets.

You know, Karl, do do we think there's in insider information being used as markets?

>> Oh, absolutely.

I mean, I think without a doubt, these markets, house insiders that are trading on them.

And I think that what we're seeing is calcium pulling market and the federal government and states trying to regulate them and trying to figure out the best way to make sure that insiders aren't being able to profit off of information that they have essentially taken wrongfully from their companies that employers are from their government position.

that's something that is an evolving issue.

And it's something that the markets themselves are trying to work on SoCal.

She, for example, is proposing, you know, rooted out some insider trading and they're also proposing certain bans on people placing by contracts on these markets of them inside information.

So it's definitely involving issue.

So it seems like they feel like they have at least some incentive to try and regulate insider information on their own.

>> I think they do because if you have only insiders if markets that have the potential for inside information to be used.

One thing that could worry, people who are just, you know, ordinary citizens trying to use these markets is that if they're all being essentially rigged, if they'll have insiders that are going to make better bets than they can, why would you participate in those markets?

And so there is sort of a self-regulatory feature to them that if people begin to see these markets as being completely dominated by insiders, they're not going to want to place money on them.

How about that?

Supreme Court justice once said that no one with willingly.

>> Playing a loaded dice game.

And I think that captures, you know what he was saying.

Self-regulation has its role.

It's not a panacea.

And so maybe there's some role for the government regulate.

Also, if people, if insiders and think he captured the idea right that the information about what the U.S.

is plans are in Iran or a company's.

now it's a security markets.

What a company's plans are.

That information really belongs to that company or the American people and having insiders profit from that might be able violation of their sort of ethical obligations to be a member of the Pentagon or a public servant.

We've seen legislation in Congress to restrict Congressional insider trading.

Something like that might make sense here, too.

I would just note, though, there's a paradox which is.

If we really want to know.

Weather events going to happen.

If the insiders who have the information about that event, who we want to encourage to reveal that information.

So we don't want someone bombing Card Island because they made a bet on Cal.

She that they're going to profit from.

But if you know that the United States is going engage in some kind of activity and it's publicly good to reveal that maybe more plans would not be an example of Then having the insiders trade would be a good thing.

So I think it's a delicate balance to strike.

And and there's a bunch of bets on these public markets now that called prop bets like, you know, we'll Elon Musk's tweet about to be a rock.

The Iran war tomorrow.

Well, you and Musk is perfect is 100% in control of that.

And those are particularly bad bats.

in this regard.

And so I think we should be especially leery of those doctor.

Now need is does whether you win or lose money, change of the risks of participating in these prediction markets for folks?

I don't think so.

And I think the best way compare it to is just kind of how the brain reacts to sports betting.

>> We have seen that in situations you would think that yes, like losing would be something that make you not want to partake anymore.

It's actually not the actual act of winning or losing.

It's the thrill and the reward seeking mechanisms that act that are in the brain that are activated.

So, for example, even though you know, you lost $1000, for example, your brain still gets the same thrill of, you know, having that like ratification, whether it be and the moment to having a win or having the last but thinking, okay, I can make up the the difference was with my next book, you know, and what the risks change.

If regulations make prediction markets harder to access or if there are more card bills.

>> I'm not sure if the risk itself which change in the moment, but I think that what it would do is it would help us as a society.

not reach the younger adults who are a particular target who are not developed yet mentally to the point where they can make those decisions for themselves.

So maybe the moment the person has already been affected in wouldn't necessarily change things, but it would help to really take that risk away from the people who more vulnerable.

We've got just under a minute left.

I want to come back to something that you brought up earlier, though, the idea of election predictions.

>> Are there any concerns that big bets on elections might sway voters?

I mean, it's always a issue that comes up and when they're used to be these old prediction markets that we're just about politics and the liquidity, that is the dollar amount at stake was very low on the probability of.

>> A big, you know, Elon Musk or George Soros really affecting the price.

It was a real thing.

But we saw that a couple of times where the probability of say Mitt Romney winning sky-high and not.

Just was profit opportunity for everybody who knew that Obama was going to win.

And so it pretty quickly went down.

So these markets, if their liquid enough, I correct themselves a little bit.

But I just want to say one thing about that point about the young people.

What I think interesting is we want these to predict the future based on people who have actual information 18 year olds.

Don't have great information about what the weather in is or what things are going to happen in Iran.

So I think the regulation could align with the public health but still serve the public purpose of the commission a lot of questions with ease as they become so