Episode Transcript
[00:00:00] Speaker A: Predictable, predictable predictions.
[00:00:01] Speaker B: Predict.
[00:00:02] Speaker A: Predictable predictions. Predictable.
[00:00:03] Speaker C: Predicted. Predictable, Predictable.
[00:00:08] Speaker A: Predictive programming. Episode 9 with Joe O', Rourke, aka Bunchu, who is the CEO and founder of Billy Betts. Is that the story?
[00:00:17] Speaker B: That's the story.
[00:00:18] Speaker A: Sorry. Thanks for coming on, Joe.
[00:00:19] Speaker B: Yeah, appreciate you guys for having me. This is, I've been watching since, gosh, episode one, so an early view.
[00:00:25] Speaker A: We're not that far away from episode one.
[00:00:27] Speaker B: Yeah. Episode eight.
[00:00:28] Speaker A: Now, when you say watching, do you watch these on YouTube or you see the clips every week and you're like.
[00:00:33] Speaker B: Oh, I watch them full through on YouTube.
[00:00:36] Speaker A: That's pretty good.
[00:00:36] Speaker B: Yeah, sometimes twice, depending on sometimes.
[00:00:38] Speaker A: Come on, you know, come on.
[00:00:41] Speaker C: That's fair. Appreciate that. When I, when I saw your profile first, I, I clicked and I'm like, this looks like some AI slop nonsense. Like what's, what's going on? And then I see you on the Kalshi leaderboard and I'm like, oh, actually doing some real volume. Like, let me like talk to him. He sound. He can't be like fake. He's got to be somewhat.
[00:01:02] Speaker A: You can't fake your way to the top of the leaderboard.
[00:01:04] Speaker C: Yeah, that. So can you tell me a little bit about like your background, how you started predicting, et cetera, et cetera?
[00:01:11] Speaker B: Yeah, I. So, gosh, I come from like, I've probably been sports betting 20 years. I'm turning 39 today, so mazel tov. My birthday wish was to spend it with Flup and Big Buck Hunter and I got. And I brought all these cameras. So I've, I've probably been betting for like 20 years. Typical story of like, you know, started out losing better, all of that stuff. Similarly, gosh, back at some point, found odds jam to you, Chris, I believe is your story. And yeah, so it took me a long time to learn how to win.
And I also have been in the blockchain space for a very long time. So I got into blockchain via sports betting in 2017 when you had to bet offshore and the only options to deposit were like shady western unions, which I've been in plenty of those. And they all started taking bitcoin deposits at the time. So that's how I found like Coinbase and bitcoin and blockchain for the first time. And that was like the very first run up of bitcoin from like 1500 to 20K. And so I was like, oh, I should probably understand what the heck I'm doing here when I'm transacting in bitcoin. And so I learned all about the blockchain space kind of fell down that rabbit hole. Never came out. Since then, I've kind of had this other journey as a better. Right, which is you lose, you learn how to win, you get limited on your DK's, your fanduels, you run out of outs and you're like, where do I go now? And so that was like the thing that really pushed me to the exchange space.
[00:02:49] Speaker C: When was that? How many years ago was that?
[00:02:50] Speaker B: Probably three years ago now. And so at the time there really wasn't a lot out there.
Sportrade was around. I'm in New Jersey, so Sportrade ProfitX was around. And then I was using a lot of blockchain exchanges like SxBet and then Polymarket and even Polymarket up until this past year, really had a very minimal sports offering. But that's kind of like my evolution as a. As a better. And so that brought on this thesis to me about like exchanges overall and how that landscape might turn out. Because if I was having this and I was just some dude, this has to be a bigger problem, right. Like a lot of people are facing. And so I just, as I use these exchanges more, I realized that. But it is a really unique product and it's incredible offering if you kind of know what you're doing. And so. But it takes a long time to kind of learn what the hell you're doing.
[00:03:50] Speaker A: Start off like strictly taking like just seeing it as another total.
[00:03:53] Speaker B: Yes.
[00:03:54] Speaker A: So you, you started to understand like, I think a lot of people go on the same journey, which is like, oh, it's an exchange, it's different. Yeah, right. Just another spot and then you start clicking the make button. Start like looking at tickers and being like, oh, this actually is a lot different.
[00:04:10] Speaker B: Totally. Yes. And so now doing a ton of like the market making stuff. But how I evolved from like, you know, the Kalshi leaderboard to like Billy Betts and what we're doing as on like the consumer product side.
So I fell down the blockchain rabbit hole. Never came out. Started making content, really interested in that space. Similarly in 2022 fell down like the AI rabbit hole. And that was like pre chatgpt gpt3 to edit blog posts for a website or something and fell down that rabbit hole. And this in the past year, two years, the rise of being able to build a productive agent came about. And that was something that really fascinated me in the marriage of AI and blockchain and what an agent can do on chain when you give it a wallet. Now an agent can control its own wallet, it can execute tasks, it can do kind thinking and reasoning, right? Like this change thought stuff.
[00:05:12] Speaker A: Very well structured data on a blockchain.
[00:05:15] Speaker B: Totally. And so the.
[00:05:16] Speaker A: To process and make decisions on.
[00:05:18] Speaker B: Right, to process and make decisions on, but also to execute transparently. Right. Which is I think really interesting as well, right? Like any, any program can use an API, but if you have an agent interacting on chain, you can see everything, every transaction that, that, that that agent does. And I think like that's a really unique thing in terms of what we're doing.
You know, I also know the landscape of like dub club and pick sellers and all of that kind of like really seedy gross industry, right. And it's like, okay, your words.
Like it is, I mean it is, right? There's no transparency. You're kind of preying on people.
But like what are, what, what is somebody that buys picks looking for, right? They're looking for kind of something that like information that they don't have, that they trust the person gives you, which may or may not be true from, from a tout or convenience like done for you type of thing. And so what we've built is like this AI agent that started out as its own entity, its own thing, because the liquidity landscape and the offering was not there when we started Billy. It was like poly market and you could bet like NBA money lines, right? So you couldn't like take a community of people along with you, right? Which is kind of another piece of the class like pick service thing, right? It's like, okay, I send out a pic. Did you get it at the price I got? Probably not. Did you get it at the place I got? Probably not. Did you get it for the size I got? Probably not. Right. And so the same dilemma was what we were facing with, you know, okay, how do you build this thing for people but avoid all of those classic things. So for us it was, we built this agent, we put $100,000 in its wallet and we let it loose on polymarket to bet sports. And the idea, okay, we've got this agent and the agent can have a token and this is where the blockchain piece comes in, right? And so agent bets, agent wins, agent buys and burns its own token. And the community aspect of like, okay, how do you get act like, how do you take advantage of this is by holding the token, right? So you don't have to bet your own money if you don't want to. You don't have to do any of that. Your Exposure is in a perfect world. The agent wins bets for you and you kind of have this quote unquote equity stake by holding the token. And that's the flywheel, right? So it's almost like hedge fund type of thing with like a token product. And so it started back in January. We were betting NBA Moneylines after the All Star break, we got rinsed.
But since then the offering and the landscape has totally changed. Kalshi has come to be this big massive sports offering. Polymarket is totally increased what they offer. And so now it's a much different, it's a much different atmosphere for us to be able to do this. We can now tie the market making operations to it. We can tie the like the parlay RFQ stuff that we're doing to it. And it becomes this kind of really interesting experience from a consumer side to be able to kind of like access that without having to either invest in a hedge fund or build it yourself or things like that. So that's kind of like the TLDR.
[00:08:45] Speaker A: So for clarity, the BillyBeds account that you see on public leaderboards is that literally the account that you have a piece of if you're in the token.
[00:08:55] Speaker B: So that's our testing account that will turn into that thing. So we have now. So basically in order to kind of test out this thesis, we had to build the market making operation around this and that will be eventually coming soon. The piece that you have access to. Right. So the idea is now Billy's not just betting an opinion, Billy's now market making and you're getting a piece of that in one way or another through the token. So that's the idea.
[00:09:25] Speaker C: So I'm skeptical.
Why would you, if you have this winning system and everything like that, give out pieces to the public? Are you just a charitable guy or like what's in it for you?
I don't see the why should I purchase a token or anything like that.
[00:09:44] Speaker B: Sure. I would say, number one, I own part of the token, right. So I own token supply. So it is like a equity stake that I own as well. And we have a business around.
But ultimately like we're building this kind of consumer community thing. It's not necessarily meant to be like a PIC service.
We're kind of building all these tools on top of things that we think are interesting that I wish existed when I was doing all of this. Right. And I think so. So like I think that the skepticism is totally warranted. Right. Especially if you're not a crypto person. If you're not a blockchain person, if you're not an AI person, if you're not a sports bettor, all of the skepticism I think is totally fair and warranted. What I think is really interesting about what we're doing that didn't exist before is this idea of using blockchain data in a way that hadn't been used to my knowledge, in a way before and giving that to people.
We that, that that's all open data that's just like really hard to get to. So why not pull it out blockchain data, you mean?
[00:10:59] Speaker A: Because Polymarket like everything executes on chain, right? So every trade history exists on train.
So is that what you're leveraging is trade history data?
[00:11:08] Speaker B: Yeah, so that's part of it. Right. So we built this kind of algorithm that takes so basically, I mean to get into kind of where that data comes from. Part of it is using parsing that blockchain data. Right. So you can see on Polymarket, not only just Poly, Polymarket, sxbet, overtimemarkets, xyz, any place that settles on chain or through a smart contract, right? You can pull all that data, you can pull all that wallet history and you can P and L A wallet in real time, by sport, by market type, by anything. Right. So we have like this now AI powered feed of in real time. Who made this bet? Is this person a statistically significant better in the top 0.1%, 1% of the sport for the market? And how does that weigh into kind of the decision making process of the agent, whether that's taking an opinion or betting it itself or how does that weigh into kind of our market making operation going forward?
[00:12:10] Speaker A: Apologies if you don't know the answer to this question, but if Polymarket gets a DCM license and a DCO for their clearinghouse and they start using a clearinghouse, do they no longer settle on chain?
[00:12:22] Speaker B: So to my understanding, Polymarket US actually will not be on chain.
So that's accurate. Right. So the US version of Polymarket, at least to begin with, will not be on chain, but Polymarket International will stay on chain.
What's also interesting now though is Kalshi, through their new partnership with Jupiter, I believe it is the Swap Exchange now that's on chain data, which is really interesting.
[00:12:52] Speaker A: Oh really?
[00:12:52] Speaker B: Yeah. So that's there and a lot of their data now is coming on chain. I don't know if you'll be able to with the Kalshi data, like pull out the P and L stuff that you will, that you can with like just looking at a normal wallet, but there's now on chain Kalshi data.
[00:13:12] Speaker C: Are you not doing as well in Kalshi because it's kind of like you can't see everything or like how is like the different strategies for being on chain versus off chain and then also when Polymarket comes to the U.S. do you see a lot of this? Like your strategies you have to evolve now because like I assume a lot of the Polymarket volume is going to transition to just Polymarket US.
[00:13:32] Speaker B: Yeah, I think the way to think of the blockchain, I would say is and how it plays into everything we do is how it would in any decision making you guys make here at Novig on a data feed that you use. Think of it as any other source of data. Right. And so if that, or like, you know, if you've ever been in a sports betting moving group, if you've ever moved bets for someone else, it's not.
[00:13:59] Speaker A: Have you ever been part of one of those groups?
[00:14:01] Speaker B: I've never heard of that. I've heard they existed.
[00:14:04] Speaker A: Is that like they come take all your stuff to a new apartment. That's a sports betting moving group.
[00:14:08] Speaker B: Yes, exactly. It's a bunch of guys wearing jerseys and they take your stuff from one to another. But like, if you.
I would think of it as similar ways you would use that information. Right? Like that information is perceived sharp. Right. As is this. However you can, you know, actually do some data science on it to prove that it is. And now, like, you know, one of the, I would say pushbacks you get when you talk about using blockchain data is like, oh, well, people will hide their wallets or hide their action or whatever, which is true. But it doesn't change the fact that whether that person's betting a million dollars or $100 or $10, you can measure if they're statistically significant in the market that they're playing in. And that's what I think matters most because I mean, I really, I'm sure there are bettors out there that are very good at what they do that don want to scale or know that this world exists. Right.
[00:15:07] Speaker A: But there's also, it's possible that the equilibrium is all the top people create a new wallet every hour to do all their action out of and regular people don't bother doing that. It's like, oh, you only look at the fresh wallets, like, exactly. Like you don't know the answers to those questions until you start trying. I think that like so many times in every facet of prediction markets and sports. People like, they throw their hands up in the air even just like, well, I won't use exchanges because of adverse selection. It's like, who do you think it is? Like, who do you think these mad geniuses are that are going to destroy you?
[00:15:40] Speaker B: The adverse selection you just got was my $7,000 misclick last week.
[00:15:44] Speaker A: Yeah, like.
[00:15:47] Speaker B: But totally. And so I just think of it as like the way we use it would be similar to how you use any other data feed that you either pay a subscription to or find valuable. And I think that there is a ton of valuable data out there on chain that a lot of people just like don't even know that exists.
[00:16:05] Speaker A: So it's possible to do a lot of what happens on a prediction market fully on chain and have automated market makers and all this stuff. And it is in many ways like elegant and idealistic. If you're a crypto maxi totally. And then what a lot of the companies have done, either for convenience or because they've found it performs better, is moving to a more centralized club model.
Whatever they can, they end up doing and usually still continuing to like take crypto purchases and try and engage the crypto community however they can. Do you like, like couch, right? Do you?
[00:16:46] Speaker C: Yeah.
[00:16:46] Speaker A: And in some case just write a bunch of checks and kind of hand wave away like what the crypto tie in is. Do you feel like there fundamentally is a relationship between prediction markets and crypto? Do you feel like that relationship relies on prediction markets being on chain?
How do you see the evolution of that relationship and what are the parameters that are required for it to thrive?
[00:17:14] Speaker B: Yeah, this is a super interesting question because I think you see it happening.
[00:17:18] Speaker A: On X. I'm so smart, dude, it's crazy.
[00:17:20] Speaker B: Yeah, it's super smart.
Good question. The thing I find really interesting about it is it's the discourse you see on X right now, right? It's like, okay, and there's this, this world of like deep crypto Twitter that because polymarket was initially on chain, like, you're not a prediction market if you're not on chain. However, there's the other side of like, which is like, oh, prediction markets are this truth seeking vessel.
[00:17:49] Speaker A: Right.
[00:17:49] Speaker B: And I think if you're going to take that view that prediction markets are a source of truth, the most ideal version of that is on chain, right. Because of the transparency nature of it. Right. Like let's say any of these quote unquote insider type trades that end up coming about, like there was a very popular one about like the release of GPT5. Right. And like three days before the release this Fresh wallets just pounding, you know, thousands and thousands and thousands of dollars into this very specific release date on polymarket. And you're like, okay, well, if this wallet's never traded before, if it's sized X, you know, above X, you can probably realistically say that they have information the rest of the market doesn't. And so, and the only way to know that is being on chain. Right. The.
The opposite side of that is like the data feed you get from Kalshi. So like we have a data feed from Kalshi that is basically like we can see the size of trades that come in on every kind of feed.
[00:19:02] Speaker C: Could I not make the argument that, that if you see a price movement that's big in a short period of time, that's the same thing and you don't need it to be on chain with a wallet? Or am I missing the point?
[00:19:13] Speaker B: No, I think I would push back and say, is every $10,000 bet you take sharp?
[00:19:22] Speaker C: No.
[00:19:22] Speaker B: Okay, but it might move a price.
So if every $10,000 bet you take cannot be counted as Sharpe, then no, I would argue a price movement not necessarily lead to that same thing. However, if you had $10,000 bet from a wallet that's only traded X and that is statistically significant or has never traded this market or any other market besides this, you can infer a little more into that. I would say, and maybe that's just me being ideal, but I would say, I think again, you're just adding parameters. You may be able to say bet over X is reliab sharper than not. Because you don't just get a lot of whales that just.
[00:20:12] Speaker C: So I hear what you're saying, and I think I would agree that you can find it faster if you have the wallet information. But like, take the.
Was it the Nobel Prize that likely got leaked? Yeah.
If you see a movement a couple hours before it's released at that significant. I don't need wallet data.
I know it's. But I would agree that you probably would have found it faster than I would have seeing the wallet data.
[00:20:39] Speaker B: Yeah, I think it's about.
I think there's another piece of this too, which is like, is, you know, there's like this insider trading discourse on X of like, is this a feature or a bug? I would think, like, almost everybody should say that it is a bad thing. Like insiders are typically a bad thing.
[00:21:00] Speaker C: Why?
[00:21:01] Speaker B: Because it, I think it's like a Market integrity type of thing. Like if I, I think like you can have this whole conversation about liquidity, right, in these markets and it's like, I agree, just to be clear, liquidity is a function in my opinion of like trust in whether that's trust in your price or trust in the integrity of the market or any of those types of things. I think that like, so, so to just tie it back, right? It's like, okay, if I know that I have, or if, if you can't trust the integrity of the market, then the price movement necessarily doesn't mean the truth is happening or not. But is an insider good or bad? All of those types of things tie back into this same argument.
[00:21:52] Speaker A: The thing about price movement is that you can spoof a marketplace and I think if everything is fully on chain, there's some notion that all misbehavior could eventually be revealed.
No way that like a central entity could try to protect anybody or obscure the truth whatsoever. Whereas if you have a company in a trust me bro position, it's like it's kind of up to them to say what they are going to provide and to stick to their word. But the reality is like, when I phrase it that way, it sounds like I don't buy into that, but I totally buy into it. That's how the entire global banking system works, right? Like, the reality is a lot more money transacts in, in fiat than in crypto.
[00:22:39] Speaker B: Totally. So it's not like the question was like, okay, is blockchain good or bad for prediction markets? And I think it's inherently a good thing. I don't think it requires blockchain. Right. But I mean you're seeing it with Kalshi. But I think the transparency of on chain data is really interesting. And I think like if you believe that, you know, these things are going to be a source of media or truth or get you to the final outcome faster, the more information you can have into every single data point that comes in, the better.
[00:23:12] Speaker A: Well, let me ask you a slightly related question because I think sports, we have a lot of conventions around settlement and the conventions are so well regarded that ultimately any sportsbook, any prediction market, any operator simply clicks the yes no button or has a pipeline that is proverbially clicking the yes no button on a touchdown score or whatever. And it's totally fine that one of your employees is settling it because we all agree on the rules. There's a universal set of rules. It would affect your business very quickly if you weren't going by Those rules.
So again, it's one of those theoretical runs into the practical and the practical dominates.
[00:23:50] Speaker B: But.
[00:23:53] Speaker A: If new market types are constantly being added and you really get to that lightning takeoff in prediction markets, it's possible that the standardized rule set can't keep up. And then a DAO style, decentralized, centralized way of deciding outcomes becomes very interesting. And so I almost wonder if it's like people kind of give up on the automated market, making live with the club, live with a centralized entity. But they're like, but all settlement stuff needs to be handled in a decentralized way because you can't be trusted with that piece.
[00:24:27] Speaker B: And that's how Polymarket is settled now.
[00:24:31] Speaker A: But people have a lot of issues with that in practice, right? Totally.
[00:24:34] Speaker C: Wasn't I reading about something where like there's a photograph of.
[00:24:37] Speaker B: Was he Zelensky suit?
[00:24:39] Speaker C: Yes, yes, yes, yes. I don't, could.
I don't. I wasn't really active in Polymarket or even like.
[00:24:45] Speaker B: So the whole thing was like, okay, the market was. Will Zielinski wear a suit to. I forget exactly what the event was. There's a picture of him wearing this like three piece or like this thing that if you just put it out there, everybody in this room would say this guy's wearing a suit. Right.
But I mean there's more history to that in terms of like where that market actually came from, what was the birth of that market. And it had to do with, you know, the way he specifically dresses, et cetera, et cetera. But to your point, like it did come to this, like UMA or UMA is like the body that does these Polymarket settlements. And it was like, is UMA a dow? I don't. 100%.
[00:25:27] Speaker A: Sorry.
[00:25:28] Speaker B: No, that's okay. I don't, I just don't totally know. I would assume, yes, because it's like they're voting with essentially token stake. Right. So a bunch of holders have a bunch of these UMA tokens and that they get voting power or rights based on token holdership. Right. And so essentially that's how DAO works.
[00:25:52] Speaker A: So the only other component I'm aware of is that then also voting within the majority gets you some kind gets you tokens. Is that right?
[00:25:58] Speaker B: Like possibly. I'm not 100% sure, but there probably is some kind of incentive mechanism.
[00:26:04] Speaker A: I think it's, I think it's functionally a dao, if it's not literally one. It's designed with the same principles.
[00:26:08] Speaker B: Exactly. And so there's. To your point, it's like, okay, those have like these ambiguous types of rule sets and you're leaving it up to, you know, crowd settlement and that. That has problems in practicality. Right? Like, you see it a lot. There's a. There's not.
There's like multiple disc disputes a month on like a poly market market like that. Right.
But yeah, I think, like, practice, like, theoretically, it's super, super cool and interesting. I'm not sure in practice because, look, I've been in the crypto space a long time. I've been a part of daos. Daos are really interesting in theory. It's hard to get people to participate in the way you theoretically want a dao to work. Right. Like, there's a reason they need incentive mechanisms. Right? And it's like, okay, then there becomes this like, o financial incentive to maybe that person was insider trading their own settlement. Right? And like, who knows? But yeah, super. But that whole, like the whole blockchain nature of transparency and settlement and stuff is. Is very interesting. I don't know if it's like the end all be all, but the question of like, does blockchain make prediction markets more truthful, I think is a yes. Right? Like, for all those reasons.
[00:27:31] Speaker A: Are you trading anything besides sports?
[00:27:34] Speaker B: Personally, I'm not a huge, like politics person, so I don't really dabble in those markets. The things I find most fun are like the culture stuff. So you guys have talked a lot about mention markets. I think the mention markets are super fun.
Speed. The crypto tie in was. Did you guys see the Brian Armstrong thing?
That was. Did you see that?
[00:27:59] Speaker C: That was crazy.
[00:28:00] Speaker A: I think. I think everybody who would listen to this has heard it, but Brian Armstrong, CEO of Coinbase, on a earnings call, as it was retold. I didn't listen to the call. Somebody mentioned the mentioned market.
He just pulled it out of thin air.
[00:28:17] Speaker C: He said, sorry, I've been distracted. I want to read off all these words that are on the mentioned market and then read every single word that hadn't been said.
[00:28:24] Speaker A: The important point is every single thing that there was, yes, no trading on for him to say he read the word one after another. So they would all settle to yes.
[00:28:31] Speaker B: I feel like you knew that that was inevitability at some point. I think. I do think it is interesting that, you know, he was the one to do it.
[00:28:40] Speaker A: Especially because, like, both Al Michaels and Joe Buck are the kind of guys I thought would become aware of it and mess with it. You know, Michael Michaels is one of these guys who's Famous for when a. When a game that is not interesting because it's a blowout finally goes over or goes under, he'll kind of be like. And that's the last thing anybody was paying attention to. And like not quite outright say it, but he's been doing that for years.
[00:29:03] Speaker B: Interesting to some I think is what he said. Yes.
[00:29:05] Speaker A: He was doing that pre legalization. Like yeah, way back.
[00:29:08] Speaker C: So I see that. And I'm like this is terrible for mentioned Martin. Yeah, I think they're fun and I agree with you. But do you think, do you agree with my sentiment or No, I think I do.
[00:29:18] Speaker B: I think at the.
It's funny because at the time it happened I thought it was really interesting. And so I tweeted like, oh like total chad move. Right? Like. And when you think about like oh, all the stuff we just talked about, the integrity of these markets, it's a problem. It's definitely a problem.
But that's like. But I do think the mentioned markets are kind of like this gateway to recreational adoption to prediction market product wise.
[00:29:50] Speaker A: They're fire in my opinion.
[00:29:51] Speaker B: And I think that I got my wife involved in Survivor mention markets because we watched Survivor together. It was really fun.
[00:29:58] Speaker C: I wanna be clear. There's no way in my opinion Brian Armstrong was betting or even telling someone he was just messing with it. Cause he thought it was funny. But the fear that I have is someone that needs the finances, does mess with it and benefits from it and then you get into real problem.
If we only had the Brian Armstrongs of the world messing with it for fun, that'd be another thing to handicap. Like is this person gonna rattle off all these words then?
[00:30:25] Speaker B: Yeah. I'm curious how you guys all.
[00:30:27] Speaker A: Yes. Parlay on the endings call would have gone crazy.
[00:30:31] Speaker B: Exactly.
I'm curious like how you see that versus like what we're seeing right now happening with the NBA stuff. Like they're what NBA stuff?
[00:30:45] Speaker C: Look, the NBA stuff is obviously concerning.
It's not a good look.
[00:30:49] Speaker A: NBA stuff is way worse than the Bryant.
[00:30:52] Speaker C: It's not even close.
I am like this is always. There's always been rigged games and stuff like notions of it and we've always tried to contain it. This is about as bad as it's gotten. The thing that I will say is I think the legalization has kind of showcased it more because it's legal. And if this happened pre legalization or I bet things did happen, we just wouldn't have heard about it. So this is actually a good thing from that regard. If it Gets way overblown, then it can be problematic. And my fear with the mentioned markets is it's so much easier. I mean, think about it.
You have to make a conceded effort to rig a game. You have to do a lot of things. Al Michaels to say a specific word, he could just pretend that it was natural and you would have no ide.
[00:31:42] Speaker A: But he's also not compelled by anything not do that.
[00:31:44] Speaker B: Right.
[00:31:45] Speaker A: Like he's not like to be clear, like some of the things we're talking about with, with sports leagues, like are federal crimes, like everybody agrees is like super illegal.
[00:31:53] Speaker C: Exactly.
[00:31:54] Speaker A: It's not. What Brian Armstrong didn't commit a crime.
Although it could.
[00:31:57] Speaker B: Will it eventually.
[00:31:58] Speaker A: Yeah, yeah. Right.
[00:32:00] Speaker B: It's like, will it eventually? Like, I don't know. Yeah.
[00:32:02] Speaker A: I mean, and, and how, how have you now compelled me into this? You know, like, like if I'm aware of these mention markets because they exist and I get hate mail from people if I do or don't say certain things. But also I have to go out and I'm not getting paid to go do that. I'm not an entertainer, like an NBA athlete. It's like, that's a nasty position to put a public figure in.
[00:32:22] Speaker C: Can you imagine you have the recreationals messaging like a player that didn't go over their points.
[00:32:26] Speaker B: Right.
[00:32:26] Speaker A: But doing it to the CEO.
That's really funny.
[00:32:30] Speaker B: How did you not say blockchain?
That's really funny.
[00:32:36] Speaker A: And I like, like I do believe, and I think it's important in the business to quote unquote, believe and to like always be thinking super long term and super big picture about where all this could go, which can lead you to want to hand wave away the early friction and be like, don't worry about it. There's going to be so much liquidity. It doesn't matter.
It's like, no, it's so important that you build trust with consumers and the public and everything. Any business that's developing these products and that you take integrity concerns extremely seriously. Or else everything's gonna be dead on arrival.
[00:33:12] Speaker C: Exactly.
[00:33:12] Speaker A: Even if you're trying to communicate, you don't see where this is going. All this is gonna work itself out. We're in the early days. You can't just be laughing about it. It doesn't matter.
[00:33:22] Speaker B: Oh, totally. And I think there's second and third order effects of.
Oh, it's not just the consumer side. Right. Because the consumer side doesn't happen unless there's somebody providing that li.
And why would anybody want to provide liquidity to a market like that and then the whole thing doesn't get to exist and we never get to that fun utopia that we're all talking about in the future. So I totally agree.
I'm curious you guys, as market makers and traders, where do you think the solve is long term in some of these other types of markets, like a mention market or some of these long tail sports markets like California. She has up. Hat up. Like who's going to be the Week 1 starting quarterback for X team? How do you see liquidity being solved in the future?
[00:34:14] Speaker C: You need to make market integrity number one. You cannot laugh about the Brian Armstrong thing. In my opinion. You need to draw a hard line that this is not okay and any form of market manipulation is not okay. We will seize those funds. Funds and you are not getting paid out if you have any insider trading.
[00:34:37] Speaker A: Well, like if Brian Armstrong had traded that.
[00:34:40] Speaker B: Sorry, sorry.
[00:34:41] Speaker C: Yes.
[00:34:41] Speaker A: Like he's not actually liable at anything.
[00:34:43] Speaker C: Right. But like.
[00:34:44] Speaker A: Yeah, yeah, yeah, right.
[00:34:45] Speaker C: Anything. If you trade in like try to get, if it's possible, push for like jail. Make that so negative to insider trade. That's how you solve the liquidity thing.
[00:34:56] Speaker B: Look, how about providing the liquidity? There's.
[00:34:59] Speaker A: That's tough though because a lot of these places really want to believe these contracts are fungible.
And now all of a sudden you're in the territory of like, well, the contracts purchased by those with inside information are not equivalent to the ones who are not. And so there's a lot of philosophy that goes into these platforms that can start to crumble if you focus on this. Which doesn't mean you shouldn't do it. But it's like you have to acknowledge how big a lift this would be for some of these platforms to do things like this.
[00:35:24] Speaker B: What about the professional vision piece?
[00:35:26] Speaker C: So the providing of liquidity?
I don't think it's a problem because right now, the reason why I wouldn't look to market maker right now is because insider trading is so rampant and easy to do. I don't want to risk that.
[00:35:41] Speaker B: But it's a huge parallel to what we're seeing now with the court settings.
[00:35:45] Speaker C: Exactly. The court setting liquidity is killing liquidity on Kalshi and if I had a guarantee that there was I wasn't gonna get insider trading, I could look and try to get tight margins. And yes, people are actual sharps. We just had prediction market trader in here. Some people like that they're gonna earn off of me. But I'm gonna use flow and move and I'll earn my 1%, hopefully market making but we'll get a ton of liquidity and it'll be great. But I can't do that. I can't earn like 1% when someone's gonna come click me for like 50,000 contracts at like 100 win rate because I've been set of trading and it's like I'm not gonna bother. Why would I try?
[00:36:26] Speaker B: Yeah, I think like one of my, I would say crazy theories is like from the liquidity side of like all right, when we look at sports, right, it's like you've got your Sigs, you've got these big funds that have are trading these events and they can do that because sports has largely solved terms of like okay, I can make a price and I can trust that price, right? And like then you have all these long tail markets that they're just like empty and it's like okay, it's cause nobody knows how to price the thing, right?
And they don't have the conf. Sig's not gonna do it because you're not gonna have a desk that's gonna. The juice isn't worth the squeeze, right? So it's like how do you get all of these long tail markets to have some sort of viable liquidity without.
Because these big desks aren't going to do it, right?
[00:37:25] Speaker C: I disagree with you there a little bit because yes, sports is mostly solved like on NFL Sunday I know what the price should be of these games. We have tons of market in foot but on Tuesday even in non injury games in NFL you could be wrong on your price and you could get hit in one way but still you can take big clicks, you can still take a lot of liquidity there because there's so many recreationals that like it mention markets is a very recreational happy product and because it is, I think a market maker could come in and actually give deep liquidity to provide for those and have them have tight markets.
The reason they don't is of course in my opinion instead of trading similar to why. Look, a lot of recreationals love to live bet or live trade and there's a reason why in Cal State you don't see it because of courtsiders and it just, it's not. The juice is not worth the squeeze for that.
[00:38:19] Speaker A: I do think long tails, it's a similar thing where you, if you find the UI UX to serve them to more regular users, the inflows will be there which changes the toxicity balance, which changes the incentive. I also think a lot of these market makers were not built for those kind of markets.
[00:38:40] Speaker B: Totally.
[00:38:40] Speaker A: And there's a new wave of market makers that are. I mean, it's the kind of thing we optimized around when we started because we understood the landscape and the. It was just like vacancy. We have friends who might not be the best at whatever sport they're doing, but they're willing to tackle regimes of markets that others are afraid of.
[00:38:57] Speaker B: Totally.
[00:38:57] Speaker A: And I think that's the kind of thing that is inspiring when we talk about all the negative stuff. It's like, it's very cool to see people step up to the plate and try things that nobody has had the audacity to try before. All right, we gotta wrap up real quick.
Any last minute plugs, anything you wanna get out there? What's your Twitter handle?
[00:39:14] Speaker B: My Twitter handle is Unchubets. B U n C H u bet.
Check us out at Billy Bets AI. We're not charging you anything. It's free. So I can't be a scam. Right?
[00:39:25] Speaker C: Not how it works, but.
[00:39:26] Speaker A: Can't be a scam. All right, Joe, thank you very much.
[00:39:29] Speaker B: Appreciate you guys.
[00:39:30] Speaker C: Thank you.
[00:39:30] Speaker A: Wrapped up.
