Earlier quoted context omitted.
There's a legitimate, non-gambling use case: hedging against your existing position in GOOG. There's no equivalent instrument for sports.
> There's no equivalent instrument for sports. Options on the sports team's parent company. I mean you want to hedge against financial losses due to on-field performance but also commercial performance, right? What is the utility of hedging purely against on-field performance?
CFTC declares market emergency, orders Kalshi to continue to operate in New York
171–180 of 226 posts
Re: CFTC declares market emergency, orders Kalshi to continue to operate in New York
#172Earlier quoted context omitted.
There's a legitimate, non-gambling use case: hedging against your existing position in GOOG. There's no equivalent instrument for sports.
That sounds _exactly_ like a gambling use case.
If I'm holding GOOG shares, I can buy puts to protect my downside risk (that's the hedge).
Re: CFTC declares market emergency, orders Kalshi to continue to operate in New York
#173Earlier quoted context omitted.
ELI5 why it's better for you to place a $10,000 bet that, say, GOOG falls below $300 by February 2028, than to bet the same that the Pats win the Super Bowl? They're both gambling.
You actually raise a great point for regulating high-risk (and recently heavily gamified) options and futures bets more like gambling for retail investors.
Re: CFTC declares market emergency, orders Kalshi to continue to operate in New York
#174Earlier quoted context omitted.
Insuring against loss. I just looked up the official name; it’s called prize indemnity insurance. In the case of those “make a free throw from half court and win a car” competitions, the risk is a known value: the prize sponsor’s wholesale vehicle cost. The sponsor pays a premium for each contest, which is calculated based on the likelihood of someone winning. This is a very well established insurance market. You as…
Insurance against loss due to ... paying for insurance? The language of the thing is compelling at first glance, but it doesn't actually parse. Sharing your gambling wins with patrons to attract more patrons is not insurance .
Kalshi is clearly not an insurer. But the commercial role they filled in this very specific situation is the same as a prize indemnity policy.
Re: CFTC declares market emergency, orders Kalshi to continue to operate in New York
#175Earlier quoted context omitted.
Insuring against loss. I just looked up the official name; it’s called prize indemnity insurance. In the case of those “make a free throw from half court and win a car” competitions, the risk is a known value: the prize sponsor’s wholesale vehicle cost. The sponsor pays a premium for each contest, which is calculated based on the likelihood of someone winning. This is a very well established insurance market. You as…
Insurance against loss due to ... paying for insurance? The language of the thing is compelling at first glance, but it doesn't actually parse. Sharing your gambling wins with patrons to attract more patrons is not insurance .
Re: CFTC declares market emergency, orders Kalshi to continue to operate in New York
#176Earlier quoted context omitted.
When Texas shut down porn sites internationally, this didn't happen, the order from Texas was allowed to stand. This is because Texas is a red state and NY is blue.
Porn sites do not have CFTC to defend them.
Re: CFTC declares market emergency, orders Kalshi to continue to operate in New York
#177This seems correct, even though I think it's unfortunate that these prediction markets are ruining so many people's lives. > In the lawsuit, filed on July 31, New York seeks a temporary restraining order prohibiting KalshiEX, LLC from offering all event contracts nationwide and more than $36 billion in damages. This seems naturally the territory of the CFTC. They have exclusive right to regulate futures and derivativ…
Your mistake is trusting that a federal agency will tell the truth when the president or his family has a financial interest. Hint: they will not.
Re: CFTC declares market emergency, orders Kalshi to continue to operate in New York
#178Earlier quoted context omitted.
Most people invoke the "states' rights" platitude when the federal government oversteps on constitutional matters that haven't been specifically legislated. In this case, Congress already passed a law regulating these activities, and it seems pretty clear-cut that Kalshi engages in interstate commerce, so New York will likely lose if this gets to the Supreme Court. That's not to say I think event prediction markets a…
> In this case, Congress already passed a law regulating these activities, and it seems pretty clear-cut that Kalshi engages in interstate commerce, so New York will likely lose if this gets to the Supreme Court. That is a wild take. Interstate regulatory power does not prevent a state from passing laws regulating things happening inside its own state.
As an example, let's say Congress deemed fidget spinners a serious hazard to society. Congress can take two broad approaches to deal with them: (1) regulate, or (2) ban. In the first case, any state laws regulating fidget spinners could theoretically continue to exist, so long as those laws do not conflict with the federal laws and states are allowed to have additional regulations beyond those federal. In the second case, those laws become moot, as fidget spinners are not allowed.
Another reason why this works can be seen in the dynamics of data control laws like the HIPAA, COPPA, and CCPA (they're not privacy laws but data control). If you are an entity operating in the US covered under HIPAA or COPAA, it doesn't matter if your corporate headquarters are in California or Delaware; you must comply with those laws. With the CCPA, California decided that it wanted additional data control laws in the vein of the EU's GDPR, and that's their right because (1) no existing broad-scale federal data control law currently exists and (2) the Constitution does not give Congress the exclusive power to regulate data flows.
Re: CFTC declares market emergency, orders Kalshi to continue to operate in New York
#179Earlier quoted context omitted.
Isn't this how gambling works though? You and I place a similar value of chips on a table, then the winner walks it over to a third party (the counter at the casino) to exchange the chips for currency?
In gambling, you are betting against the sportsbook run by the house, not peers.
How is Kalshi paid today? They take a cut of each transaction, just like the bookmaker does. Neither cares who wins or loses
Turning it around, the bookmaker really isnt who you bet against, I get that technically you do. but in practice.... You bet against all the other bettors. Bookmakers offset bets with other bookmakers, etc if the balance is off.
In practice bookmakers arent trying to be on one side or the other in a bet. Some do, but they dont last long. They want the odds to make a 50/50 market in bets and they pocket the vig.
Oversimplified but that is the gist of it. Also, my knowledge of bookmaking is from my neighborhood and I assume the legal variety works the same way though.
Re: CFTC declares market emergency, orders Kalshi to continue to operate in New York
#180Earlier quoted context omitted.
You actually raise a great point for regulating high-risk (and recently heavily gamified) options and futures bets more like gambling for retail investors.
Totally agree with this. I don't understand how those organizations aren't "bucket shops" which have basically been illegal in the states since the 1920s. As bad as they are, at least it's really hard to move the stock market, and very illegal to do it in most of the dishonest ways you can think of. With prediction markets we have people betting on the words they will themselves say...
Unfortunately, when trading a lot at negative expected value, the outcomes converge...