Class Dismissed
The House always wins. The same is not true for the Frat House. Founders of prediction markets—or gambling sites that have recently added sports gambling to the mix—know how to place a smart bet. That’s why they’re headed to college. While these sites are susceptible to insider trading and market manipulation, neither of those strategies was required for Kalshi and Polymarket to identify a valuable target market. There was already a gambling scourge spreading across college campuses, particularly among males who have adopted sports betting as a normal part of university life. Some non-profits say that as many as 10% of college students could be classified as pathological gamblers. And those numbers were added up before prediction markets took off. So, given the profits over ethics vibe of our current classless cultural moment, it would be safe to bet that prediction markets are coming to a fraternity near you. WSJ (Gift Article): The Prediction Market Bets Driving a Campus Frenzy. “Both companies have begun splashing cash on campuses. Polymarket has offered to pay fraternities, in exchange for signing up users, money that can be spent on throwing ‘epic parties’—one frat raised $30,510 over a two-week period. Both platforms have been paying student influencers to promote them as ways to raise fun money, enlisting student athletes as brand representatives and supporting student clubs … Polymarket also reached out to fraternities and social clubs across the University of California, Berkeley, last fall, according to students there, offering company-branded beer pong cups and up to $1,000 for parties.” The targeting of youth, many of whom are too young to participate in regular gambling, isn’t stopping orgs like AP, Google, CNN, and the NHL (and the platform I’m sending this newsletter out on) from partnering with the prediction markets, because of a distorted belief that they provide some kind of wisdom of the crowds version of truth. But throwing the fuel of legalized gambling on the fire already engulfing college campuses is a bad bet. Especially if it pays off.
+ Charlie Warzel in The Atlantic (Gift Article): A Technology for a Low-Trust Society. “This is the central lie of prediction markets: They claim to get us closer to the truth but, in the end, they make us less certain about the world. But this erosion of trust is a feature, not a bug, for these platforms. A world where people are suspicious of every motive is a world where the cold logic of gambling feels more rational. A zero-trust society is one where the prediction markets’ dubious ‘wisdom of crowds’ marketing seems extra appealing. In this way, prediction markets are a system that justifies its own existence—a well-oiled machine chipping away at societal trust while offering a convenient solution to its own problem.”
+ Think I’m making Kalshi and Polymarket seem too hateable? Well, consider this: They hate each other, too.
