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points by derektank 5 days ago | 0 comments

I don’t see the clear difference between something like Kalshi and, say, Robinhood. I do see a clear difference between Kalshi and casinos or sports gambling sites like Fan Duel; in the latter, your counterparty is the institution itself. This creates a lot of perverse incentives on the part of sports gambling sites to maintain their edge, such as banning bettors that are too good at playing the odds. Kalshi, on the other hand, is never your counterparty in any transaction.

Now, Robinhood is a brokerage, regulated by FINRA, and has been fined for misbehavior in the past. So I am more than willing to believe that there is daylight here that I’m not seeing. But anything that lets you speculate attracts a certain clientele, and I think the most important distinction is whether or not the platform itself is an interested party.

[–] mcmcmc 5 days ago

If the differentiating factor is just who you’re betting against, how are Kalshi et al any different from online poker? It’s still gambling, the house just takes a rake

[–] omilu 5 days ago

Because you can easily collude and cheat at poker so it needs to be heavily regulated or outright illegal to prevent theft. You can't really cheat at prediction markets, unless you have insider information which they can litigate after the fact.

[–] mcmcmc 5 days ago

Surely you’re being facetious, insider trading is obviously a huge problem that is rarely enforced and we’ve already seen instances of people actively influencing events or using false information to fake the result of a bet

[–] drugstorecowboy 3 days ago

How can you collude and cheat at poker? If there are 4 people playing, and 3 of them "collude", its litterally no different than one person just playing 3 hands at once which shouldn't make any difference. The fact that you would win more hands is offset by the big losses you would take when the 4th person wins.

[–] foltik 3 days ago

The edge comes from seeing more cards. That gives you better information than your opponent about who's ahead, meaning both your raises and folds have higher EV than theirs.

[–] drugstorecowboy 3 days ago

Oh thank you I hadn't considered that. After commenting I realized that I had never seen anyone play multiple hands. This is why.

[–] JumpCrisscross 5 days ago

> You can't really cheat at prediction markets

Lots of folks gripe about how Kalshi adjudicates contracts.

[–] cowlevel 4 days ago

The one I remember is from Polymatket, about whether Trump would end the Gaza war by a certain date. I bet no, and it resolved to yes on the basis that Trump said that he ended the war.

[–] derektank 5 days ago

I agree that whether the house has a stake in the outcome is (probably, I haven’t read the statute) not relevant to the definition of what is and is not gambling under Utah state law. Online Poker is very obviously a game though in a way that Kalshi and online brokerages aren’t (even if they share game like elements, such as random rewards). Important to caveat that prediction markets do allow you to speculate on the outcomes of games occurring off the platform, and maybe that is the distinction here between Kalshi and Robinhood, but then is Kalshi still “obviously” a gambling site if they ban markets on sports outcomes but leave everything else?

[–] mcmcmc 4 days ago

If they ban markets on sports outcomes they lose 90% of their business

[–] betterunix2 5 days ago

If Kalshi is not a gambling operation then it is an unregulated futures market, which is still illegal. There are perverse incentives in futures markets too, which is why they are regulated.

Also speculators serve an important purpose: hedging strategies require speculators on the other side. It is not just a "certain clientele," there are people who run profitable businesses on speculation (it amounts to collecting insurance premiums from people who want hedges).

[–] whimsicalism 5 days ago

You're posting this all over the site but Kalshi is very clearly a licensed futures market regulated by the CFTC

[–] JumpCrisscross 4 days ago

> Kalshi is very clearly a licensed futures market regulated by the CFTC

As an excluded commodity. Based on the CFTC's own rule making. Based on this logic the SEC can go back to deciding it gets to regulate anything as securities fraud.

[–] betterunix2 5 days ago

How is that at all clear? They are likely subject to CFTC regulations but there are a lot of questions about whether or not they are in compliance.

[–] whimsicalism 5 days ago

Describing an organization with a license from the CFTC as an "unregulated futures market" is just flat wrong, I'm not really sure why you're motte-baileying here.

[–] betterunix2 5 days ago

They offer contracts that are almost certainly outside the scope of regulation, an appeals court has already ruled that some of their contracts are indeed subject to state laws and not CFTC regulation, and they are continuing to push the envelope. How is it wrong to call them an unregulated market under the circumstances?

[–] whimsicalism 5 days ago

Because they are subject to a regulator and hold a license from a regulator.

[–] betterunix2 5 days ago

Bernie Madoff's operation was also subject to a regulator and was properly registered as a broker-dealer; that did not somehow make it a regulated operation, at least not in the sense of actually complying with the regulations. Boiler rooms are also subject to a regulator (the SEC) and obviously are not regulated brokerages.

Really it sounds like this is a disagreement about what it means for a market to be "regulated" -- I draw the line at compliance, you seem to draw the line elsewhere.

[–] mcmcmc 4 days ago

“Regulated by the CFTC” is a bit of an oxymoron when they don’t do any real enforcement

[–] lkey 4 days ago

Oh word? what specific commodity is being traded?

The CFTC was created to hedge real risk. Onions iirc?

Kalshi creates risk where there was none before. The 'future' on the 'commodity' of 'number of dunks by an aging shaq at a halftime show'.

Courts have taken the dimmest possible view of this legal fabrication and I expect their losses in courts to continue without direct intervention by the Trump scions.

[–] jakeydus 4 days ago

People will say (including in this thread) that it allows them to hedge against negative outcomes. What negative outcomes are experienced by someone hedging against whether LeBron flies his helicopter to practice or not?

[–] sire-vc 4 days ago

Helicopter repair companies?

[–] jakeydus 4 days ago

Damn.

[–] Projectiboga 5 days ago

Robinhood is regulated under the SEC and other regulatory bodies and keeps "paper trails" of the trades.

[–] whimsicalism 5 days ago

and Kalshi is regulated on the CFTC as it is not an securities market that the SEC regulates.

[–] mahboi 5 days ago

Besides the brokerage being regulated, stock markets are regulated.

[–] calvinmorrison 5 days ago

basically, does the government have its thumb on the scale makes it legal. Gambling is so bad and illegal, except when the pennsylvania lottery does it. Alcohol, bad and illegal, except when the state monopoly sells it.

[–] kube-system 5 days ago

There are very good reasons that gambling and financial markets are regulated.

[–] mahboi 5 days ago

Yep. Hope they kill Kalshi.

[–] walthamstow 5 days ago

Devices that broadcast wifi illegal except when the FCC says so. Damn government with their thumb on the scales.

[–] toyg 5 days ago

That's such a poor argument. Illegal building is bad because it's illegal; illegal gambling is bad because it's illegal. This is just how laws work. Heck, in the US even homicide is bad because it's illegal, when you consider that there is a legal version of it.

[–] mahboi 4 days ago

Penalty for homicide is homicide

[–] verdverm 5 days ago

It's really the worst of both combined. There is ample gambling like options and behavior on Kalshi

policy makers, assistants, journalists, and the like are insider trading - and the president of the united states is intentionally market manipulating for profit

[–] mcmcmc 4 days ago

90% of trade volume on Kalshi is sports betting