Predicting Predictions
I’ve been gambling. It’s not a new thing, I’ve been a gambler my whole life. I chase edges. Right now, the new big thing is prediction markets. The big question is what prediction markets will impact. It’s clear that prediction markets will take significant volume if they continue to receive regulatory clearance. So the questions are:
- Will they continue to gain regulatory approvals?
- How much / what kind of volume will they take?
Regulatory
Kalshi is operating like a company that knows how to buy regulatory approval. They have Don Trump Jr. on the board to buy approval from this administration. Who knows how long this administration will last? Does it all come crashing down when the Trump’s can’t be bought off? Probably not, they will just buy off whoever is in power next or they will have gotten big enough that they already won regulatory approval. Obviously, this can all change quick, but my guess is that prediction markets are here to stay.
Volume
Prediction markets have taken significant volume. They are doing billions in sports volume (up to $2B a week on Kalshi alone). Are predictions markets growing the market? Yeah. Are prediction markets taking significant volume from established providers? Yeah.
The Death of Draftkings
Will this mark the death of Draftkings? I don’t think so. Draftkings was never here for the volume that Kalshi is taking. Draftkings is here for the normie volume and they are really good at that. Predicition markets are built for tech bros, not for phone shitters firing off bets from the toilet. Draftkings wants and has the latter. That is where they will make their money.
I don’t love Draftkings as an investment… yet. If fears of prediction markets start to make Draftkings trade at a dirt cheap valuation, that’s when I think it’s time to dive in.
