Polymarket’s dumbest betting market

On Polymarket, you can bet on almost anything. Today Matt is speaking to Supervising Producer Kara Jensen-Mackinnon about one of the strangest markets the site has ever run: one that turned WNBA games into a target for flying sex toys. Follow If You're Listening on the ABC Listen app https://radio.abc.net.au/help/apps. Check out our series on YouTube: https://www.youtube.com/playlist?list=PLDTPrMoGHssAfgMMS3L5LpLNFMNp1U_Nq

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  And I'm Carrington Clark. From Monday to Thursday on ABC Business Daily, we break down the biggest stories in business, finance and the economy and why they matter.

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  This podcast was produced on the lands of the Uabakal and Gadigal people. Just a warning, this episode includes some discussion about, um, adult items. It's not explicit, but there might be some words in here that your kids might ask you to define. And if you don't want to do that, maybe skip this particular episode.

• 1:11Speaker 02

  G'day, Matt Bevan here, this is if you're listening. We've had a lot of responses to our last couple of episodes about the Trump family's involvement in cryptocurrency and prediction markets. There's quite a lot of, how is this legal? And also a little bit of, so the president's a capitalist, who cares? But for us here, working on this show, one of the most interesting things is how many incredible stories there are related to these subjects. In particular, some extraordinary stories of people finding ways to manipulate prediction markets. It was genuinely very difficult for us to figure out which ones needed to go in the episode. We basically just decided to keep it to stories very specifically relevant to Trump and the war in Iran.

• 1:51Speaker 02

  But there were just so many others, including one that supervising producer Kara Jensen McKinnon has become particularly interested in. G'day Cara.

• 2:00Speaker 03

  Hello, I am very interested in this story.

• 2:12Speaker 02

  Before we get to the story, Cara, have you ever done any insider trading?

• 2:15Speaker 03

  Um, not that I can think of and not that I'm willing to admit on an ABC podcast. How about you?

• 2:22Speaker 02

  Well, no, I haven't done it, but the closest that I've come to it, not that I could admit to crimes on the podcast and haven't indeed done any. But a few years ago, I remember a story came out that one of the online sports betting agencies had put out like a market on who was going to win the Triple J hottest 100.

• 2:41Speaker 03

  Okay.

• 2:41Speaker 02

  I don't know, certainly don't know who wins the hottest 100, but I know the people who collate the votes before the, you know, the broadcast begins, someone knows who won. And I was like, could I, uh, no, I mean, obviously I won't, but.

• 2:57Speaker 03

  Could we? Yeah.

• 2:58Speaker 02

  But there was a slight moment of, I appear to be adjacent to insider information.

• 3:03Speaker 03

  Yeah.

• 3:04Speaker 02

  And it was interesting, an all staff email went out here at the ABC saying, do not bet on the hottest 100, please. Absolutely do not get involved in that at all. We do not like this. Please stay away from it. And I'm sure that everybody did. The realisation I had is, you know, the amount of money that you could make on that kind of a market, betting against a bookmaker, you would have to risk your job over like a couple of hundred bucks that you could potentially win.

• 3:32Speaker 03

  Yes, yes.

• 3:33Speaker 02

  The prediction markets have changed that a lot where you can actually make some serious money and potentially get away with it.

• 3:39Speaker 03

  Yes.

• 3:40Speaker 02

  But this is a story that you've got for us. It isn't really insider trading. It's kind of about being able to place a bet on a thing that you can then just make happen yourself.

• 3:50Speaker 03

  Exactly, exactly. This story is like a bit of a convergence. So the last two episodes we did, we looked at crypto markets and kind of these like pump and dump schemes in tokens, in cryptocurrency, which is basically where you put a bunch of money in, then you create this kind of marketing frenzy around the company. People invest and then you basically cash out while it's peaking and then it crashes, the value crashes. And we also did an episode looking at prediction markets last week, specifically Polymarket and how people are basically just cashing in on information that they already know. So this story is those two stories coming together for the ultimate story.

• 4:31Speaker 02

  Oh, okay.

• 4:31Speaker 03

  It starts on the 28th of July last year. I don't know if you remember that far back, actually one year ago to the day.

• 4:38Speaker 02

  Yes, that's one year ago today. That's crazy. Okay.

• 4:41Speaker 03

  There was a cryptocurrency meme coin launched called the dildo coin.

• 4:46Speaker 02

  I can't believe Cara that we, we weren't already like organising events to commemorate the anniversary of that.

• 4:52Speaker 03

  Yeah, this is the one year anniversary of the dildo coin launch. And so as is customary for these coin launches, the people who are behind it are like, how are we going to really enhance the hype basically around this so we can super boost the value? And the way that they determined that they would do that was through this coordinated stunt by getting people to throw sex toys, specifically dildos, onto the WNBA, the women's NBA courts during live games. I don't know if you remember this, but it was a big story last year, kind of in August that I remember happening and then just it got covered over by every other news thing happening at the time.

• 5:31Speaker 02

  No, I didn't see it.

• 5:33Speaker 03

  You're not subscribed to dildo news?

• 5:34Speaker 02

  No, I'm not, no. Unless it happens in the NRL or the NRLW, I don't really notice it in sports terms.

• 5:42Speaker 03

  Okay, so this coin launches, they come up with this stunt. I wonder how long you think it took for the first one to happen?

• 5:49Speaker 02

  The first throwing?

• 5:49Speaker 03

  The first toss.

• 5:50Speaker 02

  The next day, maybe? I don't know.

• 5:52Speaker 03

  It was absolutely the next day during a game between Atlanta Dream and the Golden State Valkyries. In the fourth quarter, a neon green dildo landed on the court and play stopped. An official had to kick it off.

• 6:06Speaker 04

  Hayes gets blocked by Maya Caldwell. Something flies on the court, actually from the crowd. That is a first.

• 6:15Speaker 03

  And police arrested a guy, this 23 year old guy and charged him with disorderly conduct and public indecency. So this happened and instead of everyone being like, okay, you know, this is terrible, let's shut this down. It happened eight more times.

• 6:32Speaker 02

  Okay.

• 6:32Speaker 03

  The next one happened on August 1st in Chicago. On August 5th, three were thrown in one day, one in a Los Angeles game where it almost hit one of the players, a woman called Sophie Cunningham.

• 6:46Speaker 04

  Oh, look out, something just came onto the floor. Got an object that just flew in as the free throw was being made. It looked like that hit a player too.

• 7:00Speaker 02

  I know her. She's one of two WNBA players that I know.

• 7:03Speaker 03

  She's one of the famous ones. It happened in Phoenix where that dildo hit a man and his nine year old niece. And then it happened in Brooklyn where it hit a 12 year old girl.

• 7:13Speaker 02

  Oh my goodness.

• 7:14Speaker 03

  And then a week later, there was another incident in Chicago. As you can imagine, these tossings are disrupting the games, the players, the refs, the officials are furious. Sophie Cunningham, who you know, said publicly that this has got to stop. Obviously somebody's going to get hurt. A lot of players came out and said that it was disrespectful, obviously. The Minnesota coach linked it to a pattern of sexualisation of women to undermine them. It's clear. And then this is where Polymarket comes in.

• 7:45Speaker 02

  Of course.

• 7:46Speaker 03

  Our prediction market. While the WNBA league was trying to stop this, Polymarket was monetising it. On the 6th of August, so we're a week into this, Polymarket's sports accounts launched something they called the dildo dailies, which is where you could basically place a bet on when the next dildo would land on an NBA court.

• 8:08Speaker 02

  All right. So similar to the bets that we were talking about with Maga My Man, the person who was betting on when the US would launch strikes on Iran, picking a day that this would happen?

• 8:20Speaker 03

  Yes.

• 8:20Speaker 02

  Right, yeah.

• 8:21Speaker 03

  Absolutely. So you're betting on the game that it's going to happen, you're betting on the colour of the dildo that's going to be thrown, you're betting on the quarter that it's going to land. So you're paying for these shares basically into these yes or no votes, as we went into in the episode. And people were very angry at the story, but a lot of people were very keen on betting on this. And by the following week, it was reported that half a million US dollars had changed hands just on these markets alone, betting on these dildo dailies.

• 8:52Speaker 02

  Okay.

• 8:52Speaker 03

  One report said that on one single weekend, $63,000 was traded and one guy made $6,000 off a single incident. And then Polymarket, rather than kind of trying to shut it down or trying to suggest that perhaps people slow down their betting on this, posted from their own account that the WNBA betting volumes on dildos has surpassed the betting volume for who will actually win the game.

• 9:19Speaker 02

  Great.

• 9:20Speaker 03

  And so this creates this problem, basically, as we went into with the episode where if you have access to information, you know, you can obviously bet on it and make a big deal of money. With this, they kind of created this perfect storm where like tickets to the WNBA aren't actually that expensive and dildos also aren't that expensive to buy. So people were kind of like for 50 bucks, attending WNBA games with a dildo in their bag and throwing it on and then cashing in on a bet that they have placed.

• 9:51Speaker 02

  Right.

• 9:51Speaker 03

  It's a $50 spend for potentially one person made $6,000.

• 9:56Speaker 02

  It's just insane.

• 9:57Speaker 03

  Yeah.

• 9:58Speaker 02

  It's also exactly the kind of thing that would not be possible if not for the fact that these are these prediction markets rather than betting markets.

• 10:11Speaker 03

  Yes.

• 10:11Speaker 02

  Not that I'm advocating for the integrity of bookmakers, but the bookmakers would not allow there to be a market for something that you can bet on and then go out and fulfil the bet yourself.

• 10:26Speaker 03

  Exactly. Any single person in the crowd can fulfil the bet based on a bet that they've made. And that's kind of what makes it so crazy. And even Polymarket, you know, with their encouragement of this, people attending the game, they had then a couple of weeks later posted, again from their sports account, saying that the WNBA has introduced a no bag policy.

• 10:46Speaker 02

  No bags.

• 10:46Speaker 03

  They were going to be basically not allowing people to take bags in. And so it ended up not being true. People were always allowed to take bags in, but Polymarket kind of created this hype around that they were cracking down on it. So people just started doing it more. Some weeks later, so this is late August now, three people had been arrested from doing it, but they weren't really charged. They were just charged with indecency. It just started to create this like frenetic thing where people were going, they weren't getting charged, they're paying for tickets, they're throwing these dildos and no one was doing anything to stop it. Obviously, a lot of critics have kind of come and said that there is an inherent misogyny within the crypto and the prediction market and that this stunt is obviously explicitly about disrupting women's games.

• 11:28Speaker 03

  There was no organised campaigns to disrupt men's games. This is all happening. They're getting a lot of pushback from these female athletes saying that they're undermining the sport, but a lot of people are making a lot of money. Then Polymarket, after having basically like whipped up this frenzy, entered the chat and their official statement was that the original stunt was organised by meme coin promoters. So those dildo coin promoters who were chasing the token value and not a stated ideological campaign against women's sports. So that's what they said. I mean, whether that's a distinction that matters, profiting from harm to women versus deliberately targeting the women.

• 12:12Speaker 03

  I think it should be said that the way that Polymarket makes its money is that they take a percentage of every transaction made on the site. So they are directly profiting from harm to women. Obviously, they're not creating these markets and they're not deliberately targeting them, but they are profiting from those transactions.

• 12:30Speaker 02

  Yeah, presumably it's only because this was kind of a news adjacent event because of the inherent misogyny of what was going on, that this became a big enough deal for this to be a betting market.

• 12:41Speaker 03

  Absolutely.

• 12:42Speaker 02

  You've got an utterly ridiculous betting market that is wrapped up in the publicity of another event that is only being publicised because it's inherently misogynist and terrible.

• 12:51Speaker 03

  Exactly.

• 12:52Speaker 02

  Two stupid things clashing into each other to make a mega stupid thing.

• 12:57Speaker 03

  Yeah, exactly. You've got these crypto bros like cashing in on the humiliation of these female athletes. All the while this is happening. So there's been half a million dollars in bets have been made. And the meme coin, the original coin, that dildo coin that kicked all this off, quadrupled in value in just the space of four weeks while this is going on. It's taken the guardrails off where, you know, you can launch a coin like this and you can almost do anything to get the market hype that you need. And so they cashed out of their coin and then the whole thing kind of stopped happening because the authorities started cracking down more. They'd cashed out of their coins, so they got the payout that they wanted. But like, a sad indictment of where we're headed when it comes to cryptocurrency and prediction markets.

• 13:39Speaker 02

  The issue with the crypto thing is like, what is the point of this? This is something that I know that you've thought a lot more about than I have, but I don't understand why anybody is getting involved in crypto, because it just seems pointless. It doesn't seem like dildo coin had any inherent value.

• 13:56Speaker 03

  No.

• 13:56Speaker 02

  It was just a thing that people put money into because they thought it was funny.

• 14:00Speaker 03

  Yes.

• 14:01Speaker 02

  And then lost all their money, you know? I mean, what was the point?

• 14:04Speaker 03

  Well, that's the thing.

• 14:04Speaker 02

  Why did anybody join in? And it's the same thing with the Trump coin and it's the same thing with all of these different meme coins. I don't understand the drive that people have to get involved in this when they know, when everybody knows that you're just gonna lose money on it.

• 14:22Speaker 03

  Yeah, I mean, this is the thing. I've been involved embarrassingly in crypto for a little while, but you basically just profit off the back of people who get in after you. So if you can get in earlier as you're surging upwards as things are becoming more valuable, then you stand to profit from everyone who invests after you, so long as you can cash out at a higher value than when you bought in.

• 14:45Speaker 02

  Yes.

• 14:46Speaker 03

  And that's the thing. No one suggests that dildo coin has any inherent value or that it's even like a good idea in any way. But if you bought into dildo coin when it was 0.001 cents and then you sold out when it was worth a dollar, you've made a lot of money.

• 15:01Speaker 02

  Yes.

• 15:01Speaker 03

  And that's off the back of this media hype that has been created off the back of this entire campaign. And that's why people do it.

• 15:08Speaker 02

  So it's a pyramid scheme is essentially what it is.

• 15:10Speaker 03

  Pretty much, yeah. So long as there's someone that's dumber than you, that comes in later than you, who you can profit off, that's what you're looking for.

• 15:18Speaker 02

  Yes.

• 15:19Speaker 03

  And once you're in, then you have to contribute to the narrative as well. You have to continue to build the hype.

• 15:23Speaker 02

  Which is also the reality of a lot of the prediction markets as well. We are obviously talking about prediction markets that are based on, you know, you making predictions about things that you either can control or have inside information about.

• 15:38Speaker 03

  Hmm.

• 15:39Speaker 02

  Events that are not random, events that are directly influenced by decisions that people make. But the vast majority of what these prediction market companies are, is they're just the sports betting companies.

• 15:49Speaker 03

  Exactly.

• 15:50Speaker 02

  Almost everything that happens on Kalshi, which is Polymarket's main rival, like it is like 90% sports betting. Polymarket is not quite that much, but it's still vast majority of it is sports betting. The stuff that isn't sports betting is often just betting on broader financial markets. But we're focusing in on this inherently insane and ridiculous practice of setting up markets that are obviously massively going to draw in insider traders. And those markets are exactly the same thing as the meme coin pyramid scheme. What you need to do in order to make money on those things is be the guy who knows the answer to the question and then lure in

• 16:34Speaker 02

  a huge number of people who are uninformed in order to create the liquidity for you to win.

• 16:40Speaker 03

  Exactly.

• 16:41Speaker 02

  Because knowing the thing isn't enough, you also need to find people to bet against you.

• 16:46Speaker 03

  Exactly, exactly.

• 16:47Speaker 02

  And it's interesting looking at Polymarket's account on X now.

• 16:52Speaker 03

  Mm hmm.

• 16:52Speaker 02

  Because it's just so random, incredibly like scatterbrained. What even is this? What is going on here? I don't understand what any of this means.

• 17:02Speaker 03

  Exactly.

• 17:03Speaker 02

  Just looking at the posts over the last 24, 48 hours. Just in, Polymarket says, Elon Musk declares it's time for humanity to become multi-planetary. Okay. Another one, just in, Anthony Fauci wrote in his March 2020 diary that his newfound fame was explosive and really unimaginable. Like, okay.

• 17:24Speaker 03

  Are these things you can bet on or is this just things that are happening?

• 17:27Speaker 02

  They are linking to these betting markets.

• 17:29Speaker 03

  Right.

• 17:29Speaker 02

  Polymarket then says, according to Polymarket, there's a 6% chance that Fauci is going to get arrested this year. And you can get on there and you can buy shares in betting on who you think is going to be arrested this year.

• 17:42Speaker 03

  Jeez.

• 17:43Speaker 02

  I don't really know what the point of these markets is apart from luring in insider traders and then luring in rubes to bet against those insider traders.

• 17:53Speaker 03

  Right.

• 17:54Speaker 02

  What do you think will happen? I mean, you've got a situation where the prediction markets are banned in Australia.

• 17:58Speaker 03

  Yes, for good reason.

• 17:59Speaker 02

  Australia and various European countries are just going, uh, no, this is ridiculous. We can't have this. And I suppose that's just not going to happen under the current administration in the United States.

• 18:09Speaker 03

  Yeah, my only feeling is that unless there's some sort of insider information that is revealed through a betting market that is legitimately damaging to the Trump administration, then I can't see that there's going to be any crackdown anytime soon.

• 18:24Speaker 02

  Yeah, an argument could be made from, you know, cynical people. Like, who cares about all this? Why do I care if there's a weird, you know, random market where insiders are profiting from inside information and stealing it from gullible people who are willing to bet into these markets without inside information? And I guess the only answer to that is because it's potentially going to undermine military operations and cause, you know, serious issues with the economy.

• 18:54Speaker 03

  That's right.

• 18:55Speaker 02

  I mean, imagine if you had a situation where you have central bank governors making bets on whether interest rates are going to go up or down and then going into their monthly meeting and going, yeah, well, I realise that inflation is a bit problematic at the moment, but I did put a bet that it was going to stay flat. So I'm going to say flat, thanks. To take it back to the point that I was making at the start, previously, the amount of money in these markets was too small to make any of that worthwhile.

• 19:23Speaker 03

  Mm hmm.

• 19:24Speaker 02

  But these markets are growing by like 50% a month.

• 19:27Speaker 03

  Exactly.

• 19:28Speaker 02

  If you can make eight times your salary betting on information that you know because you are in a certain privileged informational position.

• 19:35Speaker 03

  Hmm.

• 19:36Speaker 02

  If you can make eight years' salary on a bet.

• 19:38Speaker 03

  Why wouldn't you?

• 19:39Speaker 02

  A lot of people are going to do that.

• 19:40Speaker 03

  Exactly, exactly.

• 19:41Speaker 02

  I mean, because it's wrong. That's why we wouldn't, Cara. You and I would never.

• 19:44Speaker 03

  Hey, well, we wouldn't, but we're pathetic for that reason.

• 19:48Speaker 02

  And we're chicken.

• 19:48Speaker 03

  We're just gonna go to our job every week to make our money.

• 19:51Speaker 02

  That's right.

• 19:59Speaker 02

  Now, Cara, I bet that on Thursday, we are going to be putting out an episode about an interesting development with the Trump family, attempting to buy a large tract of land in Albania and turning it into a large luxury resort. This has led to now months of massive street protests in Albania. I bet that we're going to be talking about that on Thursday.

• 20:23Speaker 03

  Amazing. I'm going to make the bet that you will say in that episode the word flamingo at least twice. Something that I have no control of.

• 20:31Speaker 02

  No, no, no.

• 20:34Speaker 03

  Bet's on.

• 20:34Speaker 02

  Yeah, bet's on. All right. Let's see how it goes. I'll see you Thursday.

• 20:37Speaker 03

  Catch you then.