John Oliver's Scathing Critique of Prediction Markets
In a recent episode of Last Week Tonight, host John Oliver delivered a powerful indictment of the rapidly expanding and poorly regulated world of prediction markets. These platforms, which allow users to bet on everything from geopolitical events to pop culture outcomes, have seen exponential growth in recent months, with billions of dollars wagered weekly.
The Grim Reality of Modern Betting
"It is shocking the extent to which prediction markets have proliferated," Oliver stated, highlighting the unnerving nature of what people can now bet on. He cited examples such as "will traffic in the Strait of Hormuz return to normal by the end of April" and "will the US confirm that aliens exist by 2027?"
More disturbing were recent betting situations like "will Nancy Guthrie's kidnapper be arrested by February 28?" Oliver emphasized, "The impulse to try to make money betting on war or an unfolding tragedy is really dark. When someone dies, you're supposed to send their family a card that says 'sorry for your loss', and not one that says 'thanks for covering the spread!'"
How Prediction Markets Avoid Gambling Regulations
Oliver noted that while prediction markets aren't new, their controversial uses have escalated dramatically since companies like Kalshi and Polymarket launched their startups. These companies fiercely argue they're not gambling sites, claiming that gambling involves playing against "the house," while their users trade against each other with companies merely charging fees on trades.
"They'll also insist that they're simply modern versions of commodity futures markets," Oliver explained, "and crucially, they'll say that the bets they sell are financial instruments that enable ordinary people to hedge against future risks."
Kalshi CEO Tarek Mansour claimed the company was "very important" because it allowed people to bet on student loan forgiveness and use winnings for loans that weren't forgiven. Oliver responded with skepticism: "Apparently, they're just trying to help people make wise planning decisions. But what exactly is the financial loss that I'm hedging against if I bet on the next winner of The Masked Singer, or whether or not Mr Beast will say 'feastable'?"
The Absurdity of Financial Justifications
To highlight the absurdity of these financial justifications, Oliver showed a clip of YouTubers betting on Donald Trump saying certain phrases in a speech, celebrating when he said "Sleepy Joe" or "transgender."
"That is not using a financial instrument to hedge risk," Oliver scolded. "It's taking advantage of a sundowning geriatric's rapidly declining verbal abilities. Oh, you bet he's going to say the word 'nasty'? Great guess, dude. It's one of the last 200 words he has left."
Oliver found the clip unsettling because "the president's harmful rhetoric is being divorced from its actual meaning" and because "that's not what these bros are supposed to be doing. They shouldn't be betting on Trump's speeches. They should be sitting on that same couch and watching YouTube highlight reels of Kevin Love outlet passes, six Modelos in, forging a deep, beautiful friendship that will last for 40 years."
Political Connections and Regulatory Failures
The refusal to identify as gambling sites has paid off handsomely for these companies. By insisting they are "financial exchanges" offering "event contracts" rather than bets, prediction markets can operate in states where gambling isn't legal while avoiding state taxes and minimum age requirements where it is.
Oliver argued that much of their ability to operate freely stems from political connections. Donald Trump Jr. serves as an investor and unpaid adviser to Polymarket and a paid adviser to Kalshi. "If hiring Don Jr helped get these companies on Trump's good side, it's a bet that's paid off massively for them," Oliver noted.
While the Biden administration attempted to rein in prediction markets, the Trump administration essentially let them go unregulated by stripping the Commodity Futures Trading Commission (CFTC) of its power. The CFTC, which should have five commissioners with two from the minority party, currently has only one: Michael Selig, whom Oliver described as "a massive prediction markets cheerleader."
Oliver pointed to disturbing instances where people with intimate government knowledge appear to be using these markets for profit, citing one individual who made $400,000 after the capture of Nicolás Maduro with a last-minute bet. "It gets genuinely chilling when you realize that people seem to be using insider info to bet on life or death events," he warned.
Calls for Action and Accountability
Oliver called for immediate action, stating that "the CFTC should be doing more" but expressed little faith in meaningful regulation while Selig remains in charge. He also had minimal confidence in Congressional action, noting that "given the president of the United States has a kid currently advising both major companies, I wouldn't hold your breath."
"But at some point we do need to put in place some basic guardrails here," Oliver continued. He called on news organizations, particularly television channels, to "stop laundering these companies' reputations for them by putting their odds on screen like they are actual news."
On a personal level, Oliver advised potential users to remember that "you are statistically likely to lose money" when using these markets. While not opposed to gambling per se, he concluded: "There is something so grim about these sites turning every aspect of our lives into a bet. Because sure, money can be won on them. But in that happening, something also gets lost. Specifically a society where things aren't only weighed in financial terms and where people engage with news for what it means to human beings, not just because they have $50 riding on it."
"And when something unexpected happens in the world," Oliver added, "it would be really nice not to have to automatically question whether it's only because someone is trying to move a market."
