Two Cents

- There's a certain event contract on Polymarket that insiders jokingl referred to as the Jesus bond.

As of this writing, it puts the odds of Christ returning to Earth by the end of the year at a surprisingly high 4%, which means that if you were to against it happening, you'd be virtually guaranteed to make a $40 profit, or you'd have bigger things to worry about than money.

The moniker comes from the fact that you're getting about the same amount of interest with as little risk as a US trea - If you don't know what the heck all that means, we got you.

Prediction markets are online pl where you can essentially place on whether or not certain events will happen.

The variety of events you can bet on is vast: sports matches, election outcome weather events, entertainment aw They can be serious, like military invasions, frivolous, like a pop star's wedding venue, or totally meaningless, like how many times Elon Musk will tweet this weekend.

- In the last year, prediction markets have quickly from a niche financial oddity to a major industry.

The main ones in the US, Polymarket and Kalshi, have partnered with big news out like the Wall Street Journal, CNN, and CNBC.

In January 2026, over $1.5 billion worth of trade over the Super Bowl alone.

- It seems like the future i bright for prediction markets, and yet something doesn't quite add up for me.

- What's that?

- Well, it's like that Jesus bon When you get income from a treas that's the government paying you for loaning them money.

But who's paying for the Jesus b - The answer to that question po to a fundamental catch-22 of prediction markets, one that some say could make this betting frenzy short-lived.

- Can I put money on that?

(upbeat music) (graphic boings) (pig oinking) Although we've been using words like wager and bet, prediction markets are technically not classified as gambling by the US government but as derivatives markets.

Instead of placing bets, you buy event contracts, yes/no positions, whose price is a reflection of what the market thinks i its likelihood of coming true.

So if a yes position that Taylor Swift will get hitch in Tuscany is going for 30 cents that means that the community of traders thinks there's a 30% chance it will hap If I buy 100 of these at 30 cent and she does in fact get married in Tuscany, then each becomes worth $1, netting me a profit of $70.

If she gets married elsewhere, then my shares become worthless.

- Unlike bets, you can sell event contracts before the event is resolved.

So if Taylor Swift happens to me that the wedding will be somewhere in Europe, more people will buy the event c pushing the value of my shares up to 70 cents each.

I can hold onto them and wait for the final result or I can sell them early for a profit of 40 bucks.

- This system puts prediction ma in a kind of gray zone in between casinos and stock mar not subject to either th Securities and Exchange Commissi or state gambling laws.

Instead, they're overseen by a smaller agency called the Commodity Futures Trading Commission.

This lax regulatory environment has fostered what some say is a growing pattern of insider trading.

- In October of 2025, several bets were made on Polyma that long-shot candidate Maria Corina Machado would win the Nobel Peace Prize, just hours before it was announc A couple months later, an anonymous user made an extrem but extremely lucrative bet that the musical artist d4vd would be Google's most searched person of the year.

A month after that, another anonymous user made over $400,000 betting that Venezuelan presiden Nicolas Maduro would be ousted only hours before the U military removed him from power.

And the day before the US and Israel launched a war agains there was an unusual flurry of b that just such a strike would oc by the end of the next day.

- In each of these cases, there was widespread speculation that the profitable trades were made by insiders, like a Google employee, a member of the Nobel Committee, or a Pentagon official, who decided to leverage their ac to privileged information for a nice little payday.

In more traditional, more regulated markets, such insider trading is strictly prohibited because it damages market integr and weakens investor confidence.

If you have reason to believe that other people are using non-public information to gain an unfair advantage, you'll be much less likely to invest your own hard-earned d That's bad for the market and the economy in general.

In the absence of explicit laws against it, some prediction markets hav instituted their own safeguards against insider trading.

But thanks to the inherent anonymity of the system, it's pretty hard to enforce.

However, some proponents of prediction markets think that insider trading shouldn't be condemned but encouraged.

– The argument is based on two fundamental precepts: the wisdom of the crowd and financial incentives.

If you can get enough people to and force them to be really hone by having skin in the game, you're going to get predictions that are more reliable than you can get from traditiona Polling, for example, just measures who people want to win elections.

But event traders with money at stake have to put aside their biases and pick who they really think will win.

Experts and analysts are under p to give opinions about everythin even when they're not that sure.

But prediction markets allow users to assign dollar values to their confidence levels, resulting in more accurate forec - In this formulation, insider trading is good actually because it means that people with the very best information have been incentivized to join the game.

Polymarket's 28-year-old CEO sai "What's cool about Polymarket is that it creates this financial incentive for peo and divulge the information to the market."

But even if you buy that argumen and even if you believe that prediction markets are as accurate as the hype claims, which is debatable, there's an even more fundamental that rarely gets talked about.

Who's paying for all this?

- In traditional stock markets, if a bunch of investors buy shares in a company and the company innovates and gr creating jobs and products that people like, everyone wins.

It's not a zero-sum game.

But prediction markets are more like poker, where you play directly against the other players.

In order for one player to win, another player has to lose.

- This brings us back to the Jes If I win $40 by betting that Jesus won't return by the end of the year, that money is coming fro someone who bet that he would.

- But who are these people?

I mean, even if you have a deep religious conviction that the end times are upon us, your winnings won't get raptured up with you.

It just doesn't make any sense.

- Some of it may be just specula Some traders buy yes positions not because they think the event will happen, but because they think the odds will go up enough for them to sell and make a prof If you got in when the odds were you quadrupled your money.

- Although that kind o violates the ostensible reason that prediction markets exist: to make accurate predictions.

- Whether it's a speculator or a true believer, come January 1st, 2027, someone will be left holding the You may not feel bad for that pe but they are a necessary part of the system.

The losers are paying for the wh And in order to keep the party g we need the losers to keep losin and this is where the catch-22 c - Think about it like poker.

If you invite a professional pok to your casual Thursday night ga it might be a fun novelty at fir But if they show up every week and consistently take everyone else's money, your regular players will eventually get frustrated and quit the game.

- The same dilemma applies to prediction markets.

If you want the smartest people with the best information to join the game, there has to be enough money on to make it worthwhile.

In other words, you need a lot of losers.

(person grunts) But if those losers suspect that they're playing against people with inside infor they'll realize they're outmatched and cash out.

- Even if there were a way to eliminate insider trading, it doesn't really solve the prob The big winners in prediction markets take it very, very seriously.

Many are experts in their field or are professional statistician A casual trader doesn't stand a chance against these types.

And yet the pros need the amateurs to keep playing or there won't be enough chips i - Some say that this paradox mea that prediction markets are doomed to fail, or at least have a limit on thei But there is a solution: adverti Just as FanDuel and DraftKings p their target demographic, young men, with commercials, there is already a wide ecosystem of blogs, podcasts, live streams, and subreddits dedicated to keeping casual better optimistic about their chances and enticing new players t replace the ones who've wised up or ran out of money, much of which is coincidentally produced by pro traders with a distinct financial intere in swelling the ranks of the noo - Much like with crypto, NFTs, and meme stocks, you could look at all this as just an online community bonded by their enthusiasm for a new financial instrument or a sophisticated loser creatio Diamond hands for thee, rug pull - This is not to say that amateurs can't do well in prediction markets.

Maybe there are some of you watc who've made some successful bets But societies don't normally prosper from zero-sum games.

Successful markets are places where individuals can make money while contributing to overall economic growth.

But the only product of prediction markets, other than a transfer of wealth from amateurs to insiders, is supposedly the creation of more accurate forecasts.

- While there are some examples of prediction market forecasts being used internally by corporations to reduce waste, there's little evidence of practicable widespread social And some studies have actually questioned their accuracy.

After all, in each of th previously mentioned incidents, the inside traders were only able to score a big payday because the prevailing forecast was so wrong.

- Maybe the US government doesn't technically se prediction markets as gambling, but it's smart for individuals to look at it that way, which is to say, if you're gonna do it, do it in moderation with money you can afford to lose.

- After all, there's a saying in that if you look around the tabl and can't tell who the sucker is the sucker is you.

- [Both] And that's our two cent