The Closing Bell: How Big Was Kalshi's Second Attempt At Parlays?
Roundup: Michigan regulator sends warning to sportsbooks on prediction markets; Nevada gets win in case against Crypto.com, which could impact other court cases.
Thursday Night Football represented Kalshi’s second attempt at offering same-game parlays. So how did that go?
The amount of activity on parlays was still relatively small, at about $650,000 in trading volume. (There was $122 million total traded at Kalshi on Thursday.) The actual retail activity in that number is likely relatively small by comparison, if we’re to understand large market makers as taking the other side of parlays in most cases.
For instance, if I were to place a parlay for $1 to win $200: 1. that’s generally not going to be a retail bettor on the other side. 2. that’s a lot of “trading volume” but relatively little “handle” through a sports betting lens.
It’s still early days for the product, and it will scale. It will be interesting to see what Sunday’s NFL volume looks like.
Also of note: Kalshi rolled out multi-game parlays on Friday for NFL games. Here’s an example of what it looks like:
On the trading volume front, here’s more from Sportico: “During the four weeks between Sept. 1 and Sept. 28—encompassing the first month of the NFL season—there was $1.13 billion in trading volume on Kalshi’s NFL contracts, accounting for roughly 42% of volume during that span. College football wasn’t far behind at $811 million (30%). Sports overall accounted for around 90% of trading volume. This followed a trend in place for months on a platform that only started posting sports bets in January, having previously only done wagers on topics such as election results and weather patterns. Sports reached 91% of volume during the first two weeks of March Madness earlier this year. Even during the period between the college basketball finals in April and the beginning of the NFL season in early September, roughly 75% of volume was on sports events.”
Click through for a cool chart.
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Prediction markets roundup
Everything I wrote this week. If you read it all, scroll down and keep reading:
The Closing Line:
The Event Horizon:
Michigan Regulator Sends Warning To Sportsbooks On Prediction Markets (The Closing Line): The Michigan Gaming Control Board sent a memo to sports betting operators and others in the state warning them that their licenses could be in danger if they get into prediction markets. The memo from Henry Williams, the MGCB’s executive director, also seems to imply that offering sports event contracts in other jurisdictions could be a problem for licensees. Conduct the MGCB would consider includes “Directly or indirectly operating…sporting event contracts in any jurisdiction other than Michigan in which a regulatory body, law enforcement agency, or other governmental authority has expressly objected to or acted in any way to prevent or cease the offering of sporting event contracts in such jurisdiction.” It’s the third state to send similar correspondence, to The Closing Line’s knowledge; Arizona and Ohio are the others.
Nevada gets win in a non-Kalshi case: A bit of interesting news from the legal front. A federal judge in Nevada has denied Crypto.com’s motion for a preliminary injunction in its lawsuit to stop the state’s enforcement against allegedly offering sports betting without a license. That stands in contrast to an earlier ruling in Kalshi v. Nevada where a preliminary injunction was granted. The same judge is on both cases.
it gets even more interesting after we learn that the rationale for not granting the injunction: The judge in the case apparently believes that “sports event contracts do not qualify as ‘swaps.’” (H/t attorney Dan Wallach.) This concept is central to Kalshi’s arguments in other courts. If that front breaks down, Kalshi could be running into trouble. We’re still waiting for a written opinion to learn more and the potential repercussions before we read much into it. But it’s perhaps a pivotal moment for the legal battle over the legality of sports betting via prediction markets.
Report: Polymarket In Middle Of YouTuber Scandal (InGame): “With Polymarket set to open up shop in the United States at literally any moment, a story bubbling up about market manipulation is probably not the first thing CEO Shayne Coplan and company were hoping to read about. But when you combine a YouTuber, a fasting challenge, Saudi Arabian authorities, prison, and a surmised death, well, sometimes things don’t work out exactly as planned. According to Cryptopolitan.com, British YouTuber Lord Miles set out on a 40-day water fast in the middle of a Saudi Arabian desert. It wasn’t long before Polymarket — as well as Kalshi — had markets up on this challenge, simply asking if ‘Lord Miles completes 40-day water fast in the desert.’ From there, things were decidedly not simple.”
Crypto regulator Mike Selig emerges as lead contender to chair CFTC (Politico Pro, paywall): “A top official on the Securities and Exchange Commission’s cryptocurrency task force is emerging as the leading candidate to chair the Commodity Futures Trading Commission, according to two people familiar with the discussions. Mike Selig, chief counsel of the SEC’s task force, has begun to pull away from other contenders for CFTC chair, said the people, who were granted anonymity to talk about the private deliberations.”
What happens next in the saga of the next CFTC chair has a chance to be a fascinating part of the story of prediction markets. When Quintenz originally had his hearing in the Senate Agriculture Committee in June, he faced some questioning about PMs. But it was far from a critical mass of concern, and he was mostly able to skirt the issue.
But by the time a new CFTC pick goes in front of Senate Ag, things will have changed. A lot. Then, Kalshi was still dipping its toes in the water. When Selig or someone else faces questions, we’ll likely have Polymarket also live with sports betting, and Kalshi will have grown into a sizable sports betting exchange. Will the nominee have to face real questions about where prediction markets and sports betting is headed? That seems more likely now than it did back in June.
Robinhood CEO Vlad Tenev tweets about ‘gambling’: “Prediction markets are often dismissed as ‘gambling’ — just as cars were once dismissed as ‘horseless carriages.’ Like any new innovation, they don’t fit neatly into any one category. We’re already seeing prediction markets disrupt sportsbooks, reshape how news is reported/consumed, and give traders a native tool to price expectations. The shift is underway.”
Money Stuff | Parlay the Predictions (Bloomberg newsletter): This is just a great piece of prose about prediction markets. This goes out as a newsletter that’s free via Bloomberg… definitely worth a free subscription from where I sit. I’ll give you the kicker first which is an amazing turn of phrase: “We are one step closer to democratizing finance with the emerging asset class of same-game football parlays.” Some of the piece:
“There is something conceptually a bit tricky about offering parlays on prediction markets. The conceit of a “sports prediction market” is that, unlike traditional sportsbooks, it is just a neutral marketplace where investors/gamblers can trade with each other. Kalshi is not on the other side of your bets: If you bet that the Bills will win, you are betting against some other person who thinks the Patriots will win. But this is a hard conceit to maintain when your bet is a custom multileg parlay. If you want to bet on some precise combination of eight outcomes occurring, with a low probability of winning but a huge payout if you do win, what are the chances that some other retail gambler wants the other side of that bet? You’re doing this for fun; you want a lottery ticket. It’s no fun to sell lottery tickets, though doing it in size is lucrative. Buying lottery tickets is a popular hobby; selling lottery tickets is a profession.”
Anyway, subscribe to the newsletter and read the whole thing…it’s just a good read whenever it comes to my inbox.
Kalshi is now letting you bet on the Pro Padel League:
