Inside the Biggest M&A Deals You Need to Know (Kalshi, Polymarket, Papa John's, Daily Telegraph)

Hello and welcome back to the Market Maker podcast and the M&A segment of our two episodes per week. So M&A now, and we do an end-of-week global macro show. So make sure you do subscribe to the channel to get all the latest inside information. But here we are going to be talking about deals of the week, quick overview, breaking down a few of the biggest transactions in the past week across things like media, space, financials, food, and hiring and assessment. Interestingly, as a sector we don't talk about much. And then the deep dive and the main kind of part of this conversation is going to be around the event betting platforms aiming for what, around about $20 billion valuations. So we're going to unpack why Kao Shi and PolyMarket are being discussed. In this conversation, how their models work, what could determine whether the Qatari can become a true financial market instrument or just a controversial betting niche. Some really interesting parts and components to that, which also tie to a feature of our previous episode, which is the hedge fund community. So deals of the week, quick run through. Number one, Axel Springer has agreed to buy the UK's Daily Telegraph. For $770 million, that's dollars, not pounds. The German publisher outbid an existing offer from the Daily Mail owner DMGT in a surprise twist to the sale process, finally securing the UK media asset, which it has pursued for years. And I know that Steven, my former co-host, spoke about this at least 2 to 3 times over the course of the past 2 years. So, Yeah. Any thoughts on that one now getting over the line?

Well, it's been a while. Yeah. I mean, it's actually quite an interesting backstory. I mean, the Daily Telegraph is, if you live in the UK, then it's, you know, you'll know it well as one of the kind of key broadsheets. But actually founded back in 1855 and by and large family run until the mid-1980s, which was the kind of the leveraged buyout thing came into existence and it was the big kind of private equity sort of birth and explosion. And so they got bought by this guy called Conrad Black, Canadian guy. Anyway, he held it till 2004 and then the Barclay brothers famously swooped in and bought it in 2004. This is interesting, right? Because they bought it for £665 million. In 2004, hugely levered. I mean, you know, big kind of LBO, but actually because of FX moves, like £665 million was actually $1.2 billion back then. Yeah, we're talking about a deal here, $770 million. So, you know, in the last 20 years, the value of this asset has, I don't know what the maths is there, but it's dropped like 40%. right? A lot of that's an FX swing because back in 2004 it was almost like 2:1, you know, cable sterling versus the dollar. But obviously it's now not, it's now whatever it is, 1.35 or whatever. But anyway, the Barclay brothers held it and then until they defaulted. So they levered it up, right? And then they defaulted on their debt. So actually Lloyd's Bank who kind of financed the debt, basically took ownership of this asset through the kind of default process because basically they had £1.1 billion worth. So look, they bought it for £665 million. By the time they defaulted, the debt on that business was £1.1 billion. Anyway, couldn't afford it, so defaulted to Lloyds Bank. And then ever since, that was in 2023, and ever since it's kind of been chopping and changing and here we are now with perhaps Axel Springer coming in. But at one point I think it was the Abu Dhabi Sovereign Wealth Fund were interested, that got blocked by the government 'cause they didn't want a foreign government owning that key media asset. Anyway, so there's an interesting backstory if you want to go and have a read about it. But yeah, this is the the latest in a long line, fairly volatile period for the newspaper.

And my understanding is then from a strategic point of view, the acquisition is to strengthen Axel Springer's English language media footprint. Obviously, if you're in the UK, you'll know, but if you're not, it gives them a prominent conservative-leaning British title, uh, and they're saying they want to expand further into the US. So the second story, Airbus, Leonardo, and Thales proposed space merger is facing pushback from local competitors. So those critics include the likes of OHB and Indra Space. They're arguing the deal could reduce competition in the European satellite market and weaken consortium dynamics for the EU and ESA contracts. Just as obviously a lot of that regional demand is rising. Interestingly then, in terms of the, uh, the argument on the other side, they're saying that the merger is aimed at building a stronger European player to compete with, guess who?

Elon.

Elon and SpaceX, obviously. Uh, but obviously those opposition signals are potentially difficult. Then antitrust path is gonna be, uh, ahead of this going through decision. Given the complexity, then it's probably not likely to come until 2027.

They need to push this through. I'm sorry, this is like regulation where you're like cutting off your nose to spite your face. I mean, look, Europe's nowhere in this race compared to SpaceX and here's 3 European companies trying to go, right, let's at least kind of merge and have a bigger platform to at least get somewhere close to SpaceX. And, and, and if the regulator blocks it, of course, I mean, it's likely that these lot just flounder as individuals 'cause they can't compete. They need to get this through.

It's the EU. Come on, it's the EU, Piers. What are you, what, I don't know what you're expecting here.

Well, yeah.

Okay, next one is Monty Pasky has agreed terms of its merger with Mediabanker. So Paski, which already owns just over 86% of Mediabanker after last year's takeover, will offer 2.45% of its own shares for each remaining Mediabanker share as part of a deal expected to lead to Mediabanker's delisting by the end of 2026. A couple of the banks on the books here working on this deal: Jefferies, JP Morgan, UBS, to name a few. Moving on, your favorite Papa John's. I was, you know, I just, I just wrote a post for our daily newsletter. Maybe this is one for next week about Dave's Hot Chicken. And they're spinning off their European UK franchises, but I was like, oh, I didn't have enough time to squeeze that one in. So we'll save that one, but we'll go to Papa John's instead of Dave's Hot Chicken, maybe. And They've received a take-private bid. So yeah, tell me about this one.

Well, it's just interesting because I think it was back in 2025, they had a $2.1 billion bid on the table, which they were like going to accept. This is valuing them at $64 a share. So this bid here from Earth Capital Management, this is $47 billion. Right? Sorry, $47 compared to the $64 Apollo bid that they had back then. But like just as we're coming into the final quarter of 2025, basically Apollo pulled out. So the bidder kind of pulled out and basically what happened was there was a bit of a macro trend where, you know, that that kind of quick service restaurant market started to, generally speaking, come under a bit of pressure. Revenues out of the likes of McDonald's, for example, were looking a little weaker, and same with Papa John's here. But then also they were about to deliver their quarterly earnings report. Just before they did, Apollo pulled out. So we assume Apollo had some eyeballs on that report in advance, and so they pulled out. That quarterly earnings was then revealed that they were just in a little bit of trouble. So that was the end of 2025. Well, it's probably 6 months ago, let's just say. So here we are now with another kind of bid coming in, but yeah, at a much, much, much lower valuation.

Well, I'll hold your feet to the fire here before we move on, and you cannot give me the whole answer you gave me last time. Papa John's or Domino's, you've got to pick one. None of this fancy business in Clapham on, what is it, wherever you go.

Yeah.

None of that shenanigans.

The Bread Store, Northcote Road.

No.

Uh, yeah. We deal with—

down with the mere mortals here.

No, no. I want sourdough, you know, base with fat crusts.

That's what I—

if I had to—

I'm gonna, I'm gonna call it, I'm gonna call out before you give it to me. I'm gonna call out the people watching to leave a comment. You got to pick. Is it Papa John's or Domino's?

It's got to be Papa.

Yeah. Yeah. I'm all over Papa John's. Anyway, let's move on and talk about the final one in our list, which is a London-based education technology firm, a simulation-driven finance training platform, which has secured its first external investment from NorthCo Equity. And the capital, the press was saying, is to use to fuel US expansion and platform development, leveraging the data-led talent identification to help blue-chip clients like the world's most profitable hedge fund in history, Citadel, or some of the biggest bulge bracket sell-side institutions like Morgan Stanley or JP Morgan recruit and identify high-performing talent.

Who are these guys? This sounds pretty good, right? Who's this?

It's Amplify Me, baby. Yeah, there's probably people who listen to this podcast, I'm sure, that go, what exactly do Ant and Piers do? I actually have a job. Tell me a bit about your day job, Piers, and what we actually do.

Well, you've just nailed it. Um, you know, we are the world's leading provider of simulation technology for like talent identification, on-the-job training for, you know, the big financial institutions. So yeah, we work with all the big banks and the hedge funds, um, as well as then a whole bunch of universities. And the most important, the user of our simulations are the students. The young, eager, ambitious youngsters who are looking to try and break into the finance industry. Yeah, we're about trying to help them, trying to demystify finance, trying to democratize opportunities in finance by, you know, I would say disrupt how recruitment takes place, you know, at scale. And so this is hiring on ability, or at least potential ability in the role. Identified through our simulations rather than hiring, you know, through this inefficient, biased, you know, way of CVs, you know, online tests, uh, and then interviews. So yeah, we're looking to try and level the playing field. Anybody who's got an ability in the role, well, let's get you in that seat. So yeah, really exciting. We've done a deal and yeah, we're partnering up with Northcott. I've said Northcott already once in this podcast. Northcott Road. It's where I get my pizza. Well, these guys are Northcott Equity. Yeah, really excited. Closed the deal a couple of weeks ago, kind of went public, public news this week, and really, really pumped and ready for the next phase.

And for anyone interested, look, we don't shout ourselves out that much, but we've just launched a new website. Convenient timing here. So If you are listening to this and you're interested in what Piers has just explained, just check out amplifyme.com. All right, well look, let's jump in and let's talk about then the deep dive, which has really come about because of, well, there's a few different things. I think initially it was Kalshi and Polymarket said to be discussing fundraising rounds, which could value each platform at roughly $20 billion. And the context there is that whenever they have these raising rounds, you get an idea of then the markers of what the valuation print is at that moment in time. And Kalshi was last valued at $11 billion, bum, bum, bum, a few months ago. And Piers, please tell me AmplifyMe has gone from $11 to $20 billion in a few months, but that's definitely not quite the case. And Polymarket was last valued at $9 billion. In October. And I actually, I was quite interested. I didn't know it was Intercontinental Exchange that agreed to invest up to $2 billion in them. So yeah, tell me a little bit about this new marketplace, because I know there's a lot of the younger guys even in our firm who are talking about poly markets and stuff like that, and they seem pretty excited by it. So first off, what is it?

Well, there's a, as you say, there's a lot of hype and you know, there's a real sort of momentum, particularly amongst the younger community around this new thing. And I think this is why you're getting those kind of valuation step-ups. And look, we don't know if they're going to raise yet, and $20 billion is a kind of a rough kind of finger in the air idea of what they might be worth. But yeah, it's a lot like Calcium's 11 billion. This is the problem with private markets. They're not publicly listed stocks, right? So that you can't go online, what's the share price? Okay, that's the valuation today. So you've gotta wait for these capital raise events to kind of get another mark to market with regards to valuation. But look, there's a lot of hype and basically these, I mean, they are essentially, I mean, they're trade. I mean, do I use the word trade? They're They're exchanges for real-world outcomes. So basically users buy or sell, or buy and sell if you want, binary contracts. So it's usually framed around a yes or no question with then prices moving based on how likely the market believes an event is going to happen, right? And so for example, You know, if the market thinks that a certain outcome has an 80% chance of happening, then you can buy the yes contract at 80 cents per contract, right? You can buy the no contract at 20 cents. Okay. And then of course it moves. These things are moving until you get to the actual moment in time where the event happens, and then you know whether it's a yes or a no. And of course, if it is yes, we'll find the yes contract moves from 80 cents to the full $1 and it pays out the $1, right? If the, if, if, and the no contract will go to zero. But the, the thing about this is you can go in and out of the market whenever you want, right? It's not like you place a bet and then fine, let's see if it happens or not. And I either win or lose. I can, I can come outta the market before the event, lay off my bet and, and kind of cash in before the event even occurs, right? So these are the prediction markets and Yeah, I mean, they look much closer to exchanges, I'd say, than kind of traditional sportsbooks. Basically, a user funds an account with their cash, they place trades, they can exit positions, as I said, you know, before events even resolve. You can even do things like placing limit orders, and that's where you're just choosing the price that you would like to buy or sell at. And so, I mean, as a trader, you know, I would place limit orders, you know, all day long on the exchange order book, right? So it does feel incredibly trader-y. But the cool thing is you can basically bet on anything. I mean, this is created like sports, politics, economics, pop culture, climate, technology. Actually, my favorite one that I've heard of so far, and this is actually live right now if you want to go into Polymarket. Currently there's a market for will Jesus Christ return before 2027?

What's that? What's it trading at at the moment?

It's trading at 4%.

Before 2027. Oh, I had it priced for '29.

It's 4% at the moment. 4%, yes. 96%. No, but you joke, right? Apparently there's a big—

There's some sort of historical text somewhere on some tombstone that if you actually do the math says that he's going to come back in '27. Is that right? Something like that.

Well, there's two things. $1.4 million worth of bets have been placed on this. Secondly, so you've got the market, will Jesus Christ return before 2027? There's now also a market for whether that market's odds will cross 5%. There's a secondary market that's betting on whether the primary market will go above 5% or not.

So surely, surely you could just manipulate that market then, push the price up and then just get it on the other market.

You are already touching on probably the biggest sort of criticism around all of these prediction markets. It's kind of ripe for manipulation. So there's apparently a bit of a, one, a whale as we say, which is like a big trader with big size who's got a big position. Anthony Cheung, who's bought a load of contracts at 4%. And then yeah, it definitely would not surprise me if, oops, bump, you know, he pushes or she pushes it up above 5%, even briefly, because they've got a trade on in the secondary market saying that it will go above 5% and then probably take it all off for some kind of profit. So look, this is like the Wild West. It's a brand new thing. We'll talk about regulation in a minute, but yeah, one of the key risks to this, the longevity of this stuff is very, very, very much around, you know, is there manipulation going on? Is there insider trading going on?

So I'm assuming that the depth of the Jesus Christ market is fairly illiquid, but what you need liquidity in order to trade efficiently in terms of on the execution. So how is this market, what's the market size here en masse and how is it evolving? I'm assuming that because of all the fanfare, it's growing almost exponentially, hence the sky-high valuations. Would that be right?

Yeah. I mean, this is it. You are getting huge volumes. I mean, I think like from a growth point of view, I think the stat is it's grown roughly 130-fold. Basically, they had about a fat $100 million worth of volume per month in early 2024, right? So just 2 years ago, $100 million a month. That's now more than $13 billion a month. So that, I mean, the growth rate is just out outrageous. Hence why you're getting these quite big valuation shifts. Hang on, $11 billion in December and now we're talking $20 billion. It's because of the kind of growth rate. So yeah, it is kind of grabbing attention. Look, and it's getting a lot of, because I guess it's like pop culture and it's getting a lot of action on social media. Of course, you know, you can bet on stuff. I think there was one about where is Jeff Bezos during the Super Bowl, I think was one of the ones that suddenly caught fire.

Don't worry, we'll get to that one. That's a funny one. I've got some notes on that when we start to talk about some of the potential speed bumps that could well come into play. But here at the very beginning of the conversation, you were talking about the fact that the probabilities are updating almost live in real time. So one would imagine then that there's a lot of the intersection of maths and technology coming together here in order to facilitate that type of live pricing mechanism. So let's just take a step back for a second. I mean, how old are these companies? Who founded them? Yeah, because this sounds a little— what was it, the guy who Who blew up, who was Exchange Street with the whole crypto a few years ago. He's in prison.

Yes.

Your man, Sam Bankman-Fried. Yeah. So he, this sounds a little bit like, a little bit like him. So who are these other people? Are they similar or different?

Well, first, how old are these businesses? Not very old is the answer. So the big two of these Kalshi, as we've already mentioned. So Kalshi and Polymarket, right? So Kalshi was founded just in 2018. And basically you got these two dudes, or one guy and one girl. So Tariq Mansoor, well, hang on. So both of them were at MIT together. That's how they knew each other. They graduated and went into the financial industry. Okay. So you've got the kind of face of the business, this guy called Tariq Mansoor, who was firstly Goldman Sachs. Then he worked for Citadel Securities. And look, certainly on the Citadel Securities side, you know, they are a market maker, right? They're an electronic market maker using incredibly sophisticated algorithms to automate and make way more efficient the process of market making. So he was brought up on this first Goldman's, then Citadel Securities track. Before then leaving the company, we had, and then starting Taushee with Luana Lara, who's a Brazilian. She was at MIT. She went to Bridgewater Associates first, massive hedge fund, of course, then Citadel. So not Citadel Securities. They are, although both owned by Ken Griffin, they are on two sides of the fence. So Bridgewater and Citadel are buy-side hedge funds, whereas Goldman Sachs and Citadel Securities are sell-side institutions. So Tarek's from the sell-side, Luana here from the buy-side, both MIT grads came together and said, right, we've got an idea, let's go for it. So their idea was to create a cleaner way to hedge against real-world risks. So they were thinking stuff like inflation, like kind of financial situation or, you know, otherwise, you know, any kind of event outcome basically. And so they wanted to create this without using complex financial derivatives. And really, I guess, kind of, again, just sort of making available to the world, the average person on the street, the ability to hedge. Whereas up until this point, if you wanted to hedge something, well, firstly, most people got no idea what hedging is, right? And secondly, you've got to use highly complex, very risky kind of derivative products, which actually you're not allowed to trade unless you are kind of qualified to do so. And you'd have to go and open an account at a very large financial institution in order to do so. You know, basically most of the planet's locked out of that derivative hedging market. This is about bringing it to the masses. This is their idea. So look, they launched in 2018. Polymarket, actually it was a guy basically out of his bedroom during COVID lockdown. Amazing story. A guy called Shane Copeland. Talk about an interesting character because he dropped out. He was at NYU, New York University, and he dropped out, didn't finish college. You know, just wasn't for him. You know, wasn't someone where academic you know, learning, really, he just didn't get it. And so he kind of stepped out and like during COVID was messing about in his bedroom and basically built and created Polymarket. And here we are, you know, fast forward to, well, end of 2025, he took on some funding. So in October '25, he did a funding round and actually because of that, the status, he became the world's youngest self-made billionaire. And that was following a $2 billion funding round from Intercontinental Exchange, ICE, which is, you know, one of the big kind of global, you know, very, very large, you know, very old, you know, global exchange. So it's interesting that, you know, you're getting big action now coming in from the big incumbent exchanges because obviously they're looking at these upstarts and thinking, hang on a sec. They are rolling in and this is a big risk. This is a threat to our market share. So let's go and grab a slice of it now and grab hold of the coattails, if you like. But that valued Polymarket at $9 billion in October of 2025.

So my read on this then is that these are highly intelligent, capable people, and they probably understand deeply those complex financial products.

Yeah.

And then to try and to, so you've gotta understand that as the foundation to then build the more improved, optimized, or different subject matter, like we're saying, from the traditional ways of doing it. So I would imagine the hedge funds are cognizant of this type of marketplace and like with any new products coming to market, I guess there's a sense of price discovery, which can offer some arbitrage opportunity, particularly if it's retail people trading this stuff. So I did see a headline in the FT, which kind of dipped its toe into this because it feels like, look, these guys are making a ton of money super quickly and that's going to set off, you know, that's like a drop of blood in the water and then you the hedge funds are not going to let that go aside if there's some money to be swept up fairly easily, if we've already got the underlying know-how and technology and capability, both monetarily and in intellectual resource.

Yeah.

So what are these hedge funds and these high-frequency trading firms and what are their strategies? How do they tackle this?

Well, let's use an example of one of the We've been talking about the crazy rise of the volumes through these platforms, these prediction markets. One of the most popular things that's come about is actually what are basically called ultra short-term cryptocurrency bets. And so what really grabbed the attention was basically there's contracts on Polymarket, for example, where you can bet whether the price of Bitcoin or other cryptocurrencies, and really only the main ones like Bitcoin and Ether and so on, and Solana. Basically you're betting whether or not Bitcoin will be higher or lower in 15 minutes' time. Okay.

Secondly, that was, that proves that's illegal in the UK though at the moment, isn't it? 'Cause they tried to do that. The normal mainstream brokers did that, didn't they? They were, I can't remember what, I don't know. 15 years ago.

Not sure. But you know, guess how much that's attracting in terms of daily trading volume?

A 15-minute, I don't know, but I'm sure it's an insanely large amount.

$70 million.

How much?

$70 million is the daily trading volume for the will Bitcoin be higher or lower in 15 minutes time? That it's so popular. Polymarket have now brought in a will Bitcoin be higher or lower in 5 minutes time. It's this ultra short-term cryptocurrency betting. Now this is, now bring in your arbitrage, right? Because look, Bitcoin on the major exchanges like Binance, for example, well, in fact, you're going to get your hedge funds going, well, hang on, there's inefficiency here because What's the difference? You're obviously tracking Bitcoin on Binance, for example, and then it's like, okay, we're coming towards the 5-minute mark. Is it higher? Is it lower? Basically, there's a way of arbitraging the inefficiency between the prediction betting market prices and the actual real underlying prices. There's a slight inefficiency and anywhere where there's an inefficiency, in a highly correlated— if you take two things, right, that are highly, highly, highly correlated, Bitcoin, the actual Bitcoin, and their Bitcoin price on Polymarket, obviously it's the same thing, right? In the underlying, it's the same thing. The actual asset you are trading is not. So the Polymarket, that, that's a, that's a derivative of the underlying Bitcoin, right? But it's tracking the real price. So if there's any discrepancy, and I'm talking like milliseconds here, if there's a slight millisecond difference between how the price of Bitcoin moves for real underlying versus the Polymarket updating, well then this is where like high-frequency arb trading, you know, operations, this is where they live. They hunt for highly correlated products that have slippage where momentarily there's a gap where they're not, where that correlation slips. And so they're in, they're buying the lower priced one and they're selling the higher priced one. And until that inefficiency in the correlation converges back to where it should be, and then they take the trades off for a profit. So yeah, there's a lot of arbing going on here with the hedge fund community. You know, it's a market. You know, it's a financial product, so let's get involved and exploit it, basically.

Yeah. Exploitation and market manipulation, two words that come to mind. Let's go to the latter of those because, yeah, let's talk about some of the hurdles to the realization of some of these valuations that have been hitting the headlines.

Yeah.

And there was one, so the manipulation risk point, there was an anonymous Polymarket user named Alpha Raccoon. This kind of go, you could, I get a sense of the kind of community of while this is such a wild like hype around it in terms of it feels like the GameStop era.

Yeah, I was going to say, absolutely.

Alpha Raccoon reportedly won more than a million dollars by correctly predicting 22 of 23 outcomes for Google's Year in Search 2025 rankings. The improbability of that performance led to accusations then that the person who was trading it might well have been using material non-public information, i.e., works on search at Google and is just taking a bet themselves. So yeah, I mean this sort of stuff, particularly with these quite strange markets that could just come out of anywhere. Like two I saw where, which is another point where you said at the beginning, it's like yes, no scenarios.

Yeah.

But who defines what is yes, no? Some things can be very binary and some not like one was something. That was on Discord and the users on Discord were fighting and arguing for weeks over whether Ukrainian President Zelenskyy had worn a suit or not and what classified as a suit. And the argument was that he was wearing a black jacket and a shirt when he went to a NATO dinner. And so the argument was, well, that's obviously, he's wearing a suit. The others said, no, he's not wearing a suit that doesn't constitute a suit. And then the market ultimately resolved to no. And obviously all those people were super upset. And then another one I saw, which was only a few weeks ago, a mention market dedicated to Netflix and Netflix's earnings calls. So there's like these sub-markets and included an option to bet on someone saying Warner Bros. An executive did say Warner Brothers, but the market resolved to no because he didn't say bros, so brothers. So surely when there's no like definitive guardrails on what, what is a yes and no, it's going to cause massive issues with the user base. As it grows.

This is the problem. And then you're talking lawsuits and it starts to get a bit ugly. There was one around the timing of, well, you know, would there be an invasion? Would the US invade Venezuela? Okay. Yes or no. And obviously the US went in and nabbed Maduro and brought him out. Right. And then, but actually Polymarket said that that wasn't an invasion. And people are up in arms who would bet yes, it will happen. I think someone was going to win $400,000 or something. One trader had bet yes and in size and was going to get 400 grand, but Polymarket are like, no, there wasn't an invasion, you know, trigger lawsuit and so on. I think, you know, obviously there's a moral issue as well. Like you could bet, I mean, there's people bet, there was stuff like betting, you know, the timing of the first missile from the US into Iran. There's that kind of stuff, which is, just doesn't sit well or shouldn't really sit well with anyone, that type of situation. But then apparently someone, again, an anonymous trader made a load of money there, probably works within the US Defense Department and got the intel, right? So this kind of, I think this, this kind of nicely Segues us onto a really important issue around, you know, from the regulator's point of view. Because look, the regulator's stance right now is actually they're quite favorable towards this, you know, the prediction markets. And obviously, but the thing is it's exploding so quickly. And so there is an issue around market manipulation, around, you know, the general public essentially getting exploited and losing their money. As a result of people either manipulating the market, big players, I won't say hedge funds necessarily, but sophisticated operators in the market exploiting ignorant, inexperienced people. There's definitely that in action, but then it's the insider trading, right? And what the regulator is saying now, they're working with the Polymarkets of this world to basically say, look, it's your job It's your exchange, it's your market. It's your job to make sure that any of the products that you put up on your platform can't have an insider trading risk. And it's actually the platform's responsibility to make sure that that happens. And if they do not make sure that happens, then there are repercussions in terms of the regulator fining the platform for allowing it to happen. So they're trying to do it that way by Putting the onus on the platform provider to self-police and make sure there isn't any, you know, clear, obvious kind of manipulative kind of contracts being thrown up there.

So if you, if you were like the chief strategy officer of one of these, PolyMarket, let's say, then at the moment it feels like from a regulatory perspective, you're kind of sitting in this quite gray jurisdictional gap where there's, the way it works with this case is there's traditional sports betting, which in America is usually regulated on a state-by-state basis. While these prediction markets though, they're currently overseen by the CFTC as a federally regulated derivatives market that allows then Cauchy and Polymarket to argue that they should operate nationally without that very complicated patchwork of some of these state-led gambling laws, which obviously are quite different. So I guess what I'm saying is if you're thinking of like the PR around this as they try to realize their full value as companies in time is, as you mentioned, bringing into question things like pricing in geopolitical conflicts, social unrest, you can imagine in Minneapolis or something like that. So highly sensitive real-world outcomes. That's going to only set off more alarm bells. And then in combination with another thing I was reading is about, like any company trying to fill its boots of its valuation, it's about user adoption, particularly with a platform-led product like this. And they've had a rapid growth as we've discussed, but apparently there's some pretty extreme aggressive customer acquisition tactics going on. The kind of flooding of social media with ads. And particularly there's this kind of tactical approach of actively courting college fraternities and groups, which you can imagine, you can imagine them all there on their 5-minute markets having a whale of a time. But some of those questionable trades, to go back to what you briefly mentioned earlier, was tied to Jeff Bezos' whereabouts during the Super Bowl by members of his stepson's fraternity. So Polymarket reportedly gave a fraternity thousands of dollars in cash in exchange for signing up new users at the time. So you gotta think that that sort of behavior, that aggressive tactic for customer acquisition in combination with some of these more I guess spicy markets that could cause conflict is only going to get the regulator's backs up. So I guess at some point they're going to have to soften that. But the balance, I guess for them is, well, they need user growth. They need new markets, more markets, more trading.

Yes.

Shorter markets, more optionality, primary and then a secondary, third order markets off the main one. Like that's what you would do, right? To drive more revenues as a platform. So I guess maybe you could break it down then. What's ultimately or fundamentally the optimistic case here? 'Cause we, it feels like we're so early in this at the moment.

Yeah.

What's like the bull take and what's the bear pessimistic take on what's happening?

Okay. Positive lens. Look, this is like financializing everything, right? So creating a tradable asset. Basically out of any difference in opinion. Okay. It's also then a tool for hedging real-world uncertainty. So hedging risk is a really important, valuable lever for people to use and operate to kind of navigate through and deal with their risk. Right. You know, these, and I guess then maybe Finally, it's probably about these platforms could eventually produce probability data with real-world value, and that data can be super valuable for traders, analysts, you know, institutions. So you're hearing me use these words of professional operators in markets, like the pessimistic view. And one that, as you were talking, I've just kind of thought about a new pessimistic view. Basically, Isn't this like addiction? Isn't this feeding addict— you know, like, you know, cigarette, the whole cigarette industry. It feels a bit like the cigarette industry, like in the '50s and '60s in terms of customer acquisition. I don't know. Gambling is addictive. And ultimately, if you just let the whole population go free rein onto this thing, I think there's some really negative consequences that might come out of that. You know, this is not a world that the inexperienced should just pile into, you know, with their entire savings account. Ooh, is Bitcoin going to be lower in 5 minutes' time? Bosh. And then, oops, I've lost all my savings. So I think there's a lot of that. But then of course, like the other pessimistic side, lawsuits around, you know, did an outcome actually happen or not? Obviously legislative fights and the cost of that, there's the regulatory issues. One thing we haven't really mentioned is then the liquidity. Is there enough liquidity in these markets? Just meaning, is there enough volume on the yes or the no side of the contracts? Because if you've got, if there isn't much liquidity, well then these markets can suddenly kind of spike and surge and move aggressively. So you need what are called market makers who are liquidity providers, right? This is very reminiscent. There was a company called Football Index in the UK. We were actually in talks with them at one point, but they were trying to make a, as the name suggests, a tradable football index where you could trade players and the value of the players would be a function of You know, the usual stuff. Did they score? How many goals did they score? How many tackles did they make? How many goals did they let in? But also then there was a whole media angle. You know, how many followers have they got? How many posts have they made? How many times were they quoted in the press? All this stuff would go into the value of the player and you could buy or sell the player. Great idea, just it failed and it failed purely on the grounds of liquidity. There wasn't enough liquidity. They tried to remove the market makers and just let it become an order-driven system where it's just the individuals who want to buy and sell. They're the ones only operating in the order book, and there just wasn't enough volume. And all of a sudden the volatility just went off the scale and everyone lost all their money. And so liquidity is a really key thing here. Now these guys are in the US, there's obviously so much attention around them. Maybe for now they won't have liquidity issues because the volumes are just going exponentially. So maybe they'll make it from that perspective, but it's something to monitor. And then yeah, it's just about the other pessimistic side is, you know, should you really be betting money on geopolitical outcomes and events? I don't know. It feels a bit wrong to me.

So it feels like There's a lot of headwinds, but the vision of a new market infrastructure layer for what is fundamentally tradable probabilities would be absolutely like game-changing. But there's every obstacle in its way for that to materialize. I kind of feel like if this was a listed company right now, you'd be long in the short term. And then out, and then that's it. I feel like it's got a lot of legs to go yet. Yeah. Until such is life, you know, the cops and robbers, you know, the regulators are always 10 steps behind. And by the time they catch up to this, it's going to be a way bigger market, I feel, than what it is today. And then what happens there? I don't know. I find it tough to see this really hitting that vision in its different—

So from Polymarket's perspective and Kalshi's perspective, you've got a lot of competition, right? The big boys like Coinbase, you know, they're coming in now and doing their own kind of predictive market. Even the Nasdaq Exchange has submitted a request to the regulator to launch a prediction market themselves, right? So there's going to be a lot of competition coming now that these upstarts have kind of really made this, have grabbed the attention of the masses. So yeah, competition's on its way.

And there's one thing that brokers and exchanges are good at, you know, at the end of the day, what is their primary goal?

Volume.

It's volume, right? And so I can see why they're investing in this stuff, right? As we did with the last funding round with Polymarket. So Yeah, I guess in the end what you get is an integration and a consolidation where the exchanges probably then absorb this. Maybe that's a much more rational-minded endgame for this.

Absolutely. It's like Facebook buying Instagram. That's your ICE exchange buying Polymarket. You know? Yeah.

All right. Well, look, we'll wrap it up there. Do drop us, you know, some comments. I'm sure there's, I've never placed a trade yet on Polymarket, so I'm sure that our listeners have. And let us know, what are you betting on? What was your last bet that you put on or something you are interested in at the moment? I'd love to know. Honestly, I'm intrigued. Let me, let us know in the comments. But thanks as ever, Piers, and wishing everyone a good week ahead.

Thanks a lot.