To give you some idea of the culture shock I was experiencing at PREDICT: The Prediction Markets Conference at the New York Marriott Marquis Tuesday, I present to you this snippet of overheard conversation between two men wearing suits (while I was in Old Navy jeans and a 15-year-old Banana Republic untucked button-down):
MAN IN SUIT 1: Did you ever hear of Barry Sanders?
MAN IN SUIT 2: No.
MAN IN SUIT 1: (Describes Barry Sanders while I steady myself from the wooziness, quite possibly vertigo, that goes along with hearing a grown adult man ask if they’ve heard of Barry Sanders, and the other man responding ‘no.’)
OK, fine, woozy/vertigo might be a little much, but how in the world was I at a prediction markets conference and there was a guy there who had never heard of Barry Sanders? I mean, these are prediction markets. You know, where people — ahem — trade on sports. Where, just the day before, according to Aldrin Research, nearly 75% of all volume in prediction markets focused on sports and combos. It’s where the big fight is, where the U.S. Supreme Court might have to rule, where billions upon billions (upon billions upon billions) are at stake.
And this guy never heard of Barry Sanders?
And then it hit me.
I glanced at the titles of some of the panels, things like From Hypothetical to Actual: Institutional Use Cases for Prediction Markets and Where the Smart Money Is Moving: Investing in the Prediction Markets Ecosystem and Wall Street Meets Prediction Markets: The Next Frontier for Risk Management, and I looked around and saw …
Not just men in suits, but an obscene amount of men in those Patagonia (or whatever is now fancier/more Wall Street than Patagonia) vests …
And then I sat in on one of these panels and heard someone say from the stage …
“Most everyone here is in capital markets,” and …
And I felt like the punchline in the old Rodney Dangerfield joke: I went to a fight the other night and a hockey game broke out.
Our bubble
If you’re reading this, I am pretty confident you think of prediction markets as a way to bet on sports. That’s the bubble we live in on these virtual pages.
And while I intellectually know there is a whole ‘nuther use case (well, plural) for prediction markets, the simple fact is sports and combos have taken up all the oxygen in the room.
But not in this hotel room.
In this room, to my eyes and ears — and to the eyes and ears of the other sports-centric folks, like me, who wandered into the very nice conference in a very nice building on a very nice autumn day in New York — it was almost like sports was, at most, an afterthought.
Just a quick look around the perimeter of the lobby, where businesses set up their tables, gave some idea as to the mindset of the thousand or so people wandering around. Stop me when you’ve heard of one of these companies: Adaptive, Kodex, Cboe, Manatt, Dechert, Phillip Capital …
I don’t know. Maybe you’ve heard of them. I haven’t. Doesn’t matter. I wasn’t wearing a Patagonia vest. Or a suit. I barely even own a suit.
Money money
Truth: I felt a little bit foolish wandering around the conference, as I didn’t know — or at least didn’t allow myself to be conscious of the fact — that prediction markets are very (very, very) quickly becoming part of the Wall Street machine.
At one panel — and I’m paraphrasing here — Iseult Conlin, the managing director, head of global markets strategy and solutions for Tradeweb Markets (another company I never heard of), mentioned that the financial world danced around crypto for years, not getting involved, waiting and waiting and waiting for regulatory guidance. The same thing is decidedly not happening with prediction markets.
Listening to other panels, and snippets of other conversations, it almost seems like this group of people — you know, the people that kinda-sorta run the world — don’t actually believe that prediction markets are gambling. To them, it’s just another lever to pull in the world of high finance.
That’s going to stick with me. Right now, sports is doing the bulk of the business, but the people gathered to talk about the future of prediction markets barely seemed interested in talking about sports.
I came in thinking about what prediction markets are. They seemed a lot more interested in what the sector could become.
To them, it’s an emerging market, or an alternative asset class, or a vehicle for unlocking institutional liquidity through capital-efficient, event-driven risk transfer … and there I am, in $18 jeans, wondering if that guy over there knows who Emmitt Smith is.
