Trade rumors are not new or unique to the NBA. In fact, the MLB trade deadline is over 100 years old. What is new is online betting markets that allow gamblers to bet on whether those trade rumors are true, and players who can start those rumors, all while taking an ownership stake in the online gambling platform.
This past January, days before the NBA’s Feb. 5 trade deadline, ESPN reported that Milwaukee Bucks power forward Giannis Antetokounmpo, a two-time NBA MVP of the year, was considering leaving Milwaukee for either the Golden State Warriors, Miami Heat, Minnesota Timberwolves, or New York Knicks. The Bucks did win an NBA title in 2021, but have a losing record this season. Antetokounmpo is 31 years old and at the end of his contract, making his long-term future with the Bucks uncertain.
Shortly after the report went live, the prediction market platform Kalshi began posting on the social media platform X, promoting contracts on Kalshi related to Antetokounmpo’s possible trade out of Milwaukee. An estimated $23 million was wagered on whether or not the former MVP would stay. Then on Feb. 6, the day after the deadline, Antetokounmpo posted on X, “Everyone is online. The internet is full of opinions. I decided it was time to make some of my own. Today, I’m joining Kalshi as a shareholder. We all on Kalshi now.”
Kalshi quickly followed up with a statement assuring everyone that “Antetokounmpo will be forbidden from trading on markets related to the NBA.” But what about reporters? Or family? Or friends? Whether or not Antetokounmpo planted the initial ESPN rumor or not, he didn’t deny it. Instead, he let Kalshi promote the rumor and profit from it. All while he knew the report was completely false. How many people did he share this knowledge with?
The creation of fake sports trade rumors is not the extent of prediction market fakery. In November of just last year, Kalshi rival Polymarket had a contract on whether the Ukrainian town of Myrnohrad would fall to Russian forces on a certain day. If the town fell, some gamblers stood to turn a 33,000% profit. And despite Russia making no real progress in taking the town, Polymarket paid out on the bet because the map it used to keep track of the war, a map maintained by the Washington-based think tank Institute for the Study of War, showed Russian soldiers in control of the territory.
The next day, after the contract had cleared, ISW quietly restored the map, giving control of Myrnohrad back to Ukraine. ISW then released the following statement: “It has come to ISW’s attention that an unauthorized and unapproved edit to the interactive map of Russia’s invasion of Ukraine was made on the night of November 15-16 EST. The unauthorized edit was removed before the day’s normal workflow began on November 16 and did not affect ISW mapping on that or any subsequent day.” The name of an ISW staffer tasked with updating the maps was removed from ISW’s website the day after that. As of publication, Myrnohrad is still in Ukrainian hands, no thanks to Polymarket.
“The long-term vision is to financialize everything and create a tradable asset out of any difference in opinion,” Kalshi’s founder, Tarek Mansour, has said. “They do a very good job of surfacing information and distilling truth to people… They are the quintessential truth machines.
Truth machines? Really?
CONN CARROLL: AGAINST THE VICE ECONOMY
Prediction markets are just the latest and possibly most destructive example of the financialization of the U.S. economy. Instead of actually investing in factories that build things, Wall Street now makes trillions basically gambling on which direction interest rates, currency values, and commodity prices might go.
In this sense, Kalshi is democratizing the financialization of everything. Problem is: Unlike Wall Street, when some 25-year-old in Kansas goes bankrupt gambling on the price of Pokemon cards, the federal government won’t bail him out.
