Aapo Mutanen

Watching from afar this stuff is just wild. I have long held the belief that the prediction markets (lol even describing it as that) won't take off in the way people are expecting. Longer term that is. This market gives a glimpse into why. At Betfair we had the choice to offer pretty much any market we wanted. However, there were some basic provisos. 1. It couldn't generate questionable PR. 2. It couldn't be in poor taste. 3. We had to be able to offer the mkt and be able to settle the mkt in a way that was fair to both sides of the trade. Our market rules had to be watertight. There could be nothing ambiguous. Settlement sources had to be clear. 4. We wanted markets that people would want to bet on, users would provide liquidity in and that would attract other users etc. I.e. a functioning liquid market with parties on both sides of the bet. 5. We did not want markets where the outcome would be subject to inside information, within reason. What we see from Polymarket and Kalshi is interesting; 1. They crave the publicity of mkts that generate questionable PR. They adopt the notion that there is no such thing as bad PR. 2. They have had markets that involve things like wars. Markets involving foreign leaders like Venezuela. See number 1. No shame. Where do they draw the line? Betting on the death of someone? Any morals within the company? Public perception can change in a heartbeat. 3. They are getting themselves into a constant pickle with regards to how to offer some of these markets. They don't seem to care. It seems like they have no one to answer to. Just look at the farce with Cardi B this weekend. If it does cost them some money they aren't bothered. 4. We will come back to this point in a moment. 5. Who cares clearly. Points number 4 and 5 are interesting in the context of the original tweet. What is really clear is that huge numbers of markets are being offered where inside information is rampant. In a normal functioning exchange market very quickly they will cease to exist. The market makers/layers just say ********* to this. I am not just going to keep getting picked off like this. They also say I am not going to keep offering liquidity in markets that you clearly don't know how to or are able to run properly. I don't want to be guessing as to how they will settle a market. The difference with Polymarket and Kalshi is that these aren't normal exchange markets. They are markets underwritten by large liquidity providers. I have long held the belief that the following is happening. They are happy to take short term pain in order to get long term benefits. A loss leader as such. Quite normal behaviour in plenty of industries. These liquidity providers have clearly said we don't mind taking a hit in the shorter term. Look at the bigger picture. I have no idea on the numbers but that in itself isn't important. It is more the concept. Let's say our liquidity providers are happy to lose £100m on these markets. That's clearly on the high side. However, Polymarket has seen the valuation of the company go from a valuation of $1.2bn in Jan 2025 to the current valuations of more than $12bn. That money spent to get that liquidity and PR is just a drop in the ocean relatively. Speed is of the essence. Customer numbers huge. When you see markets operated without time delays you know the same is happening. These markets are just smoke and mirrors. I love the naivety of some of the investors in these products. Once the liquidity providers say enough is enough. Two things happen. One the markets collapse because they have no liquidity. Or two you take the players making the big money on the other side either out of the game or you monetise them differently. Think things like Premium charges/Expert fees/restrictions/commission rates. People simply won't keep playing in markets where there is so much asymmetric information. Unless of course they are incentivised to do so. Short term great. Long term hmm. Call me a sceptic.