Big Take: Taylor Swift Wedding Predictions Are the Hottest New Trade

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1:29EasyCater, your business tool for food. To learn more, visit easycater.com slash podcast. Bloomberg Audio Studios, podcasts, radio, news. Would you consider yourself a Swifty? I think it's a scale. Like oh so many group chats this week, I found myself talking with my co-workers about Taylor Swift. I like her music, but I'm not keeping up with every single thing she does with her life. That's Bloomberg's personal finance reporter, Francesca Maglione. I am a big fan. And that's Annie Massa, a Bloomberg wealth reporter. I am probably not all the way down the rabbit hole on every single development and every single Easter egg and every single song.

2:15but was I singing August in honor of my friend's birthday at a karaoke bar last week? Yes. Taylor Swift and NFL player Travis Kelsey announced their engagement on Tuesday. And I wanted to talk to Francesca and Annie because there's one corner of the universe that's been turning their engagement into a money-making event. The people making predictions and financial bets on where their relationship will go next. We had like a bet on our team and people had to give their like what they thought was going to happen with them in 2025. And I had said that they were going to break up. So I don't think I was expecting that at all.

2:55Did you lose money on that bet? No, no, no money was involved. Thankfully. The rise of legal online betting in the U.S. over the last few years has ushered in all kinds of bets, like bets on current events and pop culture, made on prediction markets like Polymarket, and Kalshi. So far this year, both of these platforms have had more than a billion in trading volume, so they've become more significant as the years go by. Within hours of Taylor and Travis's announcement, gamblers on Kalshi had placed about$80 ,000 worth of bets on the couple's wedding timeline. And by Thursday, that number had doubled to around $160 ,000.

3:36By Thursday afternoon, the odds of Taylor and Travis getting married by the end of the year hovered at around 7%. I was not placing any bets personally, but I was kind of bearish. So here we are, and very happy for them, obviously. Yeah. Bullish now on Travis and Taylor. 100%.

3:58I'm Sarah Holder, and this is The Big Take from Bloomberg News. Today on the show, how prediction markets work, why they're exploding in popularity, and what this all means for the people and events they're betting on.

4:15Betting isn't new. Humans have been doing it for millennia. But online prediction markets like Polymarket and Kalshi have recently surged in popularity in the U.S. If I've never used Polymarket before or Kalshi, is this like sports betting or is it different? How does it actually work? The easiest explanation would be, in the context of a presidential election, who will win, Kamala Harris or Donald Trump? That's Bloomberg wealth reporter Annie Massa. And you can bet on who will win. But now you're able to get odds effectively on all sorts of other different things. So will this event happen in the future?

4:55Yes or no. Will Taylor Swift release an album by the end of the year? Yes or no. The odds of that went up significantly. Yes, exactly. And you can watch in real time as these odds change based on who's placing bets for yes, no, or a range of other different outcomes depending on the type of market it is. Polymarket was founded in 2020, and it's gotten major funding support from Peter Thiel and Ethereum founder Vitalik Buterin. This year alone, its nearly 230 ,000 monthly users have placed nearly$16 billion of bets on real-world events. Here's Francesca Maglione, Bloomberg's personal finance reporter.

5:35It kind of started around the presidential election, and it's kind of shifted just beyond politics and everything in pop culture. When it comes to Taylor Swift in general, I think people were betting on things as, is she going to have a baby this year? Like, when are they going to get engaged? Is the wedding going to happen this year? Like anything you could think of, people are betting on. There's a market for that for sure. And what happens when you win and what happens when you lose? Like how much money is on the line here? These markets have grown in size over time. But a basic example would be you bet a few cents on a yes or no and the market settles to a dollar.

6:10And so effectively you've put down a few cents to place the bet based on what the odds are. And if you were correct, then that market settles to a dollar. This can all happen quickly. You type in your card info or hook up your crypto wallet and put some money on the odds of the Yankees winning tonight. Or on Travis and Taylor tying the knot by the end of the year. Depending on what you're wagering on, the market closes when an event ends, like after the last inning in a baseball game. Or it could end at a preset cutoff time. And once the market closes, you either get your payout or you lose. There's been some studies that have said that Americans are taking money out of their brokerage accounts to fund some of these wagers.

6:53And in extreme cases, there's losses from gambling that can contribute to auto loan delinquencies and bankruptcies. Is this part of a broader trend of online betting markets gaining popularity like DraftKings or other websites? Yeah, sports betting we've seen grow in popularity. And it's also interesting just culturally. Now people will go online to check what are the odds of this happening. So it's becoming kind of a cultural phenomenon or a place that people go to gut check anything that they're questioning or thinking about. What is a company like this worth? So actually both Calci and Polymarket have been fundraising.

7:29And Calci is valued at$2 billion now. Polymarket is valued at about a billion dollars now. The other thing is the intersection of the types of investors in these companies. You have an intersection of Silicon Valley and some more traditional Wall Street kind of firms. So Susquehanna, which is not maybe well-known on Main Street, but very well-known big Wall Street trading firm, is a big backer of Talshi. So again, like a mix of both the more Silicon Valley side of things and the Wall Street side of things. And Founders Fund is a big backer of Polymarket. And some other notable backers, like Donald Trump Jr.

8:11Donald Trump Jr. has been taking on advisory roles at a whole bunch of different companies. That's included cryptocurrency realm. It's included firearms, all kinds of different companies. But he now has a pretty strong foothold in both major prediction markets in the U.S. In January, became an advisor to Calci and just became an advisor to Polymarket. And he is a partner at this firm called 1789 Capital, which invested in Polymarket. Why is he so interested in this company? He said when he took the role at Calci that prediction markets allowed him and his family when they were watching the returns for the 2024 election at Mar-a-Lago to kind of have a better finger on the pulse of what was actually going to happen versus polls.

9:02Another thing that advocates of prediction markets say is that they're usually more accurate than polls, which you can debate, but that's what advocates say. And so he took the approach that, oh, you know, Kalshi helped my family understand what was really going on. It's also very possible that he sees a lucrative business opportunity in advising both of these companies. Who's to say? And so what's really happened is in the past year, and especially under the Trump administration, you've seen a more lax regulatory approach to policing some of these prediction markets, which have been very controversial over time.

9:42Controversial not only because of that murky regulatory landscape, but because of the real-world implications of betting on real-world events. You can look at it two ways. If you are an advocate for prediction markets, you might say, well, this is providing some kind of valuable information or wisdom of the crowds on anything that will happen next, even if a situation is tragic. If you're a detractor, you might say, well, you can come up with all kinds of twisted markets or sick markets on things And is that really a good idea to start putting that out for people to win money on? Yeah, it's a really thorny, ethical question.

10:23Yeah. Prediction markets rocky road to regulation and how they're influencing the way we think about and experience current events. That's after the break.

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12:48A few years after prediction markets hit the scene, the industry faced a major roadblock. People were flocking to sites like Polymarket and Kalshi, but the platforms were operating in a regulatory gray area. And Bloomberg reporter Annie Massa says they drew the attention of the Commodity Futures Trading Commission, or the CFTC. It's a federal agency that regulates the derivatives market, which, unlike traditional gambling, is not regulated by the states. The CFTC has taken a pretty stern approach in the past toward these contracts and basically said if you're betting yes or no on the outcomes, if you have money on the line, that type of product is something that we regulate and we oversee.

13:33You need to register with us and we are the watchdogs of this market. And both Calci and Polymarket have had their own skirmishes in the regulatory arena. The CFTC first targeted Kalshi back in 2023. The regulator claimed that the political betting the platform facilitated was illegal and ordered them to stop operating. But Kalshi sued, and after a federal court battle, the CFTC dropped its appeal in May of this year. But the tension for Polymarket had to do with two separate inquiries. There was a DOJ probe, which resulted in this big FBI raid on the CEO's penthouse in Soho last year. And there was a separate inquiry from the CFTC.

14:20The CFTC fined them over a million dollars saying, you're allowing customers to bet on outcomes and trade contracts that are basically something that we should be regulating. You need to register with us. In 2022, the U.S. banned Polymarket outright. That meant U.S.-based users weren't allowed to place bets on the site. Polymarket was almost in exile in some ways just for the U.S. That didn't stop the site from featuring bets about the U.S. In 2024, Polymarket hosted millions of dollars in bets about whether or not Donald Trump would win the presidential election. Spoiler alert, he won, just as Polymarket users had predicted.

15:01I remember that with the presidential election, that it was kind of like an informal poll that actually ended up being more accurate. Yeah, I have a friend that anytime something's going on, she just goes on Calci and is like, yeah, no, we don't have to worry about this. The odds are low or whatever the case might be. Then in July of this year, the U.S. government and Polymarket found a way to move forward. The U.S. shut down the two federal probes opened under the Biden administration, and Polymarket bought a derivatives exchange and clearinghouse called QCX, which gave them stronger legal standing to operate in the U.S.

15:32You both mentioned how influential Polymarket and Kalshi's predictions have grown as a cultural force, a political force. Where do you see that influence going next? I think in the future, many people will turn to them to kind of gut check events or presidential races. They become really helpful to kind of see how people online are feeling. Like, will Lisa Cook actually be removed would be an example. There are some controversial ones. Earlier in the year, when there were wildfires in Los Angeles, Polymarket had a market on the trajectory of the wildfires, which people found pretty untoward. So it can go all over the place.

16:17It's not just in the realm of politics or even pop culture. You can put odds on a lot of different things now. Yeah, that's disturbing, people betting on something that could destroy people's livelihoods or their lives. But I guess that once you open that door, anything can go on the platform. But Francesca says she's also looking at how the demographics of people using these platforms could shift over time and how that could influence the outcomes of certain bets. Right now, mostly men are users. Maybe we see more women go on there and it become more popular because I do think that it's pretty like the online bro, crypto bro environment right now.

16:54But maybe moving forward, it'll become more mainstream and maybe more accurate in that way as well. What are the implications of the platform having a certain kind of better or a certain kind of user? How might that impact the kinds of predictions it will spit out? And how might that have an impact on real life? There were these markets on throwing things onto the court at WNBA games. And the critique there is you're almost encouraging certain behaviors by posting these certain markets. Yeah, there's some people that are worried that it might influence real life events because some people could say it's biased.

17:32And so that's dangerous in the sense that one opinion is getting kind of an advantage over another as more people kind of turn to Calci or Polymarket, like I said, to gut check things. And if you're gut checking against kind of a biased opinion, then that might influence real life events or the way that people think about races or things like that. Yeah, yeah. Well, and that's famously one of the impacts of political polls, right? If you see your candidate leading in the polls, maybe you're less likely to vote or more likely to switch candidates or there are impacts of seeing where the wisdom of the crowd is pointing.

18:06Yeah, and people want to win. And so if you think that an outcome is going to go a certain way because you saw it on Kalshi, then maybe that will make you go that way as well. Well, we've got to hope that Taylor was not influenced to get engaged by Polymarket. I'm sure there's more love there. I hope.

18:38This is The Big Take from Bloomberg News. I'm Sarah Holder. To get more from The Big Take and unlimited access to all of Bloomberg.com, subscribe today at Bloomberg.com slash podcast offer. If you like this episode, make sure to follow and review The Big Take wherever you listen to podcasts. It helps people find the show. Thanks for listening. We'll be back tomorrow.

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