Kalshi’s ‘Midterms Hub’ & SeatGeek & Serval Automate the I.T. Department 7/23/26

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0:47Download the latest episode and subscribe at schwab.com slash marketupdatepodcast or find Schwab Market Update wherever you get your podcasts. Bring in show music, please. Hi, I'm CNBC producer Katie Kramer. Today on Squawk Pod, our tech future. First, prediction markets and the midterms. Calci has rolled out a new hub for elections contracts. Former CFTC commissioner and Calci Exchange board member Brian Quintenz on the government pushback on pre. These are new markets, so I don't think it's a surprise that states are grappling with a lot of these issues from what the laws are that have been on their books for a long time.

1:29Then the future of work with an AI startup trying to disrupt the IT department. Serval CEO Jake Stauk. Instead of filing a ticket and waiting for somebody to respond to that, we're actually going to automate that resolution with AI, get you back to the more meaningful parts of your job. And CEO of SeatGeek, Jack Gertzinger, a customer of Serval and a believer in a more efficient use of your IT guy. We see this as a way to move people from less interested work to more interesting work, get them focused on harder problems. Those conversations, plus. The question, of course, is a reframe of this the answer unto itself.

2:03I'm of two minds when it comes to AI, too. It is Thursday, July 23rd, 2026. Squawk Pod begins right now. Stand Becky by in 3, 2, 1, cue it please. Good morning, everyone. Welcome to Squawk Box right here on CNBC. We are live from the Nasdaq market site in Times Square. I'm Becky Quick along with Andrew Ross-Sorkin. Joe is off today. Meantime, shares of Google Parent Alphabet, they are lower in the pre-market this after the company reported second quarter revenue above expectations. 82 % growth in Google's cloud business, but overall profit fell short of estimates. Investors are focusing on an increased CapEx forecast as the company invests in AI.

2:46Alphabet now expects to spend between$195 and$205 billion just this year. That's up from a prior forecast of$180 to$190 billion. Let's show you what CEO Sundar Pichai said on the company's earnings call. I do think it feels like we are in very early innings of what feels like secular shift across multiple areas. In our core information businesses, just the possibilities. When I see what all you can do with absolute frontier capabilities, there's still a lot of work ahead to translate all that into experiences for our consumer users. Another alphabet earnings highlights search revenue growing 17 percent in the company's other income category, which includes stakes in Anthropic and SpaceX coming in just shy of 100 billion dollars.

3:45What's so interesting to me about the reaction, though, in the market right now about the Google piece is just, you know, every time these companies have spent more money recently, you've seen the stocks go up, meaning investors have rewarded what's been happening because they've said, oh, this is the future. This is really the first time where it seems like, at least under the margins, investors go, I don't know. And it's not just that. It's Tesla as well. We may talk about that stock a little bit later. It's the first time they've been cash spent that they've put into bigger projects that they're working on, longer term issues.

4:18That's the thing you watch for when the street rewards this long term payoff saying we want you to chase it, we want you to win, versus when the street kind of pulls back and says whatever. That is the headline that's basically been taken away from every single take on this, the AI spending balloons. A little different than what we've seen, at least in recent years. We should also tell you Iran's military says that it has hit U.S. targets in Kuwait and Jordan. It also says ships attempting to sail through the Strait of Hormuz are still being attacked. In addition, Iran-aligned Houthis say that they struck two Saudi Arabian oil tankers in the Red Sea.

4:55At least one of those tanker attacks has been confirmed by the British military. Attention has turned to the Bab al-Mandib Strait as the U.S. and Iran fight over the Strait of Hormuz. Yesterday afternoon, U.S. CENTCOM said that American forces launched more strikes against Iranian military targets. Separately, The Wall Street Journal reporting the United States is moving forces and weaponry to the Middle East in case President Trump wants to scale up American attacks against Iran. Yesterday on social media, the president said that any time Iran fires on a ship in the Strait of Hormuz, the U.S.

5:32will destroy one of the country's bridges or power plants. President Trump was speaking at a rally last night and made additional comments on some of these things, saying that he doesn't think the Iranians are serious about talking right now, but thinks that they will be soon based on the continued attacks. I call it a skirmish. This is with this skirmish we have with the Islamic Republic of Iran. And I call it that because let me tell you, they're getting hit so hard and they want to make a deal. But I say they're not ready to make a deal because every time they make a deal, they want to change it and everything.

6:12They're not ready. They'll be ready very soon. But this is why you see oil prices higher this morning. And there's the question, does this bring them to the table? Or not. And that's the best negotiating sort of chess piece that's even available at this point. On this vote, the yeas are 232, the nays are 198. The bill is passed without objection. A motion to reconsider is laid on the table. The House approving legislation that would prevent members of Congress from buying individual stocks while they are in office. More than a dozen Democrats joined Republicans in support of that bill. But the so-called Stop Insider Trading Act falls short of what many advocates of a congressional trading ban have called for.

6:54House Republicans also attached a voter identification provision to that measure. Democratic leaders urged their caucus to vote against the bill. And by the way, even though the House leadership said that they should vote against it for the Democrats, more than a dozen Democrats did cross-emper and vote in favor of this. There is the question of don't let the perfect be the enemy of the good. But then again, there are some real questions that have popped up around this. In terms of how it's set up, yes. Meta just out this morning with a new video, and it's an interesting situation, pushing CEO Mark Zuckerberg's take on the future of AI.

7:30The company says that it believes AI has the ability to build community and connection and is really sort of pushing forward into something. Let's show you the video, and we'll talk about it in a second. Leave us behind. We couldn't disagree more. Call us optimists. Call us dreamers. Just as we've always done, we're betting on people. We bet on people when we connected you to the ones you lost touch with. And again, when we connected you. This seems to be a new effort by Meta, but I think more broadly by the AI industry. And I don't know if you've sort of been picking this up between some of the comments that Sam Altman's made recently, between some of the comments that Dario Amadei has made recently.

8:16And now I think Mark Zuckerberg about trying to reframe AI more about people. I mean, this new commercial is sort of about humans and the connection with people in large part, because I think AI is becoming this sort of political football because people are so scared, frankly, that it's not about people or that it's going to undo people. Jeff Bezos, who was on our air, making this argument that he believes that AI is ultimately going to create more jobs rather than less jobs. Obviously, there's a whole other side of it. So these are the optimists about what this is going to do. I don't know whether you think this is going to ultimately benefit people or not.

8:56But it's so interesting to me that the companies themselves now are sort of, you know, taking that narrative and at least try to push in this other direction, whether it'll turn out to be that way. Because you think they're afraid of the political football and how much pressure is coming down? look this is my own my own take is that right now there is look every morning we have you know skeptical conversations about what's going to happen to people's jobs is ai going to take your job is ai going to take your dignity is ai going to what what is it really going to do to help you and i think you're now seeing whether as i said it was whether whether it's jeff bezos on our air or now mark zuckerberg this morning um at least and i believe their views are genuine.

9:42I mean, I think they come by them genuinely. They really believe that this is going to change humanity for the better. I know that there are skeptics on the other side, but it's just interesting to me that there's sort of an effort now to reframe the conversation around what AI can actually do for people. And so much of it hasn't really been that. So much has been about the technology and tokens and token maxing and business and ROI and all of that. And so the The whole sort of effort now, I think in this ad specifically, to sort of shift the conversation in another way. Whether it's successful or not, I don't know.

10:16Yeah, I was going to say, that's the question. I mean, you've brought up several times about how when AI has been mentioned at commencement speeches, it was moved. By the way, I think this ad and I think so much of the conversation in Silicon Valley has actually been shaped in the last three months, two months by those commencement speeches and by the booing and by the sort of realization that so much of the work that they're doing scares people. And the question, of course, is, is a reframe of this the answer unto itself? Or is it just a reframe? And is it real? And the truth is we probably are not going to know until we get to whatever that place is.

10:56Look, I will admit that I'm of two minds when it comes to AI, too. I have incredible hope about what it can do on the health care front, what it might be able to do to find new cures, to find new ways to deal with things that we would never be able to figure out otherwise. But you do hear this constant drumbeat of what it means for workers. And we can say we think it's going to create more, but this is happening the same day we just find out that Uber is laying off 10 percent of its customer service people, and it is blaming AI for this. It's saying we're trying to get better about how we're doing this, but it's also because we're becoming more efficient with the artificial intelligence that we're using and how we're incorporating it.

11:32So you're going to see these competing headlines that come out on a regular basis. So interesting. So Brett Taylor was sitting actually in your seat, I think, earlier this week, chairman of OpenAI, but also runs Sierra, which is his own firm, which is, by the way, doing a lot of the kind of work that effectively customer service people used to do. The basic premise of his company is that we can do that work more efficiently at a much lower price. And when you hear that, you say to yourself. That's not a terrible thing. Progress has been made by increasing efficiency and making it so that humans don't have to do some of the jobs we used to have to do.

12:07It's been a constant since we've been working our way through this industrial revolution. I think this was scarier because it's happening so fast. And the question is, how do you retrain the people who are going to lose those jobs? How do you do it on such mass scale? And so I think so then the question is, and since we won't know the other side of it until we get to the other side of it and who knows what the other side of it, when the what's the timeline. But, you know, with someone like Mark Zuckerberg or this ad coming out or other things, trying to be more suggestive of the things that this could be helpful with.

12:39And I think health care is a huge part of that story. We have the most hope for what AI can do. The most promise for things that would take us millennials, millennium, to try and accomplish on our own. If we can fast forward that, that's fantastic. But it comes right after the headline we got yesterday on OpenAI with the bots, the agents getting out of control and breaking out of the sandbox and breaking into another company. I mean, those are the type of things that it's hard to look at the two sides of this. And that's why this ad sort of lands in the middle of this whole debate. And I think that's pretty interesting.

13:12And what I just don't know ultimately is, you know, what will resonate with the public and how much of it's ultimately going to be a show me story as opposed to a tell me story. I do think that the AI industry has hasn't done the best job of articulating exactly how this could work. It's all seems very vague, even to someone like myself. So maybe this is the beginning of something that shifts that conversation. I don't know. I do think trust is going to be important. And if you're someone who's been in this industry for a long time, great, show us. But show us, like you said, show us, don't tell us.

13:51The jury's still out on this. Show us how you're going to lead us to these areas. Show us and prove it. And I think it is a big lift when you have so much public animosity already and fear that exists at this point. I would say, I don't know if every single executive that I talk to these days says 2028, the election of 2028 is going to be the AI election, is going to turn into a conversation, turn into a sort of litmus test on what you think of AI with different political candidates taking different positions and maybe even being very, you know, you think Republicans would be on one end a certain way and maybe Democrats on another.

14:34but it may transfer. Meaning that they think... Regulating AI. The Republicans to this point have had a lighter touch with it and maybe kind of trying to bolster more advancement. There is this entire okay, we're worried about what it does to our society but we also don't want to lose to the Chinese who are working so hard on this. I think there's almost two factions inside the Republican Party. There's one I think that is much more in the laissez-faire. Let's say fair, let it go. And there's a whole other crew that wants to go in a different direction. And I think in the Democratic side, you could see a whole other push that could push for way more regulation than before.

15:15And so I think that's a little bit of the other piece of it that the whole tech industry is sort of watching and trying to figure out how they're going to message or talk about and discuss that. Cheese will be next. Next on Squawk Pod, prediction markets are coming to the 2026 midterms. Some states are already warning voters about placing bets on who will win. We will hear from a former CFTC commissioner who now works with betting site Kalshi about the bets, the votes and the challenges. Yes, things can always go wrong, but it's very hard to police in real time. And we can debate the Elon Musk of it all.

15:53Like, is this all legal? We've seen cases of insider trading in prediction markets and in other markets where the news comes out much later than the individual was flagged, the account was frozen, they've been referred for investigation and prosecution.

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16:51or find Schwab Market Update wherever you get your podcasts. What made you confident that you could do something that hadn't been done before? I have no fear of failure. Trailblazing women changing the game. One of my favorite pieces of advice, think about what your boss's boss needs. Leadership can look in many, many different forms. It really does come down to just trusting yourself. Life is short and you just got to think big to accomplish big things. Julia Boorstin hosts CNBC Changemakers and Power Players. New episodes every Tuesday, wherever you get your podcasts.

17:28Welcome back to Squawk Pod from CNBC. Prediction markets, betting on the likelihood of any number of events or outcomes, came exploding onto the political scene in the last presidential election. Well, another November approaches. Prediction platform Kalshi has rolled out a midterms hub to help political junkies and the site's users see speculated results and polling averages for the 2026 races all in one place. The launch came just a day after the Elections Commission in Wisconsin warned voters there that placing bets on elections they plan to vote in is illegal in that state. How will this turn out?

18:07I can't predict. Andrew Ross Sorkin takes things from here. Coming to us right now to discuss this and so much more is Brian Quintez. He is the former CFTC commissioner, CalShay Exchange board member and senior advisor to the coalition for prediction markets. Of course, you are in favor of what's going on in terms of all of this. Let's talk about Wisconsin as a sort of microcosm of a lot of the questions going on in the country about how prediction markets should be used, whether they can be manipulated and how we should all be thinking about this. Big questions there. There's a lot of questions there.

18:43But when you saw the news on Wisconsin, for example, what did you think? Well, these are new markets. So I don't think it's a surprise that states are grappling with a lot of these issues from what the laws are that have been on their books for a long time. But in my mind, federal preemption is supreme when it comes to federally regulated derivatives markets. And there are a couple examples there that I think are informative. And the first is Michigan has a law on its books from 1931 that prevents its citizens from trading in grain futures. Back when it thought doing so represented gambling. Now, if it tried to enforce that on its citizens, I think we would all think this is ridiculous.

19:24But just because these markets are new, I think it's just part of our process to debate what the role is of a federal law versus a state law. But in my mind, this is an overstep by Wisconsin. OK, so here's a question. I just want you to posit something to you for just a second. There's an argument to be made that when people look at the prediction markets unto themselves, whatever, wherever something stands as an election is taking place, that it can influence their decision to vote at all because maybe they think it's a runaway situation. And the person that they were going to vote for is otherwise going to win anyway.

20:02so they don't even show up at the voting booths, or that they're not going to vote, or they're going to vote for the other person, meaning that the actual sort of where things stand, the horse race itself, can influence people's actions. And I would actually say journalists, interestingly, like the day of an election, oftentimes hold back in terms of what they report and when they report it, in part because they want people to go to the polls, to do it honestly and not to influence the outcome. And I'm curious what you think about that distinction. I don't think it's a lot different than what the arguments are around that with polling, to be honest.

20:45Sure, prediction markets provide more real-time information to people, but I think you also have to understand what the benefits of that are so that people can incorporate what a market's view is. And it's different. Polling and markets are different, right? polling is asking someone what do they want to have happen whereas a market is asking what do you think will happen what's interesting though is the last election or last several elections sometimes the prediction markets have been more accurate than the polls well that's right i mean i think it forces people to take more of a dispassionate view oh of what they think the outcome let me take this back to me at least the market mechanism the data that comes out of this What it means is fascinating and you could argue beneficial in many, many ways.

21:32The question, I think, is a slightly different one, which is ultimately, does it and can it impact the outcome of an election because it has an effect on what voters ultimately do and whether we think philosophically that is a good or bad thing. And whether polls are different, by the way, people don't typically run polls midday, like people hold those polls back. You don't hold those polls back. I understand why that's beneficial to the marketplace. I'm wondering whether you think it's beneficial to the electoral process. I mean, I just come from a philosophical perspective, but I think we have to trust people exercising their own self-interest.

22:13And if they are going to vote based on that, then I think a poll or a market isn't going to dissuade them from doing it. And if they don't care enough to do it and that's something that would influence it, then I think that's their decision to make. But I think this is a critical new piece of data and information that is market-derived that can inform and, in some cases, lower polarization as opposed to have negative impact. On the self-interest piece that people should do in their own self-interest, they should go to the polls and the like. One of the other things I think people wonder about, and this gets to the manipulation question, if somebody is wealthy enough and self-interested enough to decide they want to put a big bet, especially maybe not on a presidential poll since that is probably going to have hopefully a lot of volume, if you will, but maybe on a smaller campaign, but wants to demonstrate that one person is way ahead and thinks that that can affect people's self-interest on the other side, how should we think about that?

23:18So I think that's why it's important to recognize that these are markets that are federally regulated that follow all of the same rules as traditional derivatives markets. In fact, they are derivatives markets. They're licensed derivatives markets. And there are rules on the books, and they've been on the books for a long time, that require exchanges and require the CFTC to surveil the markets for manipulative conduct. And those cases can be brought. Outsized influence is something that occurs in all markets and not just these. And those can be flagged by size, by timing, etc. So, you know, I don't think we can have the perspective of saying, you know, you need to guarantee that nothing bad could ever happen in these markets, as opposed to saying, try to do your best and then make sure that you.

24:03But there's also a timing issue. So I don't know if you saw this news. Another fascinating sort of development also relates to Wisconsin. I don't know if you saw that Elon Musk has been now it's been said that he likely broke the law when he promised a million dollars payouts to voters who were going to support the president in the last election. That's only happening now, meaning part of the question is, yes, things can always go wrong, but it's very hard to police in real time. And we can debate the Elon Musk of it all. Well, I mean, I think the distinction there is when the news is reported versus when the investigation process occurs, right?

24:43And we've seen cases of insider trading in prediction markets and in other markets where the news comes out much later than the individual was flagged, the account was frozen, they've been referred for investigation and prosecution. So just because we're hearing about that now doesn't mean that that activity was flagged and is going through a normal judicial investigatory process. How did you guys catch the teleprompter, the president's teleprompter operator? Yeah, well, so I think there's a fine line between trying to disclose how a market surveils for activity because you don't want to tip people off of how to avoid that versus being transparent.

25:21but this was a person who was taking positions in real time when he saw the president skip over certain words that were in a speech, patterns of behavior over time. And this is a KYC account. What does that mean, KYC? It means that the exchange takes the information of who the person is, where they live, employment information, and all of a sudden you can start matching their identity with these traits. I mean, again, these are new markets, and they might tempt people to do bad things, but the important part is that they can be investigated, and they can be flagged, and they can be prosecuted.

25:59How much time and energy is spent on trying to make sure that people aren't finding information and getting an edge on the market? So I think there's a distinction between incentivizing people discovering information and making a market more efficient than using information to benefit themselves over which they have a duty to someone else. I mean, the latter is insider trading. Does the industry have a list, for example, of what might be described as politically exposed people? So some banks keep lists of what are described as politically exposed people. You would describe, by the way, potentially the teleprompter operator as politically exposed, potentially based on where they work or what they do.