November 29, 2025 • 49 mins
What are prediction marketplaces, and how are they disrupting the sports betting industry? Join Matt Perrault and guest Bruce Merati of BetEX for a detailed breakdown!
Are platforms like Kalshi and Polymarket a money grab? Could states revoke licenses of sportsbooks like DraftKings and FanDuel if they dive into the waters? Plus, what do bettors need to be aware of when getting invested in prediction markets?
The Pros set the scene for how we've got here and where we're going!
Timestamps: (May be off due to ads)
Intro - 0:00:00
What Is a Prediction Marketplace? - 0:00:44
First Patent - 0:10:37
Pre-BetEx - 0:13:52
What Is BetEx? - 0:14:31
Selling Bets Digitally vs. Physically - 0:22:50
Where Is the Risk? - 0:25:30
Is It All a Money Grab? - 0:34:05
Revoking Licenses? - 0:39:20
Outro - 00:49:06
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
What's up, guys.
Speaker 2 (00:01):
How are you Welcome into a new episode of The
Sharps Report with Betting Pros. I'm your host, Matt Parol teaching.
Every month we take a look at the betting industry.
We talk to insiders and experts as to what's happening
in the space, and well, nothing is more controversial and
hotter right now in the sports.
Speaker 1 (00:17):
Betting space than prediction markets.
Speaker 2 (00:19):
Bruce Moratti is a guy who I've been following on
LinkedIn quite a bit.
Speaker 1 (00:23):
He is from BETX.
Speaker 2 (00:24):
We'll get into what BETX is later in the conversation,
but he has had some awesome opinions on where we
are and where we're going with prediction markets.
Speaker 1 (00:31):
Bruce, Matt Parrel, thank you for being here.
Speaker 3 (00:34):
Welcome, thank you, thank you, Thanks very much for inviting me.
Speaker 2 (00:38):
Okay, so, what is your take if we kind of
take a thirty thousand foot view of where America is
right now in the prediction marketplace conversation?
Speaker 1 (00:47):
I think most people.
Speaker 2 (00:48):
Aren't really sure what exactly we're talking about when it
comes to prediction marketplaces. What's the easiest way of explaining
to a layman what a prediction marketplace is?
Speaker 3 (01:00):
Okay, so, so prediction market is kind of when it
comes to sports wedding, I think it's a scam okay,
uh and and everybody knows it right, but it's becoming
a political push okay by some people. And guess what
(01:24):
they think they did to taxes, you know with Uber,
they did it to Airbnb, and they can push the
narrative to industry. But guess what. I don't think they
win this one. Uh. The States are not going to
give in. So it's kind of a total invasion from
(01:47):
the financial industry, which they don't understand gaming backed by
some influential people and a prediction market on you know,
regarding sports is gambling. Now, I agree that sports spredding
is a futures contract. I've been saying that for as
(02:10):
long as I've been in the industry, which is like
twenty some years, and I've developed system software for Nevada casinos,
so i know the space really well, I think better
than most people. And it is a futures contract. But
it is gambling. So is horse racing. While on Earth
(02:33):
nobody is talking about race horse racing. You walk into
any casino in the in Nevada for the last fifty years,
it says race and sports, race and sports. They're all gambling,
including horse racing, and nobody right now talks about horse
racing because you know, it's not making much money or
(02:56):
it is a dying business. But that's how everything is started,
betting on horses, betting on dogs, especially in the UK.
So sports bedding is huge business, we all know that.
Is it done properly by casinos? No? No, it was
(03:18):
started as a way, you know, in in in Nevada
and Las Vegas. It was started as a way to
get customers from Southea, California to come to the casinos
so that they watch the game, you know on a Sunday,
bet a few bucks here or there, and then go
(03:39):
and play on the table, you know at black jack
table or it was an amenity, right, They just wanted
to cover their expenses a little bit of profit as well.
But it was never meant to be a really big thing, right,
So sports bedding was offered in a way that was
(04:01):
confusing to everyone. You know, you bet, you know, let's
say typically one hundred ten dollars to win one hundreds
ninety nine percent of people can't figure out the math,
what the odds are, and it's not on purpose, right,
typically Las Vegas, you know, hide the Jews in the
(04:21):
arts so that you know when they changed the odds,
you couldn't figure out what what the hell happened. You
couldn't distinguish between the odds offered by one casino with
another casino. It was hard they get even people who
bet on regular basis, they can't figure out the odds.
(04:42):
But people still do it because they want to put
two place bets on their you know, on their teams.
So we all know. This thing went all the way
to the Supreme Court twenty eighteen, and many times it
went to different courts, you know, when New Jersey was
(05:05):
trying to get it legalized in New Jersey, and finally
I think it was twenty seventeen when the Supreme Court.
And I've been watching this thing because I was planning
on calling patents around this concept of multi jurisdictional A
very different country than anywhere else, and Canada is close,
(05:29):
but it's different than let's say, in England, right, everything
is one country, and Wales and Ireland they are really
different countries. But you know it's a lot of it's
made up of fifty different states, different rules and regulations,
(05:50):
especially when it comes to gambling. So that's when I
started filing patents around multi jurisdictional bedding because I knew
at some point point of time you have to bring
different different jurisdictions, you know, whoever wants to join in
into this ecosystem where you create a pool, right, the
(06:13):
pool for you can sell your bet, you can place
a bet, sell your bet. The problem we have right now,
after seven eight years of basically legalization in thirty nine states,
is that no two sports book systems are talking to
each other, right right, I mean, it's just stupid that
(06:36):
they don't. Even companies who have different systems in different states,
they can't get them to talk to each other. It's
just the way it started in the bad is something
that nobody cared to develop a dissolution for because it
was a small state, right, it wasn't worth the We
were a small company, this is word Game was a
(06:57):
small public company. And when we developed a system that
was competing with CBS, the computerized bidding system of American wagering,
which dominated everyone everyone's system. You know, this is now
twenty years ago, twenty years ago, and CBS was there
for another twenty years before that, so nobody wanted to
(07:19):
spend the time and effort to develop something which hardly
made any money for anyone and then be casino. Really,
they were not willing to pay much for much for
the software. We were getting like eight hundred dollars a
month maintenance. D wow, you know, and you know it
(07:39):
didn't even cover yer developers. But at the time, you know,
this is not going back to the first days of
online gaming. We wanted to do it because it was cool.
It was the first time that you can place a
wager botely into a casino. October two thousand, that's five
(08:06):
years ago. You guys searched it online okay, okay, Bruce
Murrarii or word game online sports wagering. It was reported
on Wall Street Journal that online gaming goes live in
the US that day that day are a stock triple
little I can imagine triple. And then everybody called Nevada
(08:29):
Gaming Control Board. They said, what the hell is going on?
Is it really? You know, because it's reported by Wall
Street Journal. So at that time, Nevada didn't require full
manufactured distributor for developing sportsbook systems. We had associate equipment
like a second here right. There was a little bit
(08:52):
of checks and balances, but not full blown licensing process.
At that time. Nevada said, hey, you guys, you should
come forward for full licensing investigation of everyone, right, all
the officers and so forth. So anyway, everybody left, I
mean I the CEO who was from Lost because our
(09:16):
CFO and CEO of the company said we're not going
to be licensed. He left, and then I stayed on,
you know, naively, not knowing what's going on. I said, okay,
I've got nothing to hide, and you know, by training,
I'm charged account and CPA, I'm good at keeping track
of things and my records and everything. So I went
(09:39):
through the process. I was the only person who was
another person who was a main shareholder and he went
through the process as well. And then the entity was
in a small public company that also got license. So
with a license in probably and I think two thousand,
two thousand and two thousand and one, oh wow, okay,
(10:02):
by Nevada giving control, it was a big deal. It
was again, we got license, we got our system approved
on the phone wage ring. Then you could call the
casino and say, okay, I want to place a bed
on such and such and our system back then was
(10:23):
Dala because there was no broadcast.
Speaker 1 (10:26):
But this is in the state though.
Speaker 2 (10:28):
To make the cat to the casino, you had to
be physically in the vaalock, right.
Speaker 3 (10:32):
Yes, And my my first patent for border control was
around seven o two, being your border control develop as
soon as you called uh this server.
Speaker 2 (10:48):
Before VPNs, he became a thing for young kids. Your
area code actually meant where you were.
Speaker 3 (10:55):
Yes, So then and and then we added some you
know checks and balances so that you couldn't change your
phone you know right prefix your phone numbers. So anyway,
this this goes back long long time ago, right. So anyway,
so we and and then after us the stations, cause
you know, did the same thing, but they did it
(11:15):
with broadband and basically copied does but they did with broadband,
and our pattern was around phones. So and and again
we were just a manufacturer, so in a small manufacturer
distributor license. So anyway, I stayed in the business. And
also we developed server based gaming similar to online gaming.
(11:40):
But on the slot machines, we changed the Regulation fourteen
of Nevada. Uh that was a hard thing to do.
That's when IGT and and slot manufacturers felt like we
are attacking their business. So and they didn't want you know,
server based gaming where they want to They want to
sell a machine. That's a lot. You're getting so much
(12:03):
things and you paid let's say back then, fifteen thousand
dollars for this. They didn't want to say, okay, you
buy one box and then everything else is just graphics.
They did that was that wasn't the business, moan. So
they bought a company and I left, and their goal
was to shelve the technology. They weren't interested. They weren't
(12:25):
interested in the sportsbook, which was called Primeline, and they
gave it away basically because again you couldn't make it
was only in Nevada you couldn't make money, right, So
I stayed in business of basically doing gaming. I did.
I've done almost anything you name it in gaming, from
(12:48):
running casinos, which I wasn't good at. Hard we didn't.
We bought the casino. This is now ten years ago
in Renal, in bankruptcy, and you know it was hard
to turn it around with some investors, and then developing
software for horse racing, for slot machines, for mingo, for kino,
(13:14):
uh basically see it. Yeah, anything to do anything to
do with gaming. So, so about again, now, two thousand
and seventeen, Uh, when the Supreme Court was going to
(13:34):
to here, yeah, yeah, to hear the case with That's
when I fogged multi jurisdictional bedding and exchange. Okay, the
first one, so I lay that you know called X
or was it called something else? No? No, no, but
X the name no, no, no, I just I found
(13:55):
it under my IP company called you Play one and
you One. It's got its own stories. Basically use of
two different random number generators for a game, which is
not the basic the basis of Live Dealer. Yeah. So
if you play an evolution game kind of a thing, right,
and there are two oranges, one is mechanical and one
(14:20):
is virtual. That's that's around my patent, which is so
I saw I saw you play one last year. But
bedex is all about having an exchange where the the
I call it props, the betting opportunities, because you know
(14:43):
in the industry.
Speaker 1 (14:44):
A prop is anything but straight or totally yeah, yeah.
Speaker 3 (14:47):
They are props right, yeah, so I so whenever you
have a betting opportunity, you standardize the opportunity, right, similar
to the Chicago Go boards similar to stockboard. So if
his team X is playing against team Y. Right, yeah,
(15:10):
so you you create. I've developed the software, you know,
it's pattern I've developed. The software, solution is ready. I'm
just waiting for the industry, which will be now potentially
bed MGM, Caesars, you know, all the casinos and including tribes.
(15:30):
It looks like it's not going to be drafting and
fandom right where so where they the Again, these things
have evolved in the last few years because I've added
three four more patterns. I followed another one. I keep
the family going, you know, to to get it up
to date with everything going on. So basically, uh bad
(15:55):
X is like when you play online. Let's say on
the platform you got tabs on playing Live Dealer or
slot right. So so as soon as you click on
and call it exchange tradable BAT. I don't call it
prediction market because I think I don't. I think that
that's just that's that name is for the guys who
(16:17):
are illegal. So I call it exchange tradable BATS. So
as soon as you click on play exchange Tradable BAT,
it takes you that X is just purely b to
be Nobody would know anything about bedex. It goes to
an environment which is a watch label for that operator
in that state. That only talks to the wallet of
(16:44):
that operator. That technology because everybody has it, right, So
if you play a slot, it uses the same wallet.
You play, you know, place the wager on a game,
it comes from the same wallet. So anyway, so that
DEX talks to the wallet. So now let's say you
have five hundred dollars in your account. The the betting
(17:10):
opportunity is presented uniformly to all the participating similar to
the stock market, all the participating sports books. The way
I've come up with this thing, which is patented and
and and and I think it's the only practical way,
(17:31):
is that you allow the operators to change the initial
prop offering price, so everything less. So the I p
O the initial prop offering you. So if you're betting,
let's say, let's let's say we're talking about a money
line situation where it's three to two, and now you
(17:53):
it says you bet let's say one dollar, you know,
in in summary to win three dollars right in that situation,
and it shows the odds. So now you're betting one
dollar to bet to win three dollars. Now, any operator
(18:13):
can offer its prop and created situation where the prop
or this betting opportunity, team X wins against team why
on such and such date. It will be a symbol,
you know, for the system n f L. Then the date.
Then let's say is Chargers c h R. Then let's
(18:36):
says our AI against raiders, and then you put a
date on it. That's a that's a unique idea that
represents us game forever. Okay, like horse racing, every every
horse has a unique name why because it says in
the database. Right, okay, So so now you and and
(18:58):
and it's the same thing with you world and it stuck.
So it creates a unique id the You can change
the narrative of you know, will team X win Team
Y or whatever it is, but it reflects you know,
the event. And then and then the operators can change
(19:21):
the initial price just to deviate if they want to.
If they they deviated from that, if you know, so
that uh, you know, it feeds them in case there
is you know, for example, if the game is in
your state, you want to change it a little bit
because there's no bison. So but you can never change
the payout because the pad goes across all the operators
(19:46):
and state lines. Yeah, when you place the bet. Again,
these are part of the band when you place the bet,
and that's why it's a win win for everyone. When
you place the bet, you can only place the bet
with the operator that you have your account with, and
they do all the checks and balances that they do
for anything else. So it's no different than anybody else.
(20:11):
It's just there is this other opportunity that can happen
with that operator in that state where you place the bet.
But as soon as you place the bet, it now
and what I've set it up to be similar to
stock market, no operator knows about the identity of the
(20:32):
other operator's customer because I know they don't want to
share that. When you buy and sell a stock, the
stock change doesn't know who you are. All they know
you are a customer of child Shop, your customer of
each you know whoever, Robbinhood they don't know. Right, So
(20:52):
the way of it structured is that the sportsbooks become
I'm using the analogy because that's what people understand. They're
the broker dealer, the child Shaw, the robin Hood. They
handle your money, they handle your order, and they also
act as a securities issuer because they issue a contract
(21:15):
to you. When they issue a contract to you, that's
a bet, they take the liability for that bet. Now
that you have an asset, a binary asset that you
place the bet on, it's no longer a bet. It
can cross the state line because it's a derivative of
(21:35):
an already placed bet. You're not if you sell. If
you place one hundred dollars on Team X to win
against Team Y with Caesars in Atlantic City, that liability
sits in Atlantic Then you know, in Atlantic City, let's
say MGMTKA, the is recorded, it plays the wagering taxes
(21:59):
like okay book right, because it's it's a bet. But
then you have the option to sell your bet. But
instead of you sell it to the operator, which is
what exists right now, and the operator doesn't give you
a good price for it, right, you can now sell
(22:20):
it to anyone in the ecosystem right at competitive prices,
and I can demo it to you, you know, after this,
after we finished really simple, it's like the stock market.
Now there is a competitive market for buying and selling
trading of already place bets. Yeah, now, the market.
Speaker 2 (22:45):
Makers digitally though, right we're talking digitally that those bets
can be sold digitally, because that's the big issue. Like
because because I'm close to the guys in New Jersey
who did the physical ticket selling.
Speaker 3 (22:58):
Yeah, yeah, yeah, props. They're from Vegas, and they went
through hell with yeah, the body in control board there
is all you you illegal and said, look, you're selling
your asset. Finally, after many backs and forths so okay,
you can sell your bet.
Speaker 2 (23:16):
Only paper ticket but not yeah, but not not the
digital so that this would be a.
Speaker 3 (23:22):
The problem is because there's there is nowhere in regulations
to say you cannot if you place the bet, you
can give it to somebody else to go and catch it. Right,
there's there's nothing. So they said, okay, yeah you can.
You said you can sell your bed and so forth.
But it could be that there's money launding. We know,
we want, we want to know who bodied we and
(23:46):
the operator doesn't know, didn't know about it. You're kind
of scamming the operator by selling their you know, their
right their bat. So at the end they said, yeah,
come and get licensed and we and and finally I
think they just want and to some other places. But
reality is, you know, it's like selling on eBay physical
(24:06):
right But but but from legal point of view, it's
the same because you're selling an acid a binary asset
of an already placed wager. But and again I've been
thinking about this, this this for a long long time.
(24:27):
So the beauty of it is that everything is trackable, right,
everything is within the ecosystem of these sports books or
license entities. It can't come from offshore and place of
right back, you can't trade them. And I know there
(24:47):
are some people off shore because they call me. I said,
Bruce that we want to participate in the better We
are one of the biggest market makers in Calshi, right,
And I said, look, even when bedex goes live, you
won't be able to participate because you go through the
same chicks and balances as if you're placing a bet,
and they're not going to let you do that. But
(25:09):
they're doing it from offshore. And yeah, I know this
because they told me they are participating. So they're laying
off they're risk into the US market. Who pays for it,
the US consumer?
Speaker 1 (25:25):
Well, hold on link pose.
Speaker 2 (25:27):
I think it's a very important point about the prediction
marketplaces that are going on right now about in what
we make sure the audience understands. What you're saying is
that there are offshore sports books and offshore operators that
are taking their risk and going to the prediction market
and laying off their risks. So they're taking the other
side of where they have a liability and they're putting
into the pdiction market. So those numbers that are jacked
(25:48):
up from a handle perspective, and people are going, oh
my gosh, look how much money is in CALCI, Look
how much money is in this fiction marketplace. Well, in reality,
it's just a risk layoff from the sports books off shore.
Speaker 3 (25:58):
So this is the best thing that's happened to them
their own book. That's why that's why recently drafting and
fan will have lost money because they can't balance their book.
They are fast, they're exposed. Okay again, I've been thinking
about this for a long time. So in Nevada, they
(26:21):
didn't care that they look, they lost money one week.
It was actually they celebrated that they had an ecosystem,
meaning people who come to the casinos, typically from most
of them from southern California, they win one week, they
(26:41):
give it back plus moret so it's like the slot
machine up and down, up and then but at the
end of the year, they always kept their juice.
Speaker 1 (26:52):
Yeah.
Speaker 3 (26:53):
The probability of the house if if there is a
fixed market, you know, meaning time you know the customer base,
right if if you if the customer base is the
same or more or less the same, every time, there's
(27:13):
fifty percent chance and assuming the odds are you know,
our price reasonably well, every time there is fifty percent
chance that the house wins or the customers when the
shops went right and and the casual better is they
just bet they don't care, right, So it's fifty to fifty.
But after like two hundred events happening, guess what it
(27:38):
comes to almost fifty to fifty. And since the books
always had this, let's say five four point five percent
plus more when it's part last, they're always one at
the end of the gold Yeah, yeah, so it was.
It's still the same in the US if there's a
captured market, right which you know right now it's kind
(28:04):
of a stable class situation. But when there is a
leakage to the international operators is if they lose this,
if they win this time, they're not going to come
back next time, just do it because they have a
building of their so anyway, so so I think I
(28:25):
think the chances of them, meaning these these CMS to
win their case. They they want to push it for
a couple of two or three years, hoping that will
be some kind of something going through the Congress and yeah,
but if it goes to the Supreme Court is so Look,
(28:49):
you were here seven eight years ago and we talked
about this.
Speaker 1 (28:53):
We've a right fact that.
Speaker 3 (28:56):
The fact that they say sports building is not gaming.
Sometimes sometimes they say they were not supposed to get
into gaming. I know this because I applied to they
are applied to CFTC four years ago. Okay during four
(29:16):
d X for during Russy and Venham chairmanship, which was
you know, Biden, and this is what you're talking about.
This is gambling sport spinning. So okay, give me uh
a no action letter and you know it's not the
best run. The rules and everything is still with c
(29:37):
FDC evolvement, so I couldn't get an AX out of them.
Uh anyway, So uh that's why I know that drafting
and fan duel are going to have major major issues
because Rule two I went through all of these four
years ago, two of CE become aut act. It says
(30:03):
it everything has to be fair, it has.
Speaker 1 (30:08):
And available to everyone.
Speaker 2 (30:10):
Right, you can, you cannot, you cannot. You cannot geo
target out tribal lands.
Speaker 1 (30:15):
They must be opened everyone.
Speaker 3 (30:16):
Yes. Yes, there is also a provision that if again
that wasn't supposed, that's not for sports pinning. But there
is a provision that says if jurisdiction, if what you're
doing in the jurisdiction is illegal for in that jurism,
and then you can you can exclude them. Otherwise it
has to be fifty estates. Now the mentality of sportsbook
(30:40):
guys that it's a jurisdiction by jurisdiction basis. Okay, so
we're going to offer it in California and Texas and
some other states, but geofence the thirty nine other states.
It just shows how off they are are. They don't understand.
Speaker 1 (31:02):
Just so you understand what Bruce is saying.
Speaker 2 (31:04):
DraftKings and fander Will both have stated that they are
not going to offer prediction marketplaces in the states where
they are currently licensed to operate a sports betting operation.
So in a state like Massachusetts or New York, where
draftings and fandule draftings based in Massachusetts.
Speaker 1 (31:20):
Yeah, yeah, that they're.
Speaker 2 (31:21):
Basing that that they're saying, we're not going to offer
prediction markets only in places like California and Texas where
we don't have legalized sports gambling, which then violates the CEA.
Speaker 1 (31:31):
So it does create a big problem.
Speaker 3 (31:34):
Yeah yeah, I mean, and let's see FDC is totally
corrupt and accept that, right Yeah, which is this thing?
This thing is so obvious, right too. Everything has to
be fair. You can't discriminate. You can't say, hey, I'm
not going to offer it this tribe because against it,
(31:55):
or this is state. So you know, they can argue, Okay,
we offer it to California because they don't have a
sports planning, but California still there. You can't have illegal
sports penning unless it's this right. But then neighboring state
Arizona is okay, because we're not going to offer it
there because you already have a sports pinning. I mean,
it's just totally ridiculous, is I mean when I when
(32:20):
I read those things and then they say, oh, we've
talked to the regulators and they're okay with it. Bullshit.
There are six seven states already clearly have said that
in Nevada, and I know Nevada. When Nevada says that
anybody who does business with them, and they mean like
(32:41):
companies like the advices in Nevada, they do business with them,
then they can lose their license to right, they could
be ingjevity. Guess what their online casino online gaming that's
where they make their money is bang gone? Yeah, long right,
(33:04):
So I think Caesar's MGM, all the guys who have
casinos and they're not going to jump into prediction mark
they're probably laughing.
Speaker 2 (33:14):
And oh they have I mean both, you know, both
MGM and Caesars both have stated that they aren't and
they're not doing it at all. And they have brick
and mortars, like not only do they have by casino,
do they have brick and mortar casinos where their licenses
are very much obviously necessary to run their businesses here.
So yeah, and so then the FANDOL and Draftings both
pulling out of Nevada saying we're not going to go
for licenses anymore. I mean, the Boyd's the only one.
(33:36):
They were white labeling some of their stuff with FanDuel.
But you know I don't think anybody here in the
in the city or in the state really are going
to notice much other than DraftKings having their big building
on the highway where their headquarters are.
Speaker 3 (33:47):
Yeah. Yeah, and so so anyway, it's kind of a
Wild West situation. Yeah, and I'm surprised these guys as
you know, as much as they're you know, is.
Speaker 1 (34:01):
It a money grab though? Is it just to get
as much possible business as you can get? Right now?
Speaker 2 (34:05):
Because we've seen the most of Calshi's business is from
Robinhood customers. They have they have the whole database of
Roberhood customers who are just going over and trading or
as they call it, trading on Calshi. But now we
have Polymarket. The CEO called sports betting a scam. This week,
we've got others Underdog who are coming in who are
going to be there. Is it just like trying to
get as much money as possible until the foster gets
(34:27):
shut off?
Speaker 3 (34:29):
Is that or the naive Okay, people in the financial
industry they don't understand how complicated is the gaming space is.
They think, oh, we're trading all kinds of commodities. What
the hell is it? Sports fidding. It is simple, right,
(34:50):
we should be able to do that, you know, than
anybody else. They don't know. It's gambling. It's got all
these other situations effects, and trading or betting on sports
is not the same as trading, you know, or options
(35:10):
and futures for oil and so forth. There is really
no economic council is pure gambling. So so the reason
cal she started this is because they told after seven
years they totally failed in their core business. They were
not supposed to get even to election, right, right, So
(35:31):
they got into election and then you know, they kind
of when Trump administration came came on board, they went
easy on them. Okay, so I said, okay, now we
were lucky there, but election happens. You know, every couple
of years, we go to sports bedding, this thing evolves.
Speaker 2 (35:54):
Yeah, eighty percent of their handle is sports gambling contracts now.
Speaker 3 (35:58):
So it evolved because they were desperate. They had no
other option. The core business totally failed, and then when
they saw so much money is involved and the fact
that they're concluting the whole thing, so oh, we don't
take a bet. Guess what the market makers are the
bookmakersana is they should suit those guys, because they are
(36:22):
the ones who are taking the bets. Calcy is just
a conduit and Robinhood is also a distributor of those.
So they took sports bedding and broke it into three parts. Okay,
one is the platform and one is the market maker,
which is the book makers like MGM guy sitting you
(36:44):
know a bookmaker in Las Vegas. They are the ones
who to get on both sides, right, you know, that's
how the Chicago board work. The market makers are not
in the business of predicting what the interest rate was
would be at the end of the year. They're in
the business of creating a market of what it is,
(37:06):
what it could be, and they make their money on
the spread. Right. And then and then Robinhood, who wants
to sell everything to every kid in the world, they say, okay,
we we we sell it too, so they become the distributor.
They're just as fault as anybody else. And then the
(37:28):
market makers, the institutions, they're basically involved in illegal gambling.
They are they are making markets and they're basically taking
the bets. Right, and Calci is the front for all
of them.
Speaker 1 (37:43):
Mm hmm, calling you a sports a sports.
Speaker 3 (37:47):
And then everybody else is following that because they're hiding
behind that. And see if this doesn't say anything, you know,
for political reasons, which is.
Speaker 2 (37:55):
Yeah, I mean because I mean the the the newest
CFTC chair is hearing on Capitol Hill.
Speaker 1 (38:01):
He said that he's gonna leave it up to the
courts like that. They're not interested.
Speaker 3 (38:04):
Yeah. They he was hand picked to say those things,
right from Calci. Yeah yeah, yeah, from from from the administration,
from the guys who are behind this, right, and and
I think this is a fight between the States and CFTC. Yeah,
CFTC right now doesn't say anything, Calshy says until they
(38:27):
tell tell us, we don't do anything. Yeah, And then
the other guys say, we don't you know, this is
now the market makers and we don't know. It's it's
between you and Calci. But they're participating, right and and
also the other guys, Crypto dot com and so forth,
they're saying, Okay, we follow Calci, right, we are in
(38:49):
the same dission. We follow Calci. So so Calci is
the front for all of them because they started it
and they think they can make the most out of it.
That guess what when my prediction when drafting and fandom
goes to that market, right, and chances are they lose
(39:09):
a lot of business of their licenses and business in
most of the states.
Speaker 1 (39:14):
That's why do you do you think that states are
going to pull licenses?
Speaker 2 (39:17):
Do you think we'll get to that point where a state,
not just Nevada, but other states will pull DraftKings or
FANDOL license.
Speaker 3 (39:23):
What do you think? What? What do you think?
Speaker 1 (39:26):
I think it's saber rattling.
Speaker 2 (39:27):
And I think at the end of the day, DraftKings
and Fandol will not do it because their core business
could go away pretty quickly. Because if if by chance,
the CFTC does wake up and say, in two or
three years we have a change in the White House
and we have a different appetite for this, and they
come in and say, yet, guys, we're not doing any
more of this.
Speaker 1 (39:47):
Shut this whole thing down.
Speaker 3 (39:48):
So you think they're not going to really they're just
threatening to do it, but they're not.
Speaker 2 (39:53):
I think Drapkings and fandor will try and placate to
their to their boards, and placate to their to their stockholders,
because they actually try to do do this and actually
do execute what they're talking about their entire business model
in America from a sports betting perspective could lapse.
Speaker 3 (40:07):
Yeah yeah, oh yeah yeah. So I think they're committed
right now, unless they come back in a month or
say sorry, we made the mistake right nowfore, right now,
I bet the regulators across the country they are writing
letters and kind of telling them, hey, we told you.
(40:30):
At least seven of them so far have made it clear,
and there'll be more. Well.
Speaker 1 (40:34):
The fascinating point is Massachusetts.
Speaker 2 (40:36):
DraftKings is the second largest employer in the state of Massachusetts,
and the Master Gaming Gaming Board is the most aggressive
in the country about holding the books accountable. So it's
like two gigantic forces combined charging at each other, and
like which one. I mean, if DraftKings lost their mass
license to operate in their home state, I think every
(40:59):
state in the county sure would feel at will to
go ahead and follow suit and pull and pull their license.
Speaker 3 (41:04):
Yeah, and and and and and that's the whole principle
of regulated gaming in the US. You have to have integrity,
you have to be good, and you can't you can't
just copy and and and do other things which other
people do. When the states are in a fight with
(41:27):
them and you just go and join them. It's just
it's it's it's against the whole principle of right regulated gaming, right,
the defecting to the other side. Who is sewing all
these and and the reason that CALCI started suing preemptively,
you know, all the states including Nevada and New Jersey
(41:50):
because they wanted to put to keep these things in
the federal court, right in the federal court, and the
Massachusetts was smart and the pushing to the state right.
Speaker 1 (42:01):
State and state court. Yeah, government last week.
Speaker 3 (42:04):
They are state. There is no you know, there are
several issues. A CEO was not supposed to cover sports
within gaming, that's.
Speaker 1 (42:14):
Right, it says.
Speaker 2 (42:15):
It says it's not supposed to cover it.
Speaker 3 (42:19):
And and b this thing about preemption and so forth.
If you know, it probably only holds at federal level.
Speaker 1 (42:30):
Even if right, yeah, it's a fifty state solution. They're
trying to pull a rabbit out of the hat.
Speaker 2 (42:37):
And why I've been so against it and why I
think it's such an unfortunate thing is because so many
operators have done the right thing by going through the
regulatory process, by paying the millions of dollars to be
licensed to pay the taxes in those states to do what.
You know, it's really difficult to operate in multi states
and paying multi states all the different things you have
(42:57):
to do to operate in you know, two states, let
alone twelve thirteen states, like some of these sports books
are doing. And now we have this overarching fifty state
solution where somebody can come in and take bets in
Utah and take bets in Alabama.
Speaker 1 (43:09):
And it's like, wait a minute, hold a.
Speaker 2 (43:11):
Second, like how do we go from like where never
they don't have a lottery and now they're taking sports gambling.
Speaker 3 (43:16):
Yeah. No, the whole thing is ridiculous, absolutely ridiculous. And
they think they they again, they're living in a dream.
It's not going to happen. And I tell you why,
it's the best thing that's happened to me, because I've
been telling the industry for many years. Let's create a
(43:37):
network where everybody can you know, trade their bets already
place beats, everybody wins. The sports book would create more
revenue because people would place more bets, right, ad more
bets because it's liquid, right, you can sell it at
any point of time at market prices. So now the
(44:00):
sportsbook have new revenues. The state would make more taxes
because there will be more wage drink right back and forth.
And I've come up with the business model, you know,
where when you place a bed, there is one fee.
When you trade the bet will be like buying and
selling the stock would be a lower fee. And and
(44:25):
the consumer is winning because they have the option of
always getting out of their bed and buying other people's
bet at market prices. So it's a win win for everyone.
The issue is that the the the gaming companies didn't
want to change their paradigm, right. So I've been telling them,
I know all the old guys from the sports building
(44:48):
in Nevada because I sold them systems right, and I
kept telling them and they just couldn't understand what I
was talking about. And so look, this is the business
model is been working for thirty four years. So anyway,
now they are forced to understand what exchange tradable betting
is ETVS. So ETB is going to be the world
(45:14):
of the future D and the prediction market. Exchange tradables
you place an ETV, meaning you place is standardized bet,
your with the operator, your licensed, you have your account
with and then once you place your bet. You can
sell your bet, or you can buy other people's already
place et bs with other operators. It's all within the ecosystem.
(45:39):
So when you buy and sell a stock or orrange
Chicago board is already within that ecosystem. Somebody created that
you know contract, and that contract is created by an
operator which is licensed, is owned by a registered person
that is god an account with that entity. And you
(46:04):
can now sell it as you call it, commodity or contract,
whatever you call it, the fundible asset, binary asset. And
and it's transparent, it's trackable, it's regulated, it's the way
it should be m hm.
Speaker 1 (46:24):
And it goes over across across state lines.
Speaker 3 (46:27):
The the the trading of already placed back because it's
not a bed anymore. The bed is already in place.
So if you if you do a parlay and and
you are the operator and somebody places that parlay, you
are on the hook with that parley, okay, And if
(46:48):
you don't pay, that state would come after you because
you took the bet. Right now, the person who ends
up owning it at the time that the partly gets
resolved is a customer within the ecosystem, right yep. And
(47:08):
like poker, when there is exchange of let's say, transactions
going between two customers of two different operators the operators,
and I build all that system is all tracked. At
the end of the day, there is a payable receivables
between the operators for those traits that happen. It keeps
(47:30):
track of all of it and then it gets settled
at the end of the day between the operators automatically.
All those technologies exist. The banking systems have it. Securities
industry have it. When you buy a stock, you don't
know what happens, but for sure you broke a dealer
settles your trade with another broken dealer, you know, in
(47:53):
the back office. So I build that system where everything
gets tracked and get settled on a regular basis. But
I can't get it started until at least two operator
comes on board and the start offering it. And that's
why I'm taking such a hard look at everything going on,
(48:15):
because I think I have the solution for the industry,
and I've had it for a long time. It's hard
to explain it to them, but now they're getting it.
They understand. They understand that other you know, these other
guys are doing it and if they don't offer something innovative,
then they eventually they lose the whole business. It's just
(48:38):
a matter of time. If they don't, if they don't fight,
eventually they will lose it. Anything. But right now it's
not too late because because uh, you know, it goes
to Supreme Court, and you know, a chance of Supreme
Court is Yeah, we were wrong before and it's not good.
Speaker 1 (49:00):
It's it's not gonna happen.
Speaker 2 (49:02):
Yeah, Bruce, We're out of time. But thank you so
much for this. This was such an interesting conversation. Thank you
for being us, being with us here on the Sharp Report.
Speaker 3 (49:09):
Okay, thank you, Matt, thank you.
Speaker 4 (49:12):
Thanks for listening to the Betting Pros podcast. If you
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by leaving a positive review on Apple Podcasts or Spotify.
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What's up, guys.
Speaker 2 (00:01):
How are you Welcome into a new episode of The
Sharps Report with Betting Pros. I'm your host, Matt Parol teaching.
Every month we take a look at the betting industry.
We talk to insiders and experts as to what's happening
in the space, and well, nothing is more controversial and
hotter right now in the sports.
Speaker 1 (00:17):
Betting space than prediction markets.
Speaker 2 (00:19):
Bruce Moratti is a guy who I've been following on
LinkedIn quite a bit.
Speaker 1 (00:23):
He is from BETX.
Speaker 2 (00:24):
We'll get into what BETX is later in the conversation,
but he has had some awesome opinions on where we
are and where we're going with prediction markets.
Speaker 1 (00:31):
Bruce, Matt Parrel, thank you for being here.
Speaker 3 (00:34):
Welcome, thank you, thank you, Thanks very much for inviting me.
Speaker 2 (00:38):
Okay, so, what is your take if we kind of
take a thirty thousand foot view of where America is
right now in the prediction marketplace conversation?
Speaker 1 (00:47):
I think most people.
Speaker 2 (00:48):
Aren't really sure what exactly we're talking about when it
comes to prediction marketplaces. What's the easiest way of explaining
to a layman what a prediction marketplace is?
Speaker 3 (01:00):
Okay, so, so prediction market is kind of when it
comes to sports wedding, I think it's a scam okay,
uh and and everybody knows it right, but it's becoming
a political push okay by some people. And guess what
(01:24):
they think they did to taxes, you know with Uber,
they did it to Airbnb, and they can push the
narrative to industry. But guess what. I don't think they
win this one. Uh. The States are not going to
give in. So it's kind of a total invasion from
(01:47):
the financial industry, which they don't understand gaming backed by
some influential people and a prediction market on you know,
regarding sports is gambling. Now, I agree that sports spredding
is a futures contract. I've been saying that for as
(02:10):
long as I've been in the industry, which is like
twenty some years, and I've developed system software for Nevada casinos,
so i know the space really well, I think better
than most people. And it is a futures contract. But
it is gambling. So is horse racing. While on Earth
(02:33):
nobody is talking about race horse racing. You walk into
any casino in the in Nevada for the last fifty years,
it says race and sports, race and sports. They're all gambling,
including horse racing, and nobody right now talks about horse
racing because you know, it's not making much money or
(02:56):
it is a dying business. But that's how everything is started,
betting on horses, betting on dogs, especially in the UK.
So sports bedding is huge business, we all know that.
Is it done properly by casinos? No? No, it was
(03:18):
started as a way, you know, in in in Nevada
and Las Vegas. It was started as a way to
get customers from Southea, California to come to the casinos
so that they watch the game, you know on a Sunday,
bet a few bucks here or there, and then go
(03:39):
and play on the table, you know at black jack
table or it was an amenity, right, They just wanted
to cover their expenses a little bit of profit as well.
But it was never meant to be a really big thing, right,
So sports bedding was offered in a way that was
(04:01):
confusing to everyone. You know, you bet, you know, let's
say typically one hundred ten dollars to win one hundreds
ninety nine percent of people can't figure out the math,
what the odds are, and it's not on purpose, right,
typically Las Vegas, you know, hide the Jews in the
(04:21):
arts so that you know when they changed the odds,
you couldn't figure out what what the hell happened. You
couldn't distinguish between the odds offered by one casino with
another casino. It was hard they get even people who
bet on regular basis, they can't figure out the odds.
(04:42):
But people still do it because they want to put
two place bets on their you know, on their teams.
So we all know. This thing went all the way
to the Supreme Court twenty eighteen, and many times it
went to different courts, you know, when New Jersey was
(05:05):
trying to get it legalized in New Jersey, and finally
I think it was twenty seventeen when the Supreme Court.
And I've been watching this thing because I was planning
on calling patents around this concept of multi jurisdictional A
very different country than anywhere else, and Canada is close,
(05:29):
but it's different than let's say, in England, right, everything
is one country, and Wales and Ireland they are really
different countries. But you know it's a lot of it's
made up of fifty different states, different rules and regulations,
(05:50):
especially when it comes to gambling. So that's when I
started filing patents around multi jurisdictional bedding because I knew
at some point point of time you have to bring
different different jurisdictions, you know, whoever wants to join in
into this ecosystem where you create a pool, right, the
(06:13):
pool for you can sell your bet, you can place
a bet, sell your bet. The problem we have right now,
after seven eight years of basically legalization in thirty nine states,
is that no two sports book systems are talking to
each other, right right, I mean, it's just stupid that
(06:36):
they don't. Even companies who have different systems in different states,
they can't get them to talk to each other. It's
just the way it started in the bad is something
that nobody cared to develop a dissolution for because it
was a small state, right, it wasn't worth the We
were a small company, this is word Game was a
(06:57):
small public company. And when we developed a system that
was competing with CBS, the computerized bidding system of American wagering,
which dominated everyone everyone's system. You know, this is now
twenty years ago, twenty years ago, and CBS was there
for another twenty years before that, so nobody wanted to
(07:19):
spend the time and effort to develop something which hardly
made any money for anyone and then be casino. Really,
they were not willing to pay much for much for
the software. We were getting like eight hundred dollars a
month maintenance. D wow, you know, and you know it
(07:39):
didn't even cover yer developers. But at the time, you know,
this is not going back to the first days of
online gaming. We wanted to do it because it was cool.
It was the first time that you can place a
wager botely into a casino. October two thousand, that's five
(08:06):
years ago. You guys searched it online okay, okay, Bruce
Murrarii or word game online sports wagering. It was reported
on Wall Street Journal that online gaming goes live in
the US that day that day are a stock triple
little I can imagine triple. And then everybody called Nevada
(08:29):
Gaming Control Board. They said, what the hell is going on?
Is it really? You know, because it's reported by Wall
Street Journal. So at that time, Nevada didn't require full
manufactured distributor for developing sportsbook systems. We had associate equipment
like a second here right. There was a little bit
(08:52):
of checks and balances, but not full blown licensing process.
At that time. Nevada said, hey, you guys, you should
come forward for full licensing investigation of everyone, right, all
the officers and so forth. So anyway, everybody left, I
mean I the CEO who was from Lost because our
(09:16):
CFO and CEO of the company said we're not going
to be licensed. He left, and then I stayed on,
you know, naively, not knowing what's going on. I said, okay,
I've got nothing to hide, and you know, by training,
I'm charged account and CPA, I'm good at keeping track
of things and my records and everything. So I went
(09:39):
through the process. I was the only person who was
another person who was a main shareholder and he went
through the process as well. And then the entity was
in a small public company that also got license. So
with a license in probably and I think two thousand,
two thousand and two thousand and one, oh wow, okay,
(10:02):
by Nevada giving control, it was a big deal. It
was again, we got license, we got our system approved
on the phone wage ring. Then you could call the
casino and say, okay, I want to place a bed
on such and such and our system back then was
(10:23):
Dala because there was no broadcast.
Speaker 1 (10:26):
But this is in the state though.
Speaker 2 (10:28):
To make the cat to the casino, you had to
be physically in the vaalock, right.
Speaker 3 (10:32):
Yes, And my my first patent for border control was
around seven o two, being your border control develop as
soon as you called uh this server.
Speaker 2 (10:48):
Before VPNs, he became a thing for young kids. Your
area code actually meant where you were.
Speaker 3 (10:55):
Yes, So then and and then we added some you
know checks and balances so that you couldn't change your
phone you know right prefix your phone numbers. So anyway,
this this goes back long long time ago, right. So anyway,
so we and and then after us the stations, cause
you know, did the same thing, but they did it
(11:15):
with broadband and basically copied does but they did with broadband,
and our pattern was around phones. So and and again
we were just a manufacturer, so in a small manufacturer
distributor license. So anyway, I stayed in the business. And
also we developed server based gaming similar to online gaming.
(11:40):
But on the slot machines, we changed the Regulation fourteen
of Nevada. Uh that was a hard thing to do.
That's when IGT and and slot manufacturers felt like we
are attacking their business. So and they didn't want you know,
server based gaming where they want to They want to
sell a machine. That's a lot. You're getting so much
(12:03):
things and you paid let's say back then, fifteen thousand
dollars for this. They didn't want to say, okay, you
buy one box and then everything else is just graphics.
They did that was that wasn't the business, moan. So
they bought a company and I left, and their goal
was to shelve the technology. They weren't interested. They weren't
(12:25):
interested in the sportsbook, which was called Primeline, and they
gave it away basically because again you couldn't make it
was only in Nevada you couldn't make money, right, So
I stayed in business of basically doing gaming. I did.
I've done almost anything you name it in gaming, from
(12:48):
running casinos, which I wasn't good at. Hard we didn't.
We bought the casino. This is now ten years ago
in Renal, in bankruptcy, and you know it was hard
to turn it around with some investors, and then developing
software for horse racing, for slot machines, for mingo, for kino,
(13:14):
uh basically see it. Yeah, anything to do anything to
do with gaming. So, so about again, now, two thousand
and seventeen, Uh, when the Supreme Court was going to
(13:34):
to here, yeah, yeah, to hear the case with That's
when I fogged multi jurisdictional bedding and exchange. Okay, the
first one, so I lay that you know called X
or was it called something else? No? No, no, but
X the name no, no, no, I just I found
(13:55):
it under my IP company called you Play one and
you One. It's got its own stories. Basically use of
two different random number generators for a game, which is
not the basic the basis of Live Dealer. Yeah. So
if you play an evolution game kind of a thing, right,
and there are two oranges, one is mechanical and one
(14:20):
is virtual. That's that's around my patent, which is so
I saw I saw you play one last year. But
bedex is all about having an exchange where the the
I call it props, the betting opportunities, because you know
(14:43):
in the industry.
Speaker 1 (14:44):
A prop is anything but straight or totally yeah, yeah.
Speaker 3 (14:47):
They are props right, yeah, so I so whenever you
have a betting opportunity, you standardize the opportunity, right, similar
to the Chicago Go boards similar to stockboard. So if
his team X is playing against team Y. Right, yeah,
(15:10):
so you you create. I've developed the software, you know,
it's pattern I've developed. The software, solution is ready. I'm
just waiting for the industry, which will be now potentially
bed MGM, Caesars, you know, all the casinos and including tribes.
(15:30):
It looks like it's not going to be drafting and
fandom right where so where they the Again, these things
have evolved in the last few years because I've added
three four more patterns. I followed another one. I keep
the family going, you know, to to get it up
to date with everything going on. So basically, uh bad
(15:55):
X is like when you play online. Let's say on
the platform you got tabs on playing Live Dealer or
slot right. So so as soon as you click on
and call it exchange tradable BAT. I don't call it
prediction market because I think I don't. I think that
that's just that's that name is for the guys who
(16:17):
are illegal. So I call it exchange tradable BATS. So
as soon as you click on play exchange Tradable BAT,
it takes you that X is just purely b to
be Nobody would know anything about bedex. It goes to
an environment which is a watch label for that operator
in that state. That only talks to the wallet of
(16:44):
that operator. That technology because everybody has it, right, So
if you play a slot, it uses the same wallet.
You play, you know, place the wager on a game,
it comes from the same wallet. So anyway, so that
DEX talks to the wallet. So now let's say you
have five hundred dollars in your account. The the betting
(17:10):
opportunity is presented uniformly to all the participating similar to
the stock market, all the participating sports books. The way
I've come up with this thing, which is patented and
and and and I think it's the only practical way,
(17:31):
is that you allow the operators to change the initial
prop offering price, so everything less. So the I p
O the initial prop offering you. So if you're betting,
let's say, let's let's say we're talking about a money
line situation where it's three to two, and now you
(17:53):
it says you bet let's say one dollar, you know,
in in summary to win three dollars right in that situation,
and it shows the odds. So now you're betting one
dollar to bet to win three dollars. Now, any operator
(18:13):
can offer its prop and created situation where the prop
or this betting opportunity, team X wins against team why
on such and such date. It will be a symbol,
you know, for the system n f L. Then the date.
Then let's say is Chargers c h R. Then let's
(18:36):
says our AI against raiders, and then you put a
date on it. That's a that's a unique idea that
represents us game forever. Okay, like horse racing, every every
horse has a unique name why because it says in
the database. Right, okay, So so now you and and
(18:58):
and it's the same thing with you world and it stuck.
So it creates a unique id the You can change
the narrative of you know, will team X win Team
Y or whatever it is, but it reflects you know,
the event. And then and then the operators can change
(19:21):
the initial price just to deviate if they want to.
If they they deviated from that, if you know, so
that uh, you know, it feeds them in case there
is you know, for example, if the game is in
your state, you want to change it a little bit
because there's no bison. So but you can never change
the payout because the pad goes across all the operators
(19:46):
and state lines. Yeah, when you place the bet. Again,
these are part of the band when you place the bet,
and that's why it's a win win for everyone. When
you place the bet, you can only place the bet
with the operator that you have your account with, and
they do all the checks and balances that they do
for anything else. So it's no different than anybody else.
(20:11):
It's just there is this other opportunity that can happen
with that operator in that state where you place the bet.
But as soon as you place the bet, it now
and what I've set it up to be similar to
stock market, no operator knows about the identity of the
(20:32):
other operator's customer because I know they don't want to
share that. When you buy and sell a stock, the
stock change doesn't know who you are. All they know
you are a customer of child Shop, your customer of
each you know whoever, Robbinhood they don't know. Right, So
(20:52):
the way of it structured is that the sportsbooks become
I'm using the analogy because that's what people understand. They're
the broker dealer, the child Shaw, the robin Hood. They
handle your money, they handle your order, and they also
act as a securities issuer because they issue a contract
(21:15):
to you. When they issue a contract to you, that's
a bet, they take the liability for that bet. Now
that you have an asset, a binary asset that you
place the bet on, it's no longer a bet. It
can cross the state line because it's a derivative of
(21:35):
an already placed bet. You're not if you sell. If
you place one hundred dollars on Team X to win
against Team Y with Caesars in Atlantic City, that liability
sits in Atlantic Then you know, in Atlantic City, let's
say MGMTKA, the is recorded, it plays the wagering taxes
(21:59):
like okay book right, because it's it's a bet. But
then you have the option to sell your bet. But
instead of you sell it to the operator, which is
what exists right now, and the operator doesn't give you
a good price for it, right, you can now sell
(22:20):
it to anyone in the ecosystem right at competitive prices,
and I can demo it to you, you know, after this,
after we finished really simple, it's like the stock market.
Now there is a competitive market for buying and selling
trading of already place bets. Yeah, now, the market.
Speaker 2 (22:45):
Makers digitally though, right we're talking digitally that those bets
can be sold digitally, because that's the big issue. Like
because because I'm close to the guys in New Jersey
who did the physical ticket selling.
Speaker 3 (22:58):
Yeah, yeah, yeah, props. They're from Vegas, and they went
through hell with yeah, the body in control board there
is all you you illegal and said, look, you're selling
your asset. Finally, after many backs and forths so okay,
you can sell your bet.
Speaker 2 (23:16):
Only paper ticket but not yeah, but not not the
digital so that this would be a.
Speaker 3 (23:22):
The problem is because there's there is nowhere in regulations
to say you cannot if you place the bet, you
can give it to somebody else to go and catch it. Right,
there's there's nothing. So they said, okay, yeah you can.
You said you can sell your bed and so forth.
But it could be that there's money launding. We know,
we want, we want to know who bodied we and
(23:46):
the operator doesn't know, didn't know about it. You're kind
of scamming the operator by selling their you know, their
right their bat. So at the end they said, yeah,
come and get licensed and we and and finally I
think they just want and to some other places. But
reality is, you know, it's like selling on eBay physical
(24:06):
right But but but from legal point of view, it's
the same because you're selling an acid a binary asset
of an already placed wager. But and again I've been
thinking about this, this this for a long long time.
(24:27):
So the beauty of it is that everything is trackable, right,
everything is within the ecosystem of these sports books or
license entities. It can't come from offshore and place of
right back, you can't trade them. And I know there
(24:47):
are some people off shore because they call me. I said,
Bruce that we want to participate in the better We
are one of the biggest market makers in Calshi, right,
And I said, look, even when bedex goes live, you
won't be able to participate because you go through the
same chicks and balances as if you're placing a bet,
and they're not going to let you do that. But
(25:09):
they're doing it from offshore. And yeah, I know this
because they told me they are participating. So they're laying
off they're risk into the US market. Who pays for it,
the US consumer?
Speaker 1 (25:25):
Well, hold on link pose.
Speaker 2 (25:27):
I think it's a very important point about the prediction
marketplaces that are going on right now about in what
we make sure the audience understands. What you're saying is
that there are offshore sports books and offshore operators that
are taking their risk and going to the prediction market
and laying off their risks. So they're taking the other
side of where they have a liability and they're putting
into the pdiction market. So those numbers that are jacked
(25:48):
up from a handle perspective, and people are going, oh
my gosh, look how much money is in CALCI, Look
how much money is in this fiction marketplace. Well, in reality,
it's just a risk layoff from the sports books off shore.
Speaker 3 (25:58):
So this is the best thing that's happened to them
their own book. That's why that's why recently drafting and
fan will have lost money because they can't balance their book.
They are fast, they're exposed. Okay again, I've been thinking
about this for a long time. So in Nevada, they
(26:21):
didn't care that they look, they lost money one week.
It was actually they celebrated that they had an ecosystem,
meaning people who come to the casinos, typically from most
of them from southern California, they win one week, they
(26:41):
give it back plus moret so it's like the slot
machine up and down, up and then but at the
end of the year, they always kept their juice.
Speaker 1 (26:52):
Yeah.
Speaker 3 (26:53):
The probability of the house if if there is a
fixed market, you know, meaning time you know the customer base,
right if if you if the customer base is the
same or more or less the same, every time, there's
(27:13):
fifty percent chance and assuming the odds are you know,
our price reasonably well, every time there is fifty percent
chance that the house wins or the customers when the
shops went right and and the casual better is they
just bet they don't care, right, So it's fifty to fifty.
But after like two hundred events happening, guess what it
(27:38):
comes to almost fifty to fifty. And since the books
always had this, let's say five four point five percent
plus more when it's part last, they're always one at
the end of the gold Yeah, yeah, so it was.
It's still the same in the US if there's a
captured market, right which you know right now it's kind
(28:04):
of a stable class situation. But when there is a
leakage to the international operators is if they lose this,
if they win this time, they're not going to come
back next time, just do it because they have a
building of their so anyway, so so I think I
(28:25):
think the chances of them, meaning these these CMS to
win their case. They they want to push it for
a couple of two or three years, hoping that will
be some kind of something going through the Congress and yeah,
but if it goes to the Supreme Court is so Look,
(28:49):
you were here seven eight years ago and we talked
about this.
Speaker 1 (28:53):
We've a right fact that.
Speaker 3 (28:56):
The fact that they say sports building is not gaming.
Sometimes sometimes they say they were not supposed to get
into gaming. I know this because I applied to they
are applied to CFTC four years ago. Okay during four
(29:16):
d X for during Russy and Venham chairmanship, which was
you know, Biden, and this is what you're talking about.
This is gambling sport spinning. So okay, give me uh
a no action letter and you know it's not the
best run. The rules and everything is still with c
(29:37):
FDC evolvement, so I couldn't get an AX out of them.
Uh anyway, So uh that's why I know that drafting
and fan duel are going to have major major issues
because Rule two I went through all of these four
years ago, two of CE become aut act. It says
(30:03):
it everything has to be fair, it has.
Speaker 1 (30:08):
And available to everyone.
Speaker 2 (30:10):
Right, you can, you cannot, you cannot. You cannot geo
target out tribal lands.
Speaker 1 (30:15):
They must be opened everyone.
Speaker 3 (30:16):
Yes. Yes, there is also a provision that if again
that wasn't supposed, that's not for sports pinning. But there
is a provision that says if jurisdiction, if what you're
doing in the jurisdiction is illegal for in that jurism,
and then you can you can exclude them. Otherwise it
has to be fifty estates. Now the mentality of sportsbook
(30:40):
guys that it's a jurisdiction by jurisdiction basis. Okay, so
we're going to offer it in California and Texas and
some other states, but geofence the thirty nine other states.
It just shows how off they are are. They don't understand.
Speaker 1 (31:02):
Just so you understand what Bruce is saying.
Speaker 2 (31:04):
DraftKings and fander Will both have stated that they are
not going to offer prediction marketplaces in the states where
they are currently licensed to operate a sports betting operation.
So in a state like Massachusetts or New York, where
draftings and fandule draftings based in Massachusetts.
Speaker 1 (31:20):
Yeah, yeah, that they're.
Speaker 2 (31:21):
Basing that that they're saying, we're not going to offer
prediction markets only in places like California and Texas where
we don't have legalized sports gambling, which then violates the CEA.
Speaker 1 (31:31):
So it does create a big problem.
Speaker 3 (31:34):
Yeah yeah, I mean, and let's see FDC is totally
corrupt and accept that, right Yeah, which is this thing?
This thing is so obvious, right too. Everything has to
be fair. You can't discriminate. You can't say, hey, I'm
not going to offer it this tribe because against it,
(31:55):
or this is state. So you know, they can argue, Okay,
we offer it to California because they don't have a
sports planning, but California still there. You can't have illegal
sports penning unless it's this right. But then neighboring state
Arizona is okay, because we're not going to offer it
there because you already have a sports pinning. I mean,
it's just totally ridiculous, is I mean when I when
(32:20):
I read those things and then they say, oh, we've
talked to the regulators and they're okay with it. Bullshit.
There are six seven states already clearly have said that
in Nevada, and I know Nevada. When Nevada says that
anybody who does business with them, and they mean like
(32:41):
companies like the advices in Nevada, they do business with them,
then they can lose their license to right, they could
be ingjevity. Guess what their online casino online gaming that's
where they make their money is bang gone? Yeah, long right,
(33:04):
So I think Caesar's MGM, all the guys who have
casinos and they're not going to jump into prediction mark
they're probably laughing.
Speaker 2 (33:14):
And oh they have I mean both, you know, both
MGM and Caesars both have stated that they aren't and
they're not doing it at all. And they have brick
and mortars, like not only do they have by casino,
do they have brick and mortar casinos where their licenses
are very much obviously necessary to run their businesses here.
So yeah, and so then the FANDOL and Draftings both
pulling out of Nevada saying we're not going to go
for licenses anymore. I mean, the Boyd's the only one.
(33:36):
They were white labeling some of their stuff with FanDuel.
But you know I don't think anybody here in the
in the city or in the state really are going
to notice much other than DraftKings having their big building
on the highway where their headquarters are.
Speaker 3 (33:47):
Yeah. Yeah, and so so anyway, it's kind of a
Wild West situation. Yeah, and I'm surprised these guys as
you know, as much as they're you know, is.
Speaker 1 (34:01):
It a money grab though? Is it just to get
as much possible business as you can get? Right now?
Speaker 2 (34:05):
Because we've seen the most of Calshi's business is from
Robinhood customers. They have they have the whole database of
Roberhood customers who are just going over and trading or
as they call it, trading on Calshi. But now we
have Polymarket. The CEO called sports betting a scam. This week,
we've got others Underdog who are coming in who are
going to be there. Is it just like trying to
get as much money as possible until the foster gets
(34:27):
shut off?
Speaker 3 (34:29):
Is that or the naive Okay, people in the financial
industry they don't understand how complicated is the gaming space is.
They think, oh, we're trading all kinds of commodities. What
the hell is it? Sports fidding. It is simple, right,
(34:50):
we should be able to do that, you know, than
anybody else. They don't know. It's gambling. It's got all
these other situations effects, and trading or betting on sports
is not the same as trading, you know, or options
(35:10):
and futures for oil and so forth. There is really
no economic council is pure gambling. So so the reason
cal she started this is because they told after seven
years they totally failed in their core business. They were
not supposed to get even to election, right, right, So
(35:31):
they got into election and then you know, they kind
of when Trump administration came came on board, they went
easy on them. Okay, so I said, okay, now we
were lucky there, but election happens. You know, every couple
of years, we go to sports bedding, this thing evolves.
Speaker 2 (35:54):
Yeah, eighty percent of their handle is sports gambling contracts now.
Speaker 3 (35:58):
So it evolved because they were desperate. They had no
other option. The core business totally failed, and then when
they saw so much money is involved and the fact
that they're concluting the whole thing, so oh, we don't
take a bet. Guess what the market makers are the
bookmakersana is they should suit those guys, because they are
(36:22):
the ones who are taking the bets. Calcy is just
a conduit and Robinhood is also a distributor of those.
So they took sports bedding and broke it into three parts. Okay,
one is the platform and one is the market maker,
which is the book makers like MGM guy sitting you
(36:44):
know a bookmaker in Las Vegas. They are the ones
who to get on both sides, right, you know, that's
how the Chicago board work. The market makers are not
in the business of predicting what the interest rate was
would be at the end of the year. They're in
the business of creating a market of what it is,
(37:06):
what it could be, and they make their money on
the spread. Right. And then and then Robinhood, who wants
to sell everything to every kid in the world, they say, okay,
we we we sell it too, so they become the distributor.
They're just as fault as anybody else. And then the
(37:28):
market makers, the institutions, they're basically involved in illegal gambling.
They are they are making markets and they're basically taking
the bets. Right, and Calci is the front for all
of them.
Speaker 1 (37:43):
Mm hmm, calling you a sports a sports.
Speaker 3 (37:47):
And then everybody else is following that because they're hiding
behind that. And see if this doesn't say anything, you know,
for political reasons, which is.
Speaker 2 (37:55):
Yeah, I mean because I mean the the the newest
CFTC chair is hearing on Capitol Hill.
Speaker 1 (38:01):
He said that he's gonna leave it up to the
courts like that. They're not interested.
Speaker 3 (38:04):
Yeah. They he was hand picked to say those things,
right from Calci. Yeah yeah, yeah, from from from the administration,
from the guys who are behind this, right, and and
I think this is a fight between the States and CFTC. Yeah,
CFTC right now doesn't say anything, Calshy says until they
(38:27):
tell tell us, we don't do anything. Yeah, And then
the other guys say, we don't you know, this is
now the market makers and we don't know. It's it's
between you and Calci. But they're participating, right and and
also the other guys, Crypto dot com and so forth,
they're saying, Okay, we follow Calci, right, we are in
(38:49):
the same dission. We follow Calci. So so Calci is
the front for all of them because they started it
and they think they can make the most out of it.
That guess what when my prediction when drafting and fandom
goes to that market, right, and chances are they lose
(39:09):
a lot of business of their licenses and business in
most of the states.
Speaker 1 (39:14):
That's why do you do you think that states are
going to pull licenses?
Speaker 2 (39:17):
Do you think we'll get to that point where a state,
not just Nevada, but other states will pull DraftKings or
FANDOL license.
Speaker 3 (39:23):
What do you think? What? What do you think?
Speaker 1 (39:26):
I think it's saber rattling.
Speaker 2 (39:27):
And I think at the end of the day, DraftKings
and Fandol will not do it because their core business
could go away pretty quickly. Because if if by chance,
the CFTC does wake up and say, in two or
three years we have a change in the White House
and we have a different appetite for this, and they
come in and say, yet, guys, we're not doing any
more of this.
Speaker 1 (39:47):
Shut this whole thing down.
Speaker 3 (39:48):
So you think they're not going to really they're just
threatening to do it, but they're not.
Speaker 2 (39:53):
I think Drapkings and fandor will try and placate to
their to their boards, and placate to their to their stockholders,
because they actually try to do do this and actually
do execute what they're talking about their entire business model
in America from a sports betting perspective could lapse.
Speaker 3 (40:07):
Yeah yeah, oh yeah yeah. So I think they're committed
right now, unless they come back in a month or
say sorry, we made the mistake right nowfore, right now,
I bet the regulators across the country they are writing
letters and kind of telling them, hey, we told you.
(40:30):
At least seven of them so far have made it clear,
and there'll be more. Well.
Speaker 1 (40:34):
The fascinating point is Massachusetts.
Speaker 2 (40:36):
DraftKings is the second largest employer in the state of Massachusetts,
and the Master Gaming Gaming Board is the most aggressive
in the country about holding the books accountable. So it's
like two gigantic forces combined charging at each other, and
like which one. I mean, if DraftKings lost their mass
license to operate in their home state, I think every
(40:59):
state in the county sure would feel at will to
go ahead and follow suit and pull and pull their license.
Speaker 3 (41:04):
Yeah, and and and and and that's the whole principle
of regulated gaming in the US. You have to have integrity,
you have to be good, and you can't you can't
just copy and and and do other things which other
people do. When the states are in a fight with
(41:27):
them and you just go and join them. It's just
it's it's it's against the whole principle of right regulated gaming, right,
the defecting to the other side. Who is sewing all
these and and the reason that CALCI started suing preemptively,
you know, all the states including Nevada and New Jersey
(41:50):
because they wanted to put to keep these things in
the federal court, right in the federal court, and the
Massachusetts was smart and the pushing to the state right.
Speaker 1 (42:01):
State and state court. Yeah, government last week.
Speaker 3 (42:04):
They are state. There is no you know, there are
several issues. A CEO was not supposed to cover sports
within gaming, that's.
Speaker 1 (42:14):
Right, it says.
Speaker 2 (42:15):
It says it's not supposed to cover it.
Speaker 3 (42:19):
And and b this thing about preemption and so forth.
If you know, it probably only holds at federal level.
Speaker 1 (42:30):
Even if right, yeah, it's a fifty state solution. They're
trying to pull a rabbit out of the hat.
Speaker 2 (42:37):
And why I've been so against it and why I
think it's such an unfortunate thing is because so many
operators have done the right thing by going through the
regulatory process, by paying the millions of dollars to be
licensed to pay the taxes in those states to do what.
You know, it's really difficult to operate in multi states
and paying multi states all the different things you have
(42:57):
to do to operate in you know, two states, let
alone twelve thirteen states, like some of these sports books
are doing. And now we have this overarching fifty state
solution where somebody can come in and take bets in
Utah and take bets in Alabama.
Speaker 1 (43:09):
And it's like, wait a minute, hold a.
Speaker 2 (43:11):
Second, like how do we go from like where never
they don't have a lottery and now they're taking sports gambling.
Speaker 3 (43:16):
Yeah. No, the whole thing is ridiculous, absolutely ridiculous. And
they think they they again, they're living in a dream.
It's not going to happen. And I tell you why,
it's the best thing that's happened to me, because I've
been telling the industry for many years. Let's create a
(43:37):
network where everybody can you know, trade their bets already
place beats, everybody wins. The sports book would create more
revenue because people would place more bets, right, ad more
bets because it's liquid, right, you can sell it at
any point of time at market prices. So now the
(44:00):
sportsbook have new revenues. The state would make more taxes
because there will be more wage drink right back and forth.
And I've come up with the business model, you know,
where when you place a bed, there is one fee.
When you trade the bet will be like buying and
selling the stock would be a lower fee. And and
(44:25):
the consumer is winning because they have the option of
always getting out of their bed and buying other people's
bet at market prices. So it's a win win for everyone.
The issue is that the the the gaming companies didn't
want to change their paradigm, right. So I've been telling them,
I know all the old guys from the sports building
(44:48):
in Nevada because I sold them systems right, and I
kept telling them and they just couldn't understand what I
was talking about. And so look, this is the business
model is been working for thirty four years. So anyway,
now they are forced to understand what exchange tradable betting
is ETVS. So ETB is going to be the world
(45:14):
of the future D and the prediction market. Exchange tradables
you place an ETV, meaning you place is standardized bet,
your with the operator, your licensed, you have your account
with and then once you place your bet. You can
sell your bet, or you can buy other people's already
place et bs with other operators. It's all within the ecosystem.
(45:39):
So when you buy and sell a stock or orrange
Chicago board is already within that ecosystem. Somebody created that
you know contract, and that contract is created by an
operator which is licensed, is owned by a registered person
that is god an account with that entity. And you
(46:04):
can now sell it as you call it, commodity or contract,
whatever you call it, the fundible asset, binary asset. And
and it's transparent, it's trackable, it's regulated, it's the way
it should be m hm.
Speaker 1 (46:24):
And it goes over across across state lines.
Speaker 3 (46:27):
The the the trading of already placed back because it's
not a bed anymore. The bed is already in place.
So if you if you do a parlay and and
you are the operator and somebody places that parlay, you
are on the hook with that parley, okay, And if
(46:48):
you don't pay, that state would come after you because
you took the bet. Right now, the person who ends
up owning it at the time that the partly gets
resolved is a customer within the ecosystem, right yep. And
(47:08):
like poker, when there is exchange of let's say, transactions
going between two customers of two different operators the operators,
and I build all that system is all tracked. At
the end of the day, there is a payable receivables
between the operators for those traits that happen. It keeps
(47:30):
track of all of it and then it gets settled
at the end of the day between the operators automatically.
All those technologies exist. The banking systems have it. Securities
industry have it. When you buy a stock, you don't
know what happens, but for sure you broke a dealer
settles your trade with another broken dealer, you know, in
(47:53):
the back office. So I build that system where everything
gets tracked and get settled on a regular basis. But
I can't get it started until at least two operator
comes on board and the start offering it. And that's
why I'm taking such a hard look at everything going on,
(48:15):
because I think I have the solution for the industry,
and I've had it for a long time. It's hard
to explain it to them, but now they're getting it.
They understand. They understand that other you know, these other
guys are doing it and if they don't offer something innovative,
then they eventually they lose the whole business. It's just
(48:38):
a matter of time. If they don't, if they don't fight,
eventually they will lose it. Anything. But right now it's
not too late because because uh, you know, it goes
to Supreme Court, and you know, a chance of Supreme
Court is Yeah, we were wrong before and it's not good.
Speaker 1 (49:00):
It's it's not gonna happen.
Speaker 2 (49:02):
Yeah, Bruce, We're out of time. But thank you so
much for this. This was such an interesting conversation. Thank you
for being us, being with us here on the Sharp Report.
Speaker 3 (49:09):
Okay, thank you, Matt, thank you.
Speaker 4 (49:12):
Thanks for listening to the Betting Pros podcast. If you
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by leaving a positive review on Apple Podcasts or Spotify.
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My Favorite Murder with Karen Kilgariff and Georgia Hardstark
My Favorite Murder is a true crime comedy podcast hosted by Karen Kilgariff and Georgia Hardstark. Each week, Karen and Georgia share compelling true crimes and hometown stories from friends and listeners. Since MFM launched in January of 2016, Karen and Georgia have shared their lifelong interest in true crime and have covered stories of infamous serial killers like the Night Stalker, mysterious cold cases, captivating cults, incredible survivor stories and important events from history like the Tulsa race massacre of 1921. My Favorite Murder is part of the Exactly Right podcast network that provides a platform for bold, creative voices to bring to life provocative, entertaining and relatable stories for audiences everywhere. The Exactly Right roster of podcasts covers a variety of topics including historic true crime, comedic interviews and news, science, pop culture and more. Podcasts on the network include Buried Bones with Kate Winkler Dawson and Paul Holes, That's Messed Up: An SVU Podcast, This Podcast Will Kill You, Bananas and more.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com