America’s Betting Craze Has Spread to Its News Networks
A former longtime CNN reporter, who asked to remain anonymous, opposed the deal on various grounds, saying it seemed “gimmicky” for the network to promote betting odds. “Do they really think this adds value to the coverage? »
The value of the data depends on the liquidity of a particular market; in general, the higher the money wagered, the more predictive the odds. There is no magic threshold for determining when a market should be taken seriously, but many of the most cited election markets attract at least tens of millions of dollars in trading. When Enten touted the benefits of betting odds analysis on air the other day, he neglected to mention that only a few hundred thousand dollars had been wagered on this particular market. Kalshi’s odds provided good television fodder, but, statistically speaking, they didn’t say much.
How many news organizations, desperate for money and clicks, will head in the same direction? Dan Pozner was director of gaming content and partnerships at NBC Sports in 2020 when the company entered into its first partnership with a sportsbook, PointsBet (since acquired by Fanatics, which just launched a predictions marketplace in two dozen states). Some traditionalists at NBC were reluctant to promote the game, Pozner recalls, but the prevailing mentality was: “They have to do what everyone else is doing to keep up, or they’re going to miss out.” » Pozner also doesn’t think that many news agencies will settle for moral reservations this time around. I heard something similar from Dustin Gouker, a journalist who also spent years facilitating affiliate marketing deals with media companies and who now publishes a prediction markets newsletter, Event Horizon. It is appropriate that CNN, CNBC and Yahoo Finance will probably be pioneers: “Bloomberg, the the Wall Street Journal, New York Times, Fox News, and so on, why wouldn’t they all do something like that?
It’s easy to see the synergy between news and betting on news. Kalshi said he would create some markets at CNBC’s request, although many news stories already have a corresponding betting market. After the Times published a front-page story last month about the growing evidence of the president’s age, Kalshi’s chances of him being removed from office by the end of next year have increased to twenty-nine percent. Kalshi also accepts bets on extreme weather, such as markets whether an 8.0 magnitude earthquake will hit California before the end of the year, or whether Etna will erupt in the same time frame. (There is a one in one hundred and fifty-seven percent chance, respectively.)
Of course, there is something macabre about profiting from natural disasters or wars. Polymarket is betting on the possibility that Israel will strike Gaza on any given day. There can also be strange feedback loops, said Andrew Hall, a political scientist at Stanford. (Hall also advises venture capital firm Andreessen Horowitz, an investor in Kalshi.) In political markets in particular, “news affects prices, and then prices become part of the news,” Hall told me. For example, media coverage that Hegseth has the highest chance of being the first ousted Cabinet secretary could further increase those chances, which could generate more media coverage, which could eventually lead the president to fire him.
Links to prediction markets could create other problems for journalists. Given the importance of media coverage on betting odds, there are many opportunities for insider trading. Accentuating this conflict, news organizations are often designated as the source of truth to resolve a market. Kalshi is betting, for example, on the visit of certain people to the White House this year, like the rapper Drake or the Pope. The results of these bets are determined by reporting in various media outlets, including CNN. Kalshi’s rules prohibit any employee of a media outlet, anyone with “material nonpublic information” or anyone with “the ability to influence the outcome of the contract” from trading. But, as Event Horizon writer Gouker asked: “Are they actually stopping them? Earlier this year, a Republican candidate for governor of California, Kyle Langford, said he had bet a hundred dollars on Kalshi to win the election. Of course, he was forbidden to do so, but the bet apparently paid off. Kalshi said he was investigating.
