Meet Polymarket’s $400 Million Man | Everybody's Business
Summary
Credit Card Wars: The podcast discusses the intense competition among premium credit card providers like American Express and Chase, highlighting their strategies to attract affluent customers through exclusive perks and high fees.
Economic Insights: The conversation reveals how credit card companies are targeting the top 10% of American spenders, reflecting a K-shaped economy where wealthier individuals drive significant consumer spending.
Salesforce and Dreamforce: The podcast covers Salesforce's Dreamforce event and CEO Marc Benioff's controversial comments about federal troops in San Francisco, illustrating the intersection of corporate influence and politics.
Prediction Markets: An interview with a top prediction market participant, Domer, explores the appeal and mechanics of betting on events like Taylor Swift's album sales, highlighting the growing interest in prediction markets.
Investment Risks: The discussion on prediction markets emphasizes the potential for insider trading and market manipulation, raising concerns about the risks involved for less experienced participants.
OpenAI and AI Ethics: The podcast touches on OpenAI's decision to allow mature content on ChatGPT, sparking debate over the ethical implications and potential impact on user behavior.
Market Trends: The episode underscores the evolving landscape of financial products and services, from credit card perks to AI advancements, reflecting broader economic and technological shifts.
Transcript
[Music] Bloomberg Audio Studios podcasts, radio, news. [Music] This is Everybody's Business from Bloomberg Business Week. I'm Max Chapen and I'm Business Week editor Brad Stone in for Stacy Vanic Smith. And today, Max, you're treating us to a followup on Poly Market. Yeah, we've got an interview with the biggest prediction market better around. His name is Domer. He is fascinating. But before that, our friend Amanda Mull join us in the studio to talk about her latest piece for Business Week, the credit card wars. What's behind those skyhigh fees from AMX and Chase and what it tells us about the state of the economy? >> And Brad, you've got the underrated story. What is it? >> That's right. One leading AI firm just announced, Max, a major change and said their chatbot is about to get a little salacious. You know, I've been thinking we needed an after hours segment of everybody's business. I'm glad we'll be able to get there this week. Brad, you live in San Francisco. You're here in New York with me right now in for Stacy who's traveling. But the thing that is bothering me sitting here with you is you're missing Dreamforce, the big Salesforce conference which is going on right now in San Francisco. >> It's true. Here's what I'm not missing. Terrible traffic, closed streets, jammed restaurants, 50,000 people, flooding into San Francisco. But I do I I do feel like I'm missing something. I mean, the city comes alive. Salesforce is bringing in Metallica and Benson Boon to perform there. The energy floods into the city and Mark Beni off, Salesforce's founder and CEO, gets to play magnanimous host. This is so embarrassing for San Francisco that that the Dream Force, this conference held by a software as a service company is the big event, but I guess it is the big event. >> This this is the counterculture here in in in 2025. But look, every company has these big events. Apple has WWDC, Facebook has connect, customers come, press comes, the CEO gets up there and makes big pronouncements, and occasionally Max really puts his foot into it, >> right? And that's why we're talking about this because Mark Beni off who you know until very recently I guess right up until Donald Trump be became president was known as this like Democratic donor influential liberal. He had helped raise taxes in San Francisco to pay for more aid for homeless people. He has done a complete 180 since Trump's election. He got on the phone with the New York Times and just by the by mentioned that he was in favor of having federal troops come into San Francisco. This is obviously happening in other cities. Democratic mayors and local officials are are almost uniformly against it. Mark Beni off welcoming the change. He said, "We don't have enough cops, so if they can be cops, I'm all for it." Welcoming in the federal troops to to to help Dreamforce out here. >> And basically spent the rest of the week trying to walk it back. But look, I mean, the White House does not like Mark Beni off. He is not in favor. He is associated with the Democratic party. Meanwhile, his rivals like Larry Ellison and Oracle soaring at at least in some part on the strength of their connection to the White House. So, you know, Mark is trying to be opportunistic here. >> Yeah, I think he wants in on that basically is is what you're saying. And and and why not? I mean, it's it's been really it's been good times for for anyone who is closely connected to Donald Trump or at least it seems that way. >> Yeah. and and the federal government is a big part of Salesforce's business. So, I can see why he's sort of throwing stuff against the wall right now. At the time of this recording at least, Salesforce stock is down 25% this year. But Brad, I mean, you know this, but like it's so funny because first of all, Mark Manov doesn't live in San Francisco. He lives in Hawaii. He g he he wears Hawaiian shirts, which is fun and that's kind of like his main thing. But anyway, he doesn't live in the city. He gave this interview from his private plane, which is always a good look. So like there are a lot of things about this that are just kind of I mean just like amusing and just like you said kind of crassly opportunistic >> and we were curious right what Dreamforce attendees made of this year's conference and of all the hubup. >> Yeah. So, we sent out a Bloomberg Tech reporter, Jana Nodler, out in San Francisco among the badged hordes, the Dreamforce attendees to ask them, you know, how excited they were for this. Had they seen any celebrity sightings and uh here's what she found. >> How excited are you about Dreamforce this year? >> Very. It's my first time to be here, so very excited. >> Oh, it's my first time. This is uh overwhelmingly wonderful. >> Oh, we're pumped. I'm here representing Six Flags and so we're doing some really cool things with Agent Force. Last time I was here when they announced data cloud. So going from data cloud to all the AI stuff is pretty cool. >> Are there any celebrities you spotted or that you're excited about? >> Not yet, but I'm going to keep my eye open. >> The band Metallica. That's what I'm excited for. Well, I just saw Mel Robbins and that was amazing. >> Hopefully Mark Cuban's here. >> It's always tough to get to see Matthew McConna, but he's usually pretty good. >> How do you feel in San Francisco? Do you feel safe here? >> Absolutely. I'm from New York. >> Oh, yeah. Beautiful city. I'm from Indianapolis, so it's probably better right now than it is there. As long as you're close to this, close to Dreamforce, you're okay. But if you get outside of here, not so much. >> Have you uh seen the comments of Ben off around bringing the National Guard into the city to keep it safer? >> I don't think it's a bad idea. >> I've been walking here from the train, so I don't understand why they would need that here. Makes a lot of sense. Yeah, it makes me wonder if Dreamforce shouldn't move. You know, safety is first. >> That probably was, I know, a mistake. Come on. I mean, it's it's a city. It's not a border. All right, there's one guy among these people who have some familiarity with US law and everybody else is just like, "Yeah, whatever." Just brings all down. >> No, I mean I I think the attendees have put their finger on something that perhaps Mark because he's living in Hawaii and spending his time on his jet doesn't quite realize, which is that the city has, I think, turned a corner. Obviously, there are some problems. It's also a city that is just not gonna it's not constitutionally uh willing to to sit back and and see the National Guard. I I I think that it would portend real protests. >> Are you saying that the voices we just heard do not represent like the full gamut of political beliefs in San Francisco? Is that what you're saying, Brad? Cuz I think you're right. Like there are a lot of people who are like not only would not be that excited to see Mark Beni off release the new agent force, but who are probably like a little bit angry about Dreamforce even being there, worried about gentrification, don't like Donald Trump. I mean you'd I think you you said this earlier, but I mean there would be a naked bike protest for sure if if the National Guard comes in and a naked bike protest that would dwarf Portland, Oregon's naked bike. >> No, I I do not want to see the National Guard in San Francisco. I think there'd be some anger and and protests and and the city frankly I don't think needs it right now. >> I think we need to get have the National Guard stop these tech conferences. [Music] Points maxing. Do you know what points maxing is? >> I have a vague idea. We're talking about credit cards, right? >> We are. We're talking about these super aggro, high-end credit cards that cost hundreds or almost $1,000 a year. And and there are all these people who are really obsessed with them. There's a crazy competition. In the latest issue of Business Week, Amanda Maul, who is our guest, calls it the war for America's rich. It's all about credit cards. And we're going to get into that. Amanda's here now. Hey Amanda. >> Hi. >> So, can you just explain what is happening with premium credit cards for those of us who are like still in the dark ages of like you shouldn't spend hundreds of dollars for a piece of plastic that gives you miles. >> Well, I I think that like the top line is that they're taking over the world sort of or at least they're taking over the world in the US. The act of using a credit card is very very similar no matter which one you use. So, if a bank wants you to use theirs versus a competitor's, they have to figure out what they can offer you in order to get you to do that. And in order to offer uh really really affluent customers more and more things, they've moved into all kinds of spheres of life. Credit card companies have long uh sort of colonized the airport and your travel experiences. They've been involved with hotels, car rental, things like that. But more recently, they've moved into events, sports, dining, all kinds of other things that rich people like in order to come up with new perks, new incentives, new coupons to attract a very particular type of customer. >> This story was surprising to me because I've always felt like one of the dirty little secrets of the credit card business is that, you know, rich people, wealthy people, they don't borrow from their credit cards, right? They they don't run up debt. And so it was shocking to me that there is this battle over the affluent segment. Explain the economics of this battle. >> Well, you're right that the wealthier people get, the less likely they are to carry a balance on their credit card. But that's only one way that credit card companies make money. There's two more ways. So, one of them is fees, which are getting higher and higher at the high end. Um, but the big one is interchange fees, and those are the fees that are paid by merchants every time anybody makes a purchase in their establishment on a credit card. They run between like 1% and like three and a half percent sometimes more on the premium cards and uh that is a source of a lot of revenue for card issuers. >> Yeah, this is the crazy thing like and we should say some of the names of these cards. So like we're talking about the American Express Platinum card, the Chase Sapphire Reserve card. >> Well, those are the two biggest players right now. You've also got the City Strata Elite, the Capital 1 Venture X, and there are other smaller cards offered by other banks, but those are the big ones from the big banks right now. >> And like you're saying, they they make money because they charge the holders a fee as much as like 700 or 800 bucks a year. But also, and I don't think this is intuitive, like when you swipe that card at a store, the store pays a percentage, and they pay more money if it's a high-end card. So, if you're swiping just like a a like a I I don't know. I don't know what has the lowest fees, >> you know, just like the basic sort of like entry level credit card that your bank issues Visa and that's like what like 1 and a.5% or something or 2%. >> Yeah, it's like 1 to one and a half%. >> But then if you swipe one of these super high-end cards, an American Express Platinum card, we're talking over 3%. Why would a merchant agree to that? Like why does that I can see why a credit card would want to charge more, but why is that like the way the system works? Well, merchants are in the US at least are sort of stuck. If they want to process transactions from people who hold these cards, then they sort of have to take them. A lot of markets around the world limit the amount that credit card processors are allowed to charge in interchange fees, but the United States does not. So card networks, which are Visa, Mastercard, American Express, basically can sort of set their own fees and then banks that issue cards can decide which tier of processing they want to put those cards at. So the really really high-end cards come in usually, you know, two and a half to as much as 5%. But when you put more and more like highincome Americans on those high-end cards, the penalty for retailers and merchants for not accepting those cards becomes greater and greater because those are the people who make a lot of purchases. They spend a lot of money. This is why one of the reasons that American Express used to not be accepted at a lot of places, but so many high highincome Americans, high-spending Americans now use American Express cards that if stores want to sell things to those customers, and they very much do, they just sort of have to eat it. >> All right, Amanda, you talk in the story about this war for these wealthy consumers. What does it look like? Like, how are these companies competing with one another? Well, you see it show up in in advertising and marketing. That's probably where most people have noticed it, if they've noticed it. I uh went to the US Open this summer. AMX and Chase are both huge sponsors of the US Open. They both had built a series of of enormous sort of spaces and booths and experiences on the grounds of the US Open. Their luxury suites in the stadium are like sort of across from each other. There is a huge a huge war to get into spaces where wealthy people spend time and where they have interests. So you see it pop up there. If you've been watching NFL this season, you see probably dueling ads for Chase Sapphire Reserve and MX Platinum. They both refreshed their perks offerings this year and raised their fees. And so they're they're both involved in this huge push right now to convince new consumers that they are the the one credit card to rule them all. You got Capital One opening up these fancy coffee shops, including one like right uh under our building. >> Yeah. Yeah. You get Capital One opening coffee shops. You get credit card companies sort of racing into the airport lounge game. Before >> the airport lounge game >> in 2013, American Express opened its first airport lounge in Vegas. And before that, all the airport lounges were owned by airports and sort of mediated by airports. And American Express was like, well, we know our our shoppers love airport lounges, so like why don't we do this ourselves? 2023, Chase was like, "Here's ours." They've opened seven since then that are like huge and luxurious, made to order food. You can get a massage. You can get a facial. You can, you know, there's all of these all of these things. And now Capital One also has airport lounges. Like they're just looking for ways to show up in the places where wealthy people are spending. >> Okay. So, we've talked about the appeal of these cards to merchants, the reason why the banks are fighting each other, but what is the appeal to customers? I mean, I I admit I'm an MX Platinum card holder. The fee wrankles me almost $1,000. You know, the airport lounges are packed with people. Buffets of milky eggs and fruit and co COVID and influenza. I mean, I just I and I'm not maximizing my point. So, why are these cards desirable and why are they particularly interesting and desirable to millennials and chinzy? >> Well, part of the story is prestige. This is why all kinds of luxury goods are desirable on some level. Credit card companies have done a really great job in the past couple of decades of marketing these cards not just as payment implements or tools, but as things that mark you as a particular type of person. >> Wait, is that feeling you get when you pull out the platinum card is what you're saying and then you hear the plunks down. It's a little heavier than a normal card. >> Yeah. Well, and I I did a story a couple years ago about why so many cards are made of metal right now. And somebody from American Express told me that within the industry they call it plunk factor. >> Yeah. The plunk factor. Um, it is it is fun to pull out like a fancy credit card and just, you know, splash it down on the table. Prestige is a huge part of this. >> Now, I do not have one of these cards and I have resisted them partly because I think that airport lounges are dumb and like it's just the same as the airport but more crowded. You know, you can get food and drinks and and seats uh and Wi-Fi in the normal airport without paying hundreds of dollars or waiting on a line or whatever. But I have wondered I do have that like FOMO feeling Amanda like that I might be missing out. Am I making a mistake? Are our listeners who might be considering this making a mistake by not you know paying up for American Express Platinum or a Chase Sapphire Reserve or a whatever one of these other ones? Well, I think this is the other big element of their appeal is that all of these cards promise thousands of dollars in annual savings if you pay the upfront fee and if you use their particular set of credits and rewards and perks correctly. The credits and rewards and things like that are are largely bent toward travel. They're bent toward more and more recently luxury shopping, dining out. So, if you're a person who goes on several vacations a year and eats out a lot in a major city and shops at Sax Fifth Avenue or Lululemon or has an Equinox membership, then like you are going to like see some savings on those purchases you would make anyway because of this. But then also what these cards do I think is create a set of perks some of which are underwritten by thirdparty retailers, thirdparty brands who want to get their products and their services in front of this like very particular set of American shoppers who are spending you know the top 10% of American households spends 50% of the consumer purchases annually at this point. So this is a very powerful group of consumers if you are selling basically anything. And so this allows them to get their products and their services in front of these shoppers. And then the credit cards usually structure the rewards in in ways that then sort of encourage you to create a habit with those new products or services. Like the Lululemon credit that American Express just introduced for its platinum card. It's $300 a year, but it's in $75 quarterly increments. >> Brad, take advantage of that. 75 bucks a quarter. You know, you can't miss it. >> It's just so much work. But Amanda, you mentioned the what what you've called the K-shaped economy, right? Wealthy people responsible for over half of all consumer spending potentially propping up this economy. So, what does what does this battle between credit card companies and banks for the wealthiest shopper tell us about the economy right now? Well, I think when you see products and services start to gather at either end of the extremes on the product and service continuum, you have an indication that brands, companies, retailers are looking at their sales data, looking at the economic data and going, there's not all that many people spending money and there's not all that many people with discretionary income. And if you're a discretionary business, which like Equinox, Lululemon, Apple Music, those all are, then it makes a lot of sense to turn your business toward satisfying the whims of people who are doing all the spending. And I think credit cards like those third party brands and retailers have made basically the same calculation because if you make your revenue on interchange fees, on credit card fees, then you need people who are spending a lot of money and who are spending frequently. So Amanda, you are clearly as sophisticated as it gets when it comes to these cards. What are you using? And I've admitted to being an AMX Platinum card holder. Max is a conscientious objector. Uh what are you what are you holding? And how do you maximize the the points? >> Well, I use an American Express Delta Reserve card. >> That's a nice one. >> Yeah, it's a fancy one. Um it is their highestend Delta co-brand card. It is above the platinum. Um, but how how these names work out. >> Did you just call me that? >> It has a lower fever. >> Clunks harder than yours. >> It's purple. It's a lovely shade of purple. No, the how the co-brand cards work is like a whole different thing cuz you get premium versions of those two. The platinum uh Delta MX doesn't have the regular Platinum MX perks and it costs a lot less. So, I'm from originally from Atlanta, which means, of course, that I am a Delta flyer. And so, it has like perks that work for me about like, you know, I get companion fairs. I get upgrades and things like that. And, uh, it basically works out. I uh, use the $200 Delta Stays credit to book a hotel room this year. All right, listeners, if you have one of these credit cards or you have thoughts on one of these credit cards, send us an email. Everybody's bloomberg.net. That's everybody's with an s at bloomberg.net. Tell us if you are a Delta holder or a or a American Express holder or or like me a conscientious objector. Amanda, thank you for doing this. Stick around. You'll be back at the end of the show for our underrated segment. I'll be here. [Music] All right, Brad. Last week on the show, Stacy and I talked to Joe Weisenthal about this new world prediction markets. >> I loved it. I it didn't make me any less skeptical of of sites like Poly Market, but I learned a lot. >> Well, you know, I think I might be prediction pill here, honestly. But but in any case, we're just sort of like wondering like who are these guys who are playing in in this world? I mean, obviously this is a world that is sort of on the gray area in terms of legality, but but is becoming very popular and very influential. And we found a guy. Now, his name, I'm going to tell you his pseudonym. is DOR. But if you go to Poly Market's leaderboard, this is like the list of all the bets on the site and you sort it by volume, you will find that this guy Domer, whose handle on Poly Market is just waking up. His avatar is a Ryan Gosling image, has bet $413 million on this site. >> Is this his living? Does is this what he does? >> This is what he does. this is his full-time job is making prediction market bets and and you know we want to understand like what this is like how a person who is sophisticated who's really playing in this world thinks about it and also like where he sees it going like does he think this is the that we're like at the beginning of something is this is this a sideeshow so we got into all that but this interview starts with Stacy just asking him like what is the deal with all your handles >> oh boy okay let's [Music] your handle on Poly Market has changed. It evolves. Could do you mind talking a little bit about that if people look for you there? >> Yeah, it's almost always the latest Ryan Gosling movie and I'm not sure. I think that started with Driver, so that was a long time ago and then I've just kind of been slowly but surely replacing it with his newest movie. >> Are you a like a Gossling fan? I mean, who isn't? >> I'd love to just hear, first of all, this is your full-time job, right? But making bets on prediction markets. Would love to hear kind of how that happened, like how you found yourself in a position where you are, you know, basically for your full-time job going and trying to predict everything from who is going to be the vice presidential pick all the way to like, I don't know, like what Taylor Swift song is going to be on the Billboard top 100. Like, how did you wind up there? Yeah. So, out of college, I had just like a regular full-time job, etc. And on the side, I was kind of playing poker, and this was like the late 2000s, so online poker was like super popular. And I had started to make more money uh doing poker than I was at my job. And I was like, let's give it a go. And so, I I I quit to play poker, but within probably maybe less than a year, I had found where you could bet on stuff like the Oscars. And so I was like, "Wow, I watched the Oscars. Like, I can bet on who's going to win. Like, this is this is really exciting." And then I found that you can bet on, you know, the presidential candidates. And I'm someone that kind of like, you know, I grew up watching Meet the Press on Sundays. Like, I'm into politics as kind of like, you know, something that I'm tracking. And so, I I was like, "Okay, let's do this as well." And so, I it it just really kind of launched from there. And I've been doing it full-time ever since. >> So, like, what does your what do your days look like? Are you just like doing research on a bunch of different things at once? Because you put a lot of work into this. >> Yeah, this is my job. So, I mean, the first thing I do when I get up is I look at my phone. Do I have alerts? What has happened overnight? Because, you know, in prediction market, it's kind of sleep is the enemy, right? When when you're you're asleep, >> the the news the news is not sleeping, right? The >> No, no, it's not. >> Yeah. So, you have to catch up on what happened while you were away, whether that's sleep or or some other obligation. And then you have to immediately get to work on like some market that I'm trading in, let's say Eric Adams to drop out maybe has moved 20 cents. And it's like, okay, did it move 20 cents? Why why did it move 20 cents? Was there a story in the New York Post? So, it's kind of catching up on on what's happening. And then as you're progressing through the day, it's tracking the news in real time. And you need the news as fast as possible, and you need the highest quality news because sometimes news is misleading or you get, you know, a little morsel of of something that hints at something else. So, there's also a lot of nuance involved in terms of tracking the news and kind of figuring out what's actually happening as opposed to what people are reporting is happening. >> Do you mind explaining what it is about this kind of betting market that was appealing to you? Because poker, I feel like that's a story that we're all pretty used to hearing, the game and the strategy, but but for something like this, when I look at it, it seems so random and a little fly by night. Like what was it about this that drew you in? >> Yeah. I mean, so I here's the issue with with my issue with poker is it's like you could be playing perfectly, right? You can be playing optimally. You can you can be a calculator. You can be mathematically perfect and you can still lose money because there's a little bit at least a little bit of luck involved. What kind of drew me to prediction markets was like you can be right about something and you would be paid off. you can do the research, you can find the answer, and it's like there's not that much luck involved, and you can really kind of distill things down to like the root of the issue and and kind of figure out what's going to happen. >> Unlike Oscar bets and stuff, cuz it seems like there's so much luck involved in that. Really? Explain that. >> No, not at all. So, so I mean, well, I mean, if you think about it, right? So, the Oscars are voted on by I don't know how many people it is at this point, but you know, a long time ago it was like 6,000 people, right? And that's not that many people if you're reading reporters like these reporters talk to actual voters. So you can get a sense of of what's popular and what's not and and you can look at all these precursors and within Hollywood there's all these smaller subgroups that hand out awards that are always giving awards to each other. So you can kind of figure out what's popular and what and what maybe is going to happen at the Oscars. >> How many bets do you have going right now? >> Oh my gosh. Uh a thousand maybe. >> You have a thousand bets. We should just say if you look at the poly market leaderboard, DOR has made $400 million worth of bets. >> You've made $400 million worth of bets. >> Yeah, it even shows the number of markets that I've bet in and it's probably closing in on 10,000. >> All right. So, a thousand open bets right now. Can you just take us through a couple of them? Well, the big one right now that I'm literally tracking and and I may sneak and and and view some tweets while I'm recording this is how many albums Taylor Swift is going to sell in her first week. That's one that I'm really tracking right now. Um, and it, you know, there's some esoteric stuff like is the Japanese prime minister going to actually be installed? Like, so it it runs the gamut from stuff that's not that serious to stuff that's actually like super serious in some country. >> How how big are the bets that you have on these? Do you mind telling us? >> Yeah. Well, that also runs the gamut. Something like Taylor Swift, I'm betting a lot of money. Something like Japan where I'm kind of trying to learn on the fly. Maybe I only have like, you know, a couple thousand at risk. >> What's a lot of money? >> Uh maybe closing in on a million. Yeah. >> You're betting a million dollars on Taylor Swift album sales. >> I think right now it's probably 600,000. Yeah. But it it could be a million by Sunday. Yeah. >> How many do you think she's going to sell? We're I should say Domer, we are recording this on October 9th. It will air >> one week from today. Just so you know, just if you're thinking about edge or timing or anything like that. >> Oh yes. >> So I I think I think the number will be just a hair under four million album sales, which is like uh an absurd amount. She's going to make the record by quite a lot. Now, if you were betting on like in the stock market, if you were betting a million dollars in the stock market, this would be a big bet. This would be like if you were betting on a company, this would be a company you could research for years. There would be all these reports from analysts. You could do all that deep research. Why wouldn't you put your money there? Why wouldn't you bet on like Nvidia or something? Why would you choose to bet on Taylor Swift album sales instead? >> That's a great question. So, one thing about prediction markets is that, you know, they're zero to 100, right? So, if you find a market that's super underpriced and it's trading at 5 cents and you think that's going to win, right? That's that's a 20 to1 payoff. That's gigantic. Whereas, if you're researching Nvidia and it's like, okay, it's underpriced by three bucks. Like, your upside is so capped. And then the other thing about the stock market is there can be random variations. Like, you can literally have the perfect thesis. Like, XYZ is going to happen. like this is going to happen two months from now, but in the intervening two months, maybe there's some, you know, crisis in South Korea where they've run out of, you know, chip ingredients or whatever. Like there could be any number of things that kind of invalidate your thesis. Whereas in prediction markets, you can kind of wrap your head around the entire thing in once. And and the zero to 100 nature is also like super compelling as well. But the downside is so much higher for Taylor Swift than it is because even if Nvidia stock doesn't do what you hope it will, you still own the stock. And this is a bet. So it does seem like there's that aspect of it. >> Yes, there's Yeah, it's a very risky it's a risky endeavor. Yes, you have a parachute if you're if you're quote unquote betting on a stock. In prediction markets, there's no parachute. >> But that doesn't bother you, the no parachute. >> No. And and it's very appealing to me. It's like an arbiter. It's like an arbiter of the truth. Like if you're wrong, you will be punished. You will get zero. So it it's the ultimate determiner, right? If if you bet on Nvidia and your your thesis is wrong, the stock may go up anyway, right? And but in prediction markets, if you're wrong, you're you're done. You know, you you've got zero. >> Can I ask Dormer? I mean, the reason we're talking about this is that, you know, the the entity that owns the New York Stock Exchange put a big investment in Poly Market, which just a couple years ago was like I I had been following the space. I thought Poly Market as this kind of like shady one that like was I mean basically illegal. It's still, we should say, in a bit of a gray area legally. I think technically Americans are not supposed to be placing bets on it. And yet again the the owner of the New York Stock Exchange just made a huge investment. Why do you think these markets are becoming so popular, right? Like why is this space going mainstream? So I think in theory people have loved prediction markets. It's been a thing for maybe decades and it's always been like, "Oh, this is coming. Oh, this is coming. Oh, we're going to we're going to make prediction markets." But this has kind of been like the actual mainstreaming of it. And it makes so much sense because, okay, let's say you're an oil trader, right? And you're trying to trade on what's going to happen in the Middle East and there's a peace deal and maybe oil drops by five bucks or whatever. Like you've not bet on the actual event. You've bet on kind of a derivative of that event, right? So prediction markets kind of distill it down to the actual thing that's happening. So a very popular market on prediction markets is will there be a recession, right? And and you can bet that in financial markets any number of ways. But in prediction markets, you can bet on the actual event. You can distill it down to its truth. Another reason that it's become so popular is because people nowadays, I feel like, are much more attuned to the data. They're much more into forecasting. Like Nate Silver was a nobody in 2008, and that type of analysis was like nothing. like 20 years ago, like you wouldn't even be on TV with that. Whereas now it's such a big focus. They're thinking about the world in numbers and prediction markets is a good way to show the world in numbers. >> How concerned are you about kind of like insider trading? So the risk that you're betting on a market and you are at a disadvantage because a participant is attempting to manipulate that market. You know, I I brought this up last week. Some of these markets are really small. Um there have been suggestions that in some elections uh supporters of various candidates have been like making bets to attempt to like generate headlines. Like how much does that concern you and is that like a barrier here? Is that an opportunity? I'm just kind of curious what you think about the whole insider trading question. >> I think it's a very interesting question and it's something that kind of needs to be figured out. But I I also feel like it's a predictable kind of like attack vector on a market, right? you can kind of figure out, okay, is this market able to be insider traded? And so if I have assessed that a market could be insider traded, like I'll probably put a lot less liquidity on that. So you I mean, you can kind of figure it out, but obviously it is it is a issue. >> Yeah. How worried are you when you're making a political bet? Uh I don't know if you're betting on the the New York City mayoral election or whatever, that the odds are being manipulated uh by a participant. I mean, the New York City mayoral is a great example because somebody who signed up as a brand new account bet on Adams to drop a lot of money right before he dropped. >> Really? >> Oh my god. >> Yeah. And it's kind of cartoonish because that seems like exactly the candidate who would insider trade his own dropout announcement. >> All right, Dmer, we we're gonna stay in touch. We're gonna find out what happens with this Taylor Swift bet and we will not participate in the markets. We're going to we're going to stay objective, >> but if I were to participate, my money would be on you, Domer. >> Awesome. >> Thanks for joining us. >> Thanks for joining us. Have a great one. [Music] >> I want to know who is taking the contrarian bet on Taylor Swift album sales. Uh, that's not a great bet. But actually related, every time Domer scores a win, somebody else or at least an equal value is is being lost. I'm not going to say there's compulsive behavior here, but there's certainly the potential for that. And so, how many losses are being enabled by this platform here in regulated markets? You know, the SEC are supposed to protect the investor. Nothing is protecting the investor here. >> You know, normal people just screwing around on the internet are not necessarily as attuned to the risks that that somebody who's like a professional better. And a normal person is going against DOM. Like if you're going to try to bet in the mayor's race, not only might might you be betting against Eric Adams himself, but you could also just be betting in some very sophisticated traders who are better at this than you. >> Domer is the equivalent of a speed trader, right? He's just better at this than you are. >> Well, is he though? So So you heard in the interview, Domer made this huge bet. And after the interview, I I reached out to him to to ask him if he could sort of give us an update on how the bet went. >> This is the Taylor Swift album sale bet. is the Taylor Swift album sale bet. He said it could be as high as a million bucks by the time it resolved. His his money on the line. So, he recorded a voice memo. I have not listened to it. You have not listened to it. I I think you may know the outcome of this bet, but I do not know. So, I'm looking forward to hearing from Domer. Did he lose a million bucks or not? >> I can't wait. >> I think on the podcast I predicted a hair under 4 million albums for Taylor Swift. Well, in the end, she sold 4.005 0.5 million albums. And what that meant was that I was I was doing this really big hedge on how many albums she would sell because the the two big components are like physical sales and like selling the whole album on iTunes and then also streaming like Spotify and stuff like that. And so there's two big components. And so one of the sites was all-encompassing, right? So that 4 million number and on that site I was betting over 4 million album sales. And then on another site, it excluded streaming. And on that one, I was betting under 3.5 million album sales excluding streaming. Well, a miracle literally happened. And maybe it was serendipitous because I went on your podcast, but I won both bets because the one went to above 4 million, 4.005, and then the second one was like 3.487 or something. So just by the skin of my teeth, I won both bets and I ended up making around $80,000. >> Oh my god. >> Wow. >> Domer. >> But also our point which is he is so sophisticated in how he placed those bets on two different sites and anybody who placed the contrarian bet there just lost money. >> Yes. And and I I think there are two questions like one is the wisdom of betting on one of these things and whether you should be like taking money out of your 401k to to gamble on Taylor Swift. I think the answer there is no but I do think should you be listening to people like Domer and the answer there is yes. You know we had the Taylor Swift album sales a week before the rest of the world knew. I do think like as somebody as like a news obsessive, I find Poly Market in particular to be like super interesting just as a way to kind of like get a baseline view of what is going to happen in the future. [Music] All right, Brad Stone, I haven't been told that you have an underrated story for us this week and Amanda Mull is here to join in the fun. >> Wonderful. Yeah, it's a little saucy. Okay, so in an ex post this week, Sam Alman, CEO of OpenAI, maker of the leading chatbot, ChatGpt, said the company had solved how to protect people with mental health issues and that it would now support mature conversations in December when it introduces age verification. So Sam basically said they want to quote treat adult users like adults and in other words, allow chap GPT if you want it to talk dirty to you. I think they're gonna keep it very classy here. Brad, >> I a respondent on uh X called it perve mode to to Sam. Sam said only if you want it. But no, it's it's really remarkable to me. These companies have gotten a lot of criticism for uh how their products have the potential to manipulate vulnerable users into developing unhealthy emotional relationships. and they seem to have really thrown caution to the wind and embraced this vision of AI that we saw in the classic movie Her and at the risk of their users perhaps falling for the ones and zeros. Well, so I just have two thoughts. One is I don't think the GPT porn is really the issue here. It's more the point you're making the broader point about like confusing people causing them to you know fall deeper into these rabbit holes like doing things that you know normal people are not really equipped to deal with. We've seen a lot of stories, including some that Bloomberg have published, about the ways that AI algorithms can essentially drive people crazy, either because it's presenting them with, you know, self harm content or it's like convincing an elderly person that they have a girlfriend that they don't have and then they go travel off and get hurt or something. But then the other my other thought is this is kind of pathetic and it and it makes me worried for OpenAI's business because if you think about other sort of hot companies, they don't usually embrace porn. That's kind of like not a sensible thing to do if you've got a great business. If you got a great business, you want to charge big companies lots of money to use your service. You don't need to find I'm sorry, like losers on the internet to like to like fill out your revenue, right? YouTube didn't have adult content. Facebook didn't have adult content. None of these companies do because it's like bad for business. So, the fact that ChatJBT is doing this makes me a feels like a bearish signal for for the company. Max, I think if you read Sam Alman's tweet, he says it's fine. He says that they've solved mental health first of all, which is what a you know what an advance for society. >> They did it so quickly, like in two weeks. >> Yeah. And they've solved age verification, which is also like wow, what new technology. And so it's fine. Like you can be pervy with chat GPT now in the privacy of your own home if you're a consenting adult. Don't worry about it. Well, let me just say, you know, when when GPT5 came out and it there was a a lot less emotional affirmation in the chatbot responses, users kind of rebelled, right? And a lot went back to four. They seem to want that kind of relationship with their chatbot. And, you know, Elon, who's behind with Grock, has made it a sort of selling point, right, that he's going to have these companion personalities uh within within Grock. And, you know, the rivalry between the two companies is fierce. As Avenue Q said uh 20 years ago, the famous musical comedy, the internet is for porn. And so, you know, Open AI doesn't want to be outflanked here. >> I'm sorry, but like if you are curing cancer, if you have the most powerful >> We're not We're not doing that anymore. We've abandoned that. That's not profitable. We're doing >> You're like, let me just Yeah, we're going to do that. But like, hey, why not? I I guess I don't know. Like you said, Amanda, if they if they've really solved these problems, then then maybe it's fine. But it's fine. It does seem it all just seems like a little weird. >> This this to me sort of like reeks of like cooking your brain on uh X the everything app. Um cuz so much of the chatter on there is about like these you know AI waifuss and uh being able to have a sexy AI girlfriend and like I I do wonder if uh the discernment of the people making these decisions at open AI isn't perhaps uh colored by that. It does seem sort of sweaty. Like it seems a >> good word. >> It Yeah, it seems sweaty in like a couple of ways. >> This show is produced by Stacy Wong. Magnus Hendrickson is our supervising producer and Amy Keane, our executive producer. Sam Rogich handles engineering and Dave Purcell fact checks. Sage Bowman heads Bloomberg Podcasts. Special thanks to Jeff Muscus, Julia Rubin, and Maria Ling. If you have a minute, please rate and review the show. It'll mean a lot to us. And if you have a story that should be our business or you want to tell us about which erotic chatbot you prefer, email us at everybody's bloomberg.net. That's everybody's with an s at bloomberg.net. Thank you for listening and we will see you soon.
Meet Polymarket’s $400 Million Man | Everybody's Business
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[Music] Bloomberg Audio Studios podcasts, radio, news. [Music] This is Everybody's Business from Bloomberg Business Week. I'm Max Chapen and I'm Business Week editor Brad Stone in for Stacy Vanic Smith. And today, Max, you're treating us to a followup on Poly Market. Yeah, we've got an interview with the biggest prediction market better around. His name is Domer. He is fascinating. But before that, our friend Amanda Mull join us in the studio to talk about her latest piece for Business Week, the credit card wars. What's behind those skyhigh fees from AMX and Chase and what it tells us about the state of the economy? >> And Brad, you've got the underrated story. What is it? >> That's right. One leading AI firm just announced, Max, a major change and said their chatbot is about to get a little salacious. You know, I've been thinking we needed an after hours segment of everybody's business. I'm glad we'll be able to get there this week. Brad, you live in San Francisco. You're here in New York with me right now in for Stacy who's traveling. But the thing that is bothering me sitting here with you is you're missing Dreamforce, the big Salesforce conference which is going on right now in San Francisco. >> It's true. Here's what I'm not missing. Terrible traffic, closed streets, jammed restaurants, 50,000 people, flooding into San Francisco. But I do I I do feel like I'm missing something. I mean, the city comes alive. Salesforce is bringing in Metallica and Benson Boon to perform there. The energy floods into the city and Mark Beni off, Salesforce's founder and CEO, gets to play magnanimous host. This is so embarrassing for San Francisco that that the Dream Force, this conference held by a software as a service company is the big event, but I guess it is the big event. >> This this is the counterculture here in in in 2025. But look, every company has these big events. Apple has WWDC, Facebook has connect, customers come, press comes, the CEO gets up there and makes big pronouncements, and occasionally Max really puts his foot into it, >> right? And that's why we're talking about this because Mark Beni off who you know until very recently I guess right up until Donald Trump be became president was known as this like Democratic donor influential liberal. He had helped raise taxes in San Francisco to pay for more aid for homeless people. He has done a complete 180 since Trump's election. He got on the phone with the New York Times and just by the by mentioned that he was in favor of having federal troops come into San Francisco. This is obviously happening in other cities. Democratic mayors and local officials are are almost uniformly against it. Mark Beni off welcoming the change. He said, "We don't have enough cops, so if they can be cops, I'm all for it." Welcoming in the federal troops to to to help Dreamforce out here. >> And basically spent the rest of the week trying to walk it back. But look, I mean, the White House does not like Mark Beni off. He is not in favor. He is associated with the Democratic party. Meanwhile, his rivals like Larry Ellison and Oracle soaring at at least in some part on the strength of their connection to the White House. So, you know, Mark is trying to be opportunistic here. >> Yeah, I think he wants in on that basically is is what you're saying. And and and why not? I mean, it's it's been really it's been good times for for anyone who is closely connected to Donald Trump or at least it seems that way. >> Yeah. and and the federal government is a big part of Salesforce's business. So, I can see why he's sort of throwing stuff against the wall right now. At the time of this recording at least, Salesforce stock is down 25% this year. But Brad, I mean, you know this, but like it's so funny because first of all, Mark Manov doesn't live in San Francisco. He lives in Hawaii. He g he he wears Hawaiian shirts, which is fun and that's kind of like his main thing. But anyway, he doesn't live in the city. He gave this interview from his private plane, which is always a good look. So like there are a lot of things about this that are just kind of I mean just like amusing and just like you said kind of crassly opportunistic >> and we were curious right what Dreamforce attendees made of this year's conference and of all the hubup. >> Yeah. So, we sent out a Bloomberg Tech reporter, Jana Nodler, out in San Francisco among the badged hordes, the Dreamforce attendees to ask them, you know, how excited they were for this. Had they seen any celebrity sightings and uh here's what she found. >> How excited are you about Dreamforce this year? >> Very. It's my first time to be here, so very excited. >> Oh, it's my first time. This is uh overwhelmingly wonderful. >> Oh, we're pumped. I'm here representing Six Flags and so we're doing some really cool things with Agent Force. Last time I was here when they announced data cloud. So going from data cloud to all the AI stuff is pretty cool. >> Are there any celebrities you spotted or that you're excited about? >> Not yet, but I'm going to keep my eye open. >> The band Metallica. That's what I'm excited for. Well, I just saw Mel Robbins and that was amazing. >> Hopefully Mark Cuban's here. >> It's always tough to get to see Matthew McConna, but he's usually pretty good. >> How do you feel in San Francisco? Do you feel safe here? >> Absolutely. I'm from New York. >> Oh, yeah. Beautiful city. I'm from Indianapolis, so it's probably better right now than it is there. As long as you're close to this, close to Dreamforce, you're okay. But if you get outside of here, not so much. >> Have you uh seen the comments of Ben off around bringing the National Guard into the city to keep it safer? >> I don't think it's a bad idea. >> I've been walking here from the train, so I don't understand why they would need that here. Makes a lot of sense. Yeah, it makes me wonder if Dreamforce shouldn't move. You know, safety is first. >> That probably was, I know, a mistake. Come on. I mean, it's it's a city. It's not a border. All right, there's one guy among these people who have some familiarity with US law and everybody else is just like, "Yeah, whatever." Just brings all down. >> No, I mean I I think the attendees have put their finger on something that perhaps Mark because he's living in Hawaii and spending his time on his jet doesn't quite realize, which is that the city has, I think, turned a corner. Obviously, there are some problems. It's also a city that is just not gonna it's not constitutionally uh willing to to sit back and and see the National Guard. I I I think that it would portend real protests. >> Are you saying that the voices we just heard do not represent like the full gamut of political beliefs in San Francisco? Is that what you're saying, Brad? Cuz I think you're right. Like there are a lot of people who are like not only would not be that excited to see Mark Beni off release the new agent force, but who are probably like a little bit angry about Dreamforce even being there, worried about gentrification, don't like Donald Trump. I mean you'd I think you you said this earlier, but I mean there would be a naked bike protest for sure if if the National Guard comes in and a naked bike protest that would dwarf Portland, Oregon's naked bike. >> No, I I do not want to see the National Guard in San Francisco. I think there'd be some anger and and protests and and the city frankly I don't think needs it right now. >> I think we need to get have the National Guard stop these tech conferences. [Music] Points maxing. Do you know what points maxing is? >> I have a vague idea. We're talking about credit cards, right? >> We are. We're talking about these super aggro, high-end credit cards that cost hundreds or almost $1,000 a year. And and there are all these people who are really obsessed with them. There's a crazy competition. In the latest issue of Business Week, Amanda Maul, who is our guest, calls it the war for America's rich. It's all about credit cards. And we're going to get into that. Amanda's here now. Hey Amanda. >> Hi. >> So, can you just explain what is happening with premium credit cards for those of us who are like still in the dark ages of like you shouldn't spend hundreds of dollars for a piece of plastic that gives you miles. >> Well, I I think that like the top line is that they're taking over the world sort of or at least they're taking over the world in the US. The act of using a credit card is very very similar no matter which one you use. So, if a bank wants you to use theirs versus a competitor's, they have to figure out what they can offer you in order to get you to do that. And in order to offer uh really really affluent customers more and more things, they've moved into all kinds of spheres of life. Credit card companies have long uh sort of colonized the airport and your travel experiences. They've been involved with hotels, car rental, things like that. But more recently, they've moved into events, sports, dining, all kinds of other things that rich people like in order to come up with new perks, new incentives, new coupons to attract a very particular type of customer. >> This story was surprising to me because I've always felt like one of the dirty little secrets of the credit card business is that, you know, rich people, wealthy people, they don't borrow from their credit cards, right? They they don't run up debt. And so it was shocking to me that there is this battle over the affluent segment. Explain the economics of this battle. >> Well, you're right that the wealthier people get, the less likely they are to carry a balance on their credit card. But that's only one way that credit card companies make money. There's two more ways. So, one of them is fees, which are getting higher and higher at the high end. Um, but the big one is interchange fees, and those are the fees that are paid by merchants every time anybody makes a purchase in their establishment on a credit card. They run between like 1% and like three and a half percent sometimes more on the premium cards and uh that is a source of a lot of revenue for card issuers. >> Yeah, this is the crazy thing like and we should say some of the names of these cards. So like we're talking about the American Express Platinum card, the Chase Sapphire Reserve card. >> Well, those are the two biggest players right now. You've also got the City Strata Elite, the Capital 1 Venture X, and there are other smaller cards offered by other banks, but those are the big ones from the big banks right now. >> And like you're saying, they they make money because they charge the holders a fee as much as like 700 or 800 bucks a year. But also, and I don't think this is intuitive, like when you swipe that card at a store, the store pays a percentage, and they pay more money if it's a high-end card. So, if you're swiping just like a a like a I I don't know. I don't know what has the lowest fees, >> you know, just like the basic sort of like entry level credit card that your bank issues Visa and that's like what like 1 and a.5% or something or 2%. >> Yeah, it's like 1 to one and a half%. >> But then if you swipe one of these super high-end cards, an American Express Platinum card, we're talking over 3%. Why would a merchant agree to that? Like why does that I can see why a credit card would want to charge more, but why is that like the way the system works? Well, merchants are in the US at least are sort of stuck. If they want to process transactions from people who hold these cards, then they sort of have to take them. A lot of markets around the world limit the amount that credit card processors are allowed to charge in interchange fees, but the United States does not. So card networks, which are Visa, Mastercard, American Express, basically can sort of set their own fees and then banks that issue cards can decide which tier of processing they want to put those cards at. So the really really high-end cards come in usually, you know, two and a half to as much as 5%. But when you put more and more like highincome Americans on those high-end cards, the penalty for retailers and merchants for not accepting those cards becomes greater and greater because those are the people who make a lot of purchases. They spend a lot of money. This is why one of the reasons that American Express used to not be accepted at a lot of places, but so many high highincome Americans, high-spending Americans now use American Express cards that if stores want to sell things to those customers, and they very much do, they just sort of have to eat it. >> All right, Amanda, you talk in the story about this war for these wealthy consumers. What does it look like? Like, how are these companies competing with one another? Well, you see it show up in in advertising and marketing. That's probably where most people have noticed it, if they've noticed it. I uh went to the US Open this summer. AMX and Chase are both huge sponsors of the US Open. They both had built a series of of enormous sort of spaces and booths and experiences on the grounds of the US Open. Their luxury suites in the stadium are like sort of across from each other. There is a huge a huge war to get into spaces where wealthy people spend time and where they have interests. So you see it pop up there. If you've been watching NFL this season, you see probably dueling ads for Chase Sapphire Reserve and MX Platinum. They both refreshed their perks offerings this year and raised their fees. And so they're they're both involved in this huge push right now to convince new consumers that they are the the one credit card to rule them all. You got Capital One opening up these fancy coffee shops, including one like right uh under our building. >> Yeah. Yeah. You get Capital One opening coffee shops. You get credit card companies sort of racing into the airport lounge game. Before >> the airport lounge game >> in 2013, American Express opened its first airport lounge in Vegas. And before that, all the airport lounges were owned by airports and sort of mediated by airports. And American Express was like, well, we know our our shoppers love airport lounges, so like why don't we do this ourselves? 2023, Chase was like, "Here's ours." They've opened seven since then that are like huge and luxurious, made to order food. You can get a massage. You can get a facial. You can, you know, there's all of these all of these things. And now Capital One also has airport lounges. Like they're just looking for ways to show up in the places where wealthy people are spending. >> Okay. So, we've talked about the appeal of these cards to merchants, the reason why the banks are fighting each other, but what is the appeal to customers? I mean, I I admit I'm an MX Platinum card holder. The fee wrankles me almost $1,000. You know, the airport lounges are packed with people. Buffets of milky eggs and fruit and co COVID and influenza. I mean, I just I and I'm not maximizing my point. So, why are these cards desirable and why are they particularly interesting and desirable to millennials and chinzy? >> Well, part of the story is prestige. This is why all kinds of luxury goods are desirable on some level. Credit card companies have done a really great job in the past couple of decades of marketing these cards not just as payment implements or tools, but as things that mark you as a particular type of person. >> Wait, is that feeling you get when you pull out the platinum card is what you're saying and then you hear the plunks down. It's a little heavier than a normal card. >> Yeah. Well, and I I did a story a couple years ago about why so many cards are made of metal right now. And somebody from American Express told me that within the industry they call it plunk factor. >> Yeah. The plunk factor. Um, it is it is fun to pull out like a fancy credit card and just, you know, splash it down on the table. Prestige is a huge part of this. >> Now, I do not have one of these cards and I have resisted them partly because I think that airport lounges are dumb and like it's just the same as the airport but more crowded. You know, you can get food and drinks and and seats uh and Wi-Fi in the normal airport without paying hundreds of dollars or waiting on a line or whatever. But I have wondered I do have that like FOMO feeling Amanda like that I might be missing out. Am I making a mistake? Are our listeners who might be considering this making a mistake by not you know paying up for American Express Platinum or a Chase Sapphire Reserve or a whatever one of these other ones? Well, I think this is the other big element of their appeal is that all of these cards promise thousands of dollars in annual savings if you pay the upfront fee and if you use their particular set of credits and rewards and perks correctly. The credits and rewards and things like that are are largely bent toward travel. They're bent toward more and more recently luxury shopping, dining out. So, if you're a person who goes on several vacations a year and eats out a lot in a major city and shops at Sax Fifth Avenue or Lululemon or has an Equinox membership, then like you are going to like see some savings on those purchases you would make anyway because of this. But then also what these cards do I think is create a set of perks some of which are underwritten by thirdparty retailers, thirdparty brands who want to get their products and their services in front of this like very particular set of American shoppers who are spending you know the top 10% of American households spends 50% of the consumer purchases annually at this point. So this is a very powerful group of consumers if you are selling basically anything. And so this allows them to get their products and their services in front of these shoppers. And then the credit cards usually structure the rewards in in ways that then sort of encourage you to create a habit with those new products or services. Like the Lululemon credit that American Express just introduced for its platinum card. It's $300 a year, but it's in $75 quarterly increments. >> Brad, take advantage of that. 75 bucks a quarter. You know, you can't miss it. >> It's just so much work. But Amanda, you mentioned the what what you've called the K-shaped economy, right? Wealthy people responsible for over half of all consumer spending potentially propping up this economy. So, what does what does this battle between credit card companies and banks for the wealthiest shopper tell us about the economy right now? Well, I think when you see products and services start to gather at either end of the extremes on the product and service continuum, you have an indication that brands, companies, retailers are looking at their sales data, looking at the economic data and going, there's not all that many people spending money and there's not all that many people with discretionary income. And if you're a discretionary business, which like Equinox, Lululemon, Apple Music, those all are, then it makes a lot of sense to turn your business toward satisfying the whims of people who are doing all the spending. And I think credit cards like those third party brands and retailers have made basically the same calculation because if you make your revenue on interchange fees, on credit card fees, then you need people who are spending a lot of money and who are spending frequently. So Amanda, you are clearly as sophisticated as it gets when it comes to these cards. What are you using? And I've admitted to being an AMX Platinum card holder. Max is a conscientious objector. Uh what are you what are you holding? And how do you maximize the the points? >> Well, I use an American Express Delta Reserve card. >> That's a nice one. >> Yeah, it's a fancy one. Um it is their highestend Delta co-brand card. It is above the platinum. Um, but how how these names work out. >> Did you just call me that? >> It has a lower fever. >> Clunks harder than yours. >> It's purple. It's a lovely shade of purple. No, the how the co-brand cards work is like a whole different thing cuz you get premium versions of those two. The platinum uh Delta MX doesn't have the regular Platinum MX perks and it costs a lot less. So, I'm from originally from Atlanta, which means, of course, that I am a Delta flyer. And so, it has like perks that work for me about like, you know, I get companion fairs. I get upgrades and things like that. And, uh, it basically works out. I uh, use the $200 Delta Stays credit to book a hotel room this year. All right, listeners, if you have one of these credit cards or you have thoughts on one of these credit cards, send us an email. Everybody's bloomberg.net. That's everybody's with an s at bloomberg.net. Tell us if you are a Delta holder or a or a American Express holder or or like me a conscientious objector. Amanda, thank you for doing this. Stick around. You'll be back at the end of the show for our underrated segment. I'll be here. [Music] All right, Brad. Last week on the show, Stacy and I talked to Joe Weisenthal about this new world prediction markets. >> I loved it. I it didn't make me any less skeptical of of sites like Poly Market, but I learned a lot. >> Well, you know, I think I might be prediction pill here, honestly. But but in any case, we're just sort of like wondering like who are these guys who are playing in in this world? I mean, obviously this is a world that is sort of on the gray area in terms of legality, but but is becoming very popular and very influential. And we found a guy. Now, his name, I'm going to tell you his pseudonym. is DOR. But if you go to Poly Market's leaderboard, this is like the list of all the bets on the site and you sort it by volume, you will find that this guy Domer, whose handle on Poly Market is just waking up. His avatar is a Ryan Gosling image, has bet $413 million on this site. >> Is this his living? Does is this what he does? >> This is what he does. this is his full-time job is making prediction market bets and and you know we want to understand like what this is like how a person who is sophisticated who's really playing in this world thinks about it and also like where he sees it going like does he think this is the that we're like at the beginning of something is this is this a sideeshow so we got into all that but this interview starts with Stacy just asking him like what is the deal with all your handles >> oh boy okay let's [Music] your handle on Poly Market has changed. It evolves. Could do you mind talking a little bit about that if people look for you there? >> Yeah, it's almost always the latest Ryan Gosling movie and I'm not sure. I think that started with Driver, so that was a long time ago and then I've just kind of been slowly but surely replacing it with his newest movie. >> Are you a like a Gossling fan? I mean, who isn't? >> I'd love to just hear, first of all, this is your full-time job, right? But making bets on prediction markets. Would love to hear kind of how that happened, like how you found yourself in a position where you are, you know, basically for your full-time job going and trying to predict everything from who is going to be the vice presidential pick all the way to like, I don't know, like what Taylor Swift song is going to be on the Billboard top 100. Like, how did you wind up there? Yeah. So, out of college, I had just like a regular full-time job, etc. And on the side, I was kind of playing poker, and this was like the late 2000s, so online poker was like super popular. And I had started to make more money uh doing poker than I was at my job. And I was like, let's give it a go. And so, I I I quit to play poker, but within probably maybe less than a year, I had found where you could bet on stuff like the Oscars. And so I was like, "Wow, I watched the Oscars. Like, I can bet on who's going to win. Like, this is this is really exciting." And then I found that you can bet on, you know, the presidential candidates. And I'm someone that kind of like, you know, I grew up watching Meet the Press on Sundays. Like, I'm into politics as kind of like, you know, something that I'm tracking. And so, I I was like, "Okay, let's do this as well." And so, I it it just really kind of launched from there. And I've been doing it full-time ever since. >> So, like, what does your what do your days look like? Are you just like doing research on a bunch of different things at once? Because you put a lot of work into this. >> Yeah, this is my job. So, I mean, the first thing I do when I get up is I look at my phone. Do I have alerts? What has happened overnight? Because, you know, in prediction market, it's kind of sleep is the enemy, right? When when you're you're asleep, >> the the news the news is not sleeping, right? The >> No, no, it's not. >> Yeah. So, you have to catch up on what happened while you were away, whether that's sleep or or some other obligation. And then you have to immediately get to work on like some market that I'm trading in, let's say Eric Adams to drop out maybe has moved 20 cents. And it's like, okay, did it move 20 cents? Why why did it move 20 cents? Was there a story in the New York Post? So, it's kind of catching up on on what's happening. And then as you're progressing through the day, it's tracking the news in real time. And you need the news as fast as possible, and you need the highest quality news because sometimes news is misleading or you get, you know, a little morsel of of something that hints at something else. So, there's also a lot of nuance involved in terms of tracking the news and kind of figuring out what's actually happening as opposed to what people are reporting is happening. >> Do you mind explaining what it is about this kind of betting market that was appealing to you? Because poker, I feel like that's a story that we're all pretty used to hearing, the game and the strategy, but but for something like this, when I look at it, it seems so random and a little fly by night. Like what was it about this that drew you in? >> Yeah. I mean, so I here's the issue with with my issue with poker is it's like you could be playing perfectly, right? You can be playing optimally. You can you can be a calculator. You can be mathematically perfect and you can still lose money because there's a little bit at least a little bit of luck involved. What kind of drew me to prediction markets was like you can be right about something and you would be paid off. you can do the research, you can find the answer, and it's like there's not that much luck involved, and you can really kind of distill things down to like the root of the issue and and kind of figure out what's going to happen. >> Unlike Oscar bets and stuff, cuz it seems like there's so much luck involved in that. Really? Explain that. >> No, not at all. So, so I mean, well, I mean, if you think about it, right? So, the Oscars are voted on by I don't know how many people it is at this point, but you know, a long time ago it was like 6,000 people, right? And that's not that many people if you're reading reporters like these reporters talk to actual voters. So you can get a sense of of what's popular and what's not and and you can look at all these precursors and within Hollywood there's all these smaller subgroups that hand out awards that are always giving awards to each other. So you can kind of figure out what's popular and what and what maybe is going to happen at the Oscars. >> How many bets do you have going right now? >> Oh my gosh. Uh a thousand maybe. >> You have a thousand bets. We should just say if you look at the poly market leaderboard, DOR has made $400 million worth of bets. >> You've made $400 million worth of bets. >> Yeah, it even shows the number of markets that I've bet in and it's probably closing in on 10,000. >> All right. So, a thousand open bets right now. Can you just take us through a couple of them? Well, the big one right now that I'm literally tracking and and I may sneak and and and view some tweets while I'm recording this is how many albums Taylor Swift is going to sell in her first week. That's one that I'm really tracking right now. Um, and it, you know, there's some esoteric stuff like is the Japanese prime minister going to actually be installed? Like, so it it runs the gamut from stuff that's not that serious to stuff that's actually like super serious in some country. >> How how big are the bets that you have on these? Do you mind telling us? >> Yeah. Well, that also runs the gamut. Something like Taylor Swift, I'm betting a lot of money. Something like Japan where I'm kind of trying to learn on the fly. Maybe I only have like, you know, a couple thousand at risk. >> What's a lot of money? >> Uh maybe closing in on a million. Yeah. >> You're betting a million dollars on Taylor Swift album sales. >> I think right now it's probably 600,000. Yeah. But it it could be a million by Sunday. Yeah. >> How many do you think she's going to sell? We're I should say Domer, we are recording this on October 9th. It will air >> one week from today. Just so you know, just if you're thinking about edge or timing or anything like that. >> Oh yes. >> So I I think I think the number will be just a hair under four million album sales, which is like uh an absurd amount. She's going to make the record by quite a lot. Now, if you were betting on like in the stock market, if you were betting a million dollars in the stock market, this would be a big bet. This would be like if you were betting on a company, this would be a company you could research for years. There would be all these reports from analysts. You could do all that deep research. Why wouldn't you put your money there? Why wouldn't you bet on like Nvidia or something? Why would you choose to bet on Taylor Swift album sales instead? >> That's a great question. So, one thing about prediction markets is that, you know, they're zero to 100, right? So, if you find a market that's super underpriced and it's trading at 5 cents and you think that's going to win, right? That's that's a 20 to1 payoff. That's gigantic. Whereas, if you're researching Nvidia and it's like, okay, it's underpriced by three bucks. Like, your upside is so capped. And then the other thing about the stock market is there can be random variations. Like, you can literally have the perfect thesis. Like, XYZ is going to happen. like this is going to happen two months from now, but in the intervening two months, maybe there's some, you know, crisis in South Korea where they've run out of, you know, chip ingredients or whatever. Like there could be any number of things that kind of invalidate your thesis. Whereas in prediction markets, you can kind of wrap your head around the entire thing in once. And and the zero to 100 nature is also like super compelling as well. But the downside is so much higher for Taylor Swift than it is because even if Nvidia stock doesn't do what you hope it will, you still own the stock. And this is a bet. So it does seem like there's that aspect of it. >> Yes, there's Yeah, it's a very risky it's a risky endeavor. Yes, you have a parachute if you're if you're quote unquote betting on a stock. In prediction markets, there's no parachute. >> But that doesn't bother you, the no parachute. >> No. And and it's very appealing to me. It's like an arbiter. It's like an arbiter of the truth. Like if you're wrong, you will be punished. You will get zero. So it it's the ultimate determiner, right? If if you bet on Nvidia and your your thesis is wrong, the stock may go up anyway, right? And but in prediction markets, if you're wrong, you're you're done. You know, you you've got zero. >> Can I ask Dormer? I mean, the reason we're talking about this is that, you know, the the entity that owns the New York Stock Exchange put a big investment in Poly Market, which just a couple years ago was like I I had been following the space. I thought Poly Market as this kind of like shady one that like was I mean basically illegal. It's still, we should say, in a bit of a gray area legally. I think technically Americans are not supposed to be placing bets on it. And yet again the the owner of the New York Stock Exchange just made a huge investment. Why do you think these markets are becoming so popular, right? Like why is this space going mainstream? So I think in theory people have loved prediction markets. It's been a thing for maybe decades and it's always been like, "Oh, this is coming. Oh, this is coming. Oh, we're going to we're going to make prediction markets." But this has kind of been like the actual mainstreaming of it. And it makes so much sense because, okay, let's say you're an oil trader, right? And you're trying to trade on what's going to happen in the Middle East and there's a peace deal and maybe oil drops by five bucks or whatever. Like you've not bet on the actual event. You've bet on kind of a derivative of that event, right? So prediction markets kind of distill it down to the actual thing that's happening. So a very popular market on prediction markets is will there be a recession, right? And and you can bet that in financial markets any number of ways. But in prediction markets, you can bet on the actual event. You can distill it down to its truth. Another reason that it's become so popular is because people nowadays, I feel like, are much more attuned to the data. They're much more into forecasting. Like Nate Silver was a nobody in 2008, and that type of analysis was like nothing. like 20 years ago, like you wouldn't even be on TV with that. Whereas now it's such a big focus. They're thinking about the world in numbers and prediction markets is a good way to show the world in numbers. >> How concerned are you about kind of like insider trading? So the risk that you're betting on a market and you are at a disadvantage because a participant is attempting to manipulate that market. You know, I I brought this up last week. Some of these markets are really small. Um there have been suggestions that in some elections uh supporters of various candidates have been like making bets to attempt to like generate headlines. Like how much does that concern you and is that like a barrier here? Is that an opportunity? I'm just kind of curious what you think about the whole insider trading question. >> I think it's a very interesting question and it's something that kind of needs to be figured out. But I I also feel like it's a predictable kind of like attack vector on a market, right? you can kind of figure out, okay, is this market able to be insider traded? And so if I have assessed that a market could be insider traded, like I'll probably put a lot less liquidity on that. So you I mean, you can kind of figure it out, but obviously it is it is a issue. >> Yeah. How worried are you when you're making a political bet? Uh I don't know if you're betting on the the New York City mayoral election or whatever, that the odds are being manipulated uh by a participant. I mean, the New York City mayoral is a great example because somebody who signed up as a brand new account bet on Adams to drop a lot of money right before he dropped. >> Really? >> Oh my god. >> Yeah. And it's kind of cartoonish because that seems like exactly the candidate who would insider trade his own dropout announcement. >> All right, Dmer, we we're gonna stay in touch. We're gonna find out what happens with this Taylor Swift bet and we will not participate in the markets. We're going to we're going to stay objective, >> but if I were to participate, my money would be on you, Domer. >> Awesome. >> Thanks for joining us. >> Thanks for joining us. Have a great one. [Music] >> I want to know who is taking the contrarian bet on Taylor Swift album sales. Uh, that's not a great bet. But actually related, every time Domer scores a win, somebody else or at least an equal value is is being lost. I'm not going to say there's compulsive behavior here, but there's certainly the potential for that. And so, how many losses are being enabled by this platform here in regulated markets? You know, the SEC are supposed to protect the investor. Nothing is protecting the investor here. >> You know, normal people just screwing around on the internet are not necessarily as attuned to the risks that that somebody who's like a professional better. And a normal person is going against DOM. Like if you're going to try to bet in the mayor's race, not only might might you be betting against Eric Adams himself, but you could also just be betting in some very sophisticated traders who are better at this than you. >> Domer is the equivalent of a speed trader, right? He's just better at this than you are. >> Well, is he though? So So you heard in the interview, Domer made this huge bet. And after the interview, I I reached out to him to to ask him if he could sort of give us an update on how the bet went. >> This is the Taylor Swift album sale bet. is the Taylor Swift album sale bet. He said it could be as high as a million bucks by the time it resolved. His his money on the line. So, he recorded a voice memo. I have not listened to it. You have not listened to it. I I think you may know the outcome of this bet, but I do not know. So, I'm looking forward to hearing from Domer. Did he lose a million bucks or not? >> I can't wait. >> I think on the podcast I predicted a hair under 4 million albums for Taylor Swift. Well, in the end, she sold 4.005 0.5 million albums. And what that meant was that I was I was doing this really big hedge on how many albums she would sell because the the two big components are like physical sales and like selling the whole album on iTunes and then also streaming like Spotify and stuff like that. And so there's two big components. And so one of the sites was all-encompassing, right? So that 4 million number and on that site I was betting over 4 million album sales. And then on another site, it excluded streaming. And on that one, I was betting under 3.5 million album sales excluding streaming. Well, a miracle literally happened. And maybe it was serendipitous because I went on your podcast, but I won both bets because the one went to above 4 million, 4.005, and then the second one was like 3.487 or something. So just by the skin of my teeth, I won both bets and I ended up making around $80,000. >> Oh my god. >> Wow. >> Domer. >> But also our point which is he is so sophisticated in how he placed those bets on two different sites and anybody who placed the contrarian bet there just lost money. >> Yes. And and I I think there are two questions like one is the wisdom of betting on one of these things and whether you should be like taking money out of your 401k to to gamble on Taylor Swift. I think the answer there is no but I do think should you be listening to people like Domer and the answer there is yes. You know we had the Taylor Swift album sales a week before the rest of the world knew. I do think like as somebody as like a news obsessive, I find Poly Market in particular to be like super interesting just as a way to kind of like get a baseline view of what is going to happen in the future. [Music] All right, Brad Stone, I haven't been told that you have an underrated story for us this week and Amanda Mull is here to join in the fun. >> Wonderful. Yeah, it's a little saucy. Okay, so in an ex post this week, Sam Alman, CEO of OpenAI, maker of the leading chatbot, ChatGpt, said the company had solved how to protect people with mental health issues and that it would now support mature conversations in December when it introduces age verification. So Sam basically said they want to quote treat adult users like adults and in other words, allow chap GPT if you want it to talk dirty to you. I think they're gonna keep it very classy here. Brad, >> I a respondent on uh X called it perve mode to to Sam. Sam said only if you want it. But no, it's it's really remarkable to me. These companies have gotten a lot of criticism for uh how their products have the potential to manipulate vulnerable users into developing unhealthy emotional relationships. and they seem to have really thrown caution to the wind and embraced this vision of AI that we saw in the classic movie Her and at the risk of their users perhaps falling for the ones and zeros. Well, so I just have two thoughts. One is I don't think the GPT porn is really the issue here. It's more the point you're making the broader point about like confusing people causing them to you know fall deeper into these rabbit holes like doing things that you know normal people are not really equipped to deal with. We've seen a lot of stories, including some that Bloomberg have published, about the ways that AI algorithms can essentially drive people crazy, either because it's presenting them with, you know, self harm content or it's like convincing an elderly person that they have a girlfriend that they don't have and then they go travel off and get hurt or something. But then the other my other thought is this is kind of pathetic and it and it makes me worried for OpenAI's business because if you think about other sort of hot companies, they don't usually embrace porn. That's kind of like not a sensible thing to do if you've got a great business. If you got a great business, you want to charge big companies lots of money to use your service. You don't need to find I'm sorry, like losers on the internet to like to like fill out your revenue, right? YouTube didn't have adult content. Facebook didn't have adult content. None of these companies do because it's like bad for business. So, the fact that ChatJBT is doing this makes me a feels like a bearish signal for for the company. Max, I think if you read Sam Alman's tweet, he says it's fine. He says that they've solved mental health first of all, which is what a you know what an advance for society. >> They did it so quickly, like in two weeks. >> Yeah. And they've solved age verification, which is also like wow, what new technology. And so it's fine. Like you can be pervy with chat GPT now in the privacy of your own home if you're a consenting adult. Don't worry about it. Well, let me just say, you know, when when GPT5 came out and it there was a a lot less emotional affirmation in the chatbot responses, users kind of rebelled, right? And a lot went back to four. They seem to want that kind of relationship with their chatbot. And, you know, Elon, who's behind with Grock, has made it a sort of selling point, right, that he's going to have these companion personalities uh within within Grock. And, you know, the rivalry between the two companies is fierce. As Avenue Q said uh 20 years ago, the famous musical comedy, the internet is for porn. And so, you know, Open AI doesn't want to be outflanked here. >> I'm sorry, but like if you are curing cancer, if you have the most powerful >> We're not We're not doing that anymore. We've abandoned that. That's not profitable. We're doing >> You're like, let me just Yeah, we're going to do that. But like, hey, why not? I I guess I don't know. Like you said, Amanda, if they if they've really solved these problems, then then maybe it's fine. But it's fine. It does seem it all just seems like a little weird. >> This this to me sort of like reeks of like cooking your brain on uh X the everything app. Um cuz so much of the chatter on there is about like these you know AI waifuss and uh being able to have a sexy AI girlfriend and like I I do wonder if uh the discernment of the people making these decisions at open AI isn't perhaps uh colored by that. It does seem sort of sweaty. Like it seems a >> good word. >> It Yeah, it seems sweaty in like a couple of ways. >> This show is produced by Stacy Wong. Magnus Hendrickson is our supervising producer and Amy Keane, our executive producer. Sam Rogich handles engineering and Dave Purcell fact checks. Sage Bowman heads Bloomberg Podcasts. Special thanks to Jeff Muscus, Julia Rubin, and Maria Ling. If you have a minute, please rate and review the show. It'll mean a lot to us. And if you have a story that should be our business or you want to tell us about which erotic chatbot you prefer, email us at everybody's bloomberg.net. That's everybody's with an s at bloomberg.net. Thank you for listening and we will see you soon.