How Many Years Will SBF Get? Jury's Out on Betting Platform Polymarket
Prediction markets can be silly, but they can be serious, too, as a tool for investors to hedge their exposure to a certain stock or engage in price discovery on the future growth of one given the market success of its products.
In this week's roundup, we're setting aside politics for popcorn and electric dreams, diving deep into Tesla deliveries and box office openings. But first…
Sentencing Sam Bankman-Fried
FTX's founder and former CEO Sam Bankman-Fried is scheduled to be sentenced this week (a position he was put in after an award-winning CoinDesk scoop revealed how precarious his empire's finances were), and the proverbial jury on Polymarket is out on how long the sentence will be.
A death sentence for Bankman-Fried isn't on the table as one juror (the real kind, not the Polymarket hive mind) initially feared in the early days of the trial. But it's almost evenly up in the air as to if he'd get between 20-50 years with the U.S. Department of Justice proposing five decades behind bars.
Bad news for those who would like to see Bankman-Fried leave jail old and gray: he might be out in less than a decade. In prior interviews with CoinDesk, lawyers familiar with white-collar cases prosecuted in the Southern District of New York say there's a possibility his sentence might be significantly reduced as creditors have been made whole although his lack of remorse could undo this.
Kalshi's Electric Clash
On Kalshi – the more buttoned-up, CFTC-registered prediction market platform – traders had a busy week monetarily debating how many electric vehicles Tesla would report it delivered this quarter as part of its earnings statement.
There's a lot at stake for Tesla. Its stock price directly moves on this number. Elon Musk's electric car giant confidently hit an all-time high for shipments last quarter at 485,000, but the global economy is giving mixed signals. China's economy is cooling, and homegrown BYD has matured to the point where it has become so competitive that it has usurped Tesla as the world's largest electric vehicle maker.
Currently, the market doesn't think Tesla will beat the record set last quarter (remember there is an element of seasonality to the sales cycle), and the money has closed in just below UBS' estimate of 432,000. The company is scheduled to report earnings in mid-April.
Volume for this contract is lower than what you'd find on a comparable contract on Polymarket, a crypto-based platform that can do business just about everywhere but the U.S. and Taiwan. Perhaps that's the cost of doing business as a CFTC-registered entity limited to the U.S.
Betting on Butts in Seats
Critics of Polymarket and prediction markets as a whole say it only encourages crypto-degeneracy because of the amount of money being placed on trivial things like Taylor Swift's potential pregnancy or if former President Donald Trump would smile in his mugshot.
Certainly, the tone of Polymarket's marketing efforts encourages the behavior. At the same time, it's important to highlight the many contracts on the platform that might aid in proper – adult – uses of prediction markets. Like price discovery, hedging, or derivatives.
One popular category of contracts on the site is betting on the box office performance of recently released movies.
The performance of these movies has a material impact on their studio's stock price, as well as the stock of large theater chains like AMC, and you'll find some guidance on how these companies expect films to do in their respective quarterly earnings.
A moderately clever bettor could read the tea leaves alongside the pop culture temperature and model out a number predicting performance.
An example of this could be found in a recent contract asking bettors to take a guess on the box office performance of the new "Ghostbusters: Frozen Empire." Initial reviews of the movie were pretty bad; the Rotten Tomatoes score is at 43%, with early reviews calling it witless and joyless. Early money had predicted it would be a modest performer at the box office and long-range forecasts from Box Office Pro put it at $35 million to $49 million.
But these bettors underestimated the power of fandom.
Despite a less-than-stellar script, the movie took in over $45 million during its U.S. opening weekend, in line with the opening weekend of the previous installment of the series, showing that fans were hungry for more Ghostbusting content. Some say it is a revenge spend of fans showing studios they want this version of Ghostbusters, and not the woke 2016 reboot. Culture war win or not, the reality is publicly listed Marcus Theaters said it would be a hit in its recent annual report, as did its competitor Cinemark. The weekend itself was fairly light in competition from other films, and there isn't a holiday or other significant culture event scheduled against it.
Is it really degenerate gambling when you can model out a forecast with Excel using SEC guidance?
UPDATE (March 26, 13:16 UTC): Substitutes a more precise adjective describing Kalshi in sixth paragraph.
