Adding Leverage To America’s Gambling Problem
Submitted by QTR's Fringe Finance
Last week a piece of news crossed the tape that deserved a hell of a lot more attention than it got. Kalshi asked the Commodity Futures Trading Commission for permission to introduce margin trading on certain prediction market contracts.
Apparently allowing people to speculate on what topping the President of Argentina will put on his breakfast toast at the next G20 Summit wasn’t batshit insane enough. Now somebody needs to be able to bet on “marmalade” with leverage?
The request came from Kalshi Klear, the company’s clearinghouse, and is aimed primarily at attracting institutional traders. The proposal has not yet been approved, and Kalshi says access would initially be restricted to qualifying self clearing members meeting certain capital requirements. There are safeguards built into the proposal, which I’ll get to, but my reaction is pretty simple: I think this is a horrific, horrific idea.
Part of the reason is that I already wrote about where I thought all of this was heading earlier this year, in a post that is already one of my most read posts of the last 5 years.
Back then, I wasn’t even talking specifically about leverage. I was writing about how uncomfortable I had become with the transformation of ordinary life into one gigantic, permanently open casino. And I wasn’t just observing it, I had lived it.
I wrote that “prediction markets, sports betting, options trading, crypto leverage, gambling apps...life has been turned into a tradable hamster wheel like dopamine loop.” I also wrote: “Every event is now a market. Every opinion is now a wager. Every moment of boredom can be monetized by putting money at risk on your phone.”
I tried Kalshi myself and eventually deleted the app because I found it frightening how seductive and accessible the experience was. I also received sponsorship offers from several prediction market companies and ultimately decided I couldn’t, in good conscience, take them.
I wasn’t arguing then, and I’m not arguing now, that prediction markets should disappear overnight. What worries me is the direction of travel. Earlier this year, I wrote that I didn’t think we fully appreciated “how psychologically corrosive it is to live in a world where you can gamble on literally anything, all day, every day.” I thought that...(READ THIS FULL ARTICLE 100% FREE HERE).