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00:04 - bank.

00:14 - Representative Tarik

00:15 - Khan, Democrat from Philadelphia.

00:18 - There's a form of online gambling called prediction markets.

00:22 - What kind of outcomes are being gambled on here?

00:26 - Yeah, it's like a whole new world for people who like to bet.

00:30 - So, in fact, one of the markets is called Kashi.

00:34 - And they say their tag line is bet on anything.

00:38 - So you can imagine sports

00:41 - also politics, elections.

00:44 - When your favorite pop star might release

00:47 - their next single, it's anything.

00:50 - And so we're seeing a whole lot of a whole lot of stuff

00:54 - being wagered, on this, on these, on these sites.

00:57 - Well, if it's a whole range of things that can be bet on,

01:00 - what does the user see when they go on the internet to the website?

01:04 - Are their choices of things to bet on, or can they initiate

01:07 - what they want to bet on?

01:09 - That's a good question.

01:10 - So I have actually gone on these markets not to gamble,

01:14 - but to actually see what are the odds of something happening.

01:17 - And it's actually,

01:20 - you know, you're not actually trading to how I guess how they've structured

01:25 - it is you're not actually necessarily placing a bet on the outcome.

01:30 - You're buying shares of yes or no.

01:34 - And if the if it is a yes question,

01:38 - then the your shares have value and you win that bet.

01:42 - And if it's knowing and you're wrong you lose the bet.

01:46 - So you have a 50% chance of winning which is not too bad.

01:49 - You would you would think so.

01:50 - But unfortunately there been issues

01:52 - with insider trading, which is what we're trying to address.

01:56 - And, give me some example of some real world

01:59 - events that somebody might be able to bet on.

02:02 - So you can bet on the Super Bowl and you know, you can do this

02:05 - on some of the other sites like Bet, MGM and DraftKings.

02:08 - You can you can bet on on these sites, but you can also bet on, for example,

02:14 - who is going to win, who is going to win

02:17 - the Senate election that's coming up in 2028?

02:21 - You can bet on who is going to win for Congress.

02:24 - You can bet on, for example, when Donald Trump,

02:28 - my tweets put put out an angry tweet.

02:32 - How many angry or how many angry tweets in the last,

02:34 - in the next 24 hours, will the president put out?

02:37 - You can basically bet on things like that.

02:40 - So it's sort of a range of gamut of things.

02:42 - And then also pop, you know, and music and culture, things, you know,

02:46 - will this person show up here or you know, who will win survivor

02:50 - and things like that.

02:51 - So how much might a gambler have to spend and how much might they win?

02:56 - So that's the thing is that, you know, people are betting large sums of money.

03:01 - And what what we're concerned about is there a limit?

03:05 - No, not that I know of.

03:08 - I mean, there are there.

03:10 - So there was there was a case of insider trading, which I'm

03:13 - sure we'll talk about, where the the soldier

03:16 - placed a $400,000 bet and won.

03:19 - And so I, I think it's basically

03:23 - as much as you want to bet, but I don't have to check on that.

03:26 - But it's it's pretty big.

03:28 - More than I'm willing to put on for sure.

03:30 - And before we get into the details

03:32 - of that soldier story, and we certainly will, can you give me

03:36 - any kind of a general example of someone on the inside here

03:40 - who would have an unfair advantage before we get into the soldier story?

03:43 - Sure.

03:45 - It's literally anything.

03:47 - So imagine, you know, before it used to be like, if you worked at a

03:52 - if you worked at a publicly traded company,

03:54 - you had to be careful about what you talked about, because, you know,

03:57 - what the intent for the insider trading regulations in, in, in, in DC

04:02 - is that two guys in a golf course, one is telling them, hey,

04:06 - we're going to come out with good earnings.

04:08 - Make sure you buy our stock.

04:10 - That's not fair, right.

04:11 - Well, now that you can bet on anything, literally anything,

04:15 - it is putting people in the position where they are

04:19 - now in a position to have classified information, not classified,

04:22 - but protected information that the rest of the people don't have.

04:26 - And so that's where the shenanigans have been, have been, have been coming.

04:31 - Well, speaking of two guys on the golf course who are exchanging protected

04:35 - information, what kind of protection is in place right now

04:39 - that can level the playing field for betting on real world events?

04:43 - Is there anything?

04:44 - Yeah, there's there's some concerns that that we have.

04:48 - One first is, is are these death markets where if,

04:51 - whether a someone will be killed or someone will die?

04:55 - And also betting on youth sports,

04:57 - which is something that we've seen before but is enabled by markets like this.

05:02 - So there are two, you know, concerns about things that,

05:05 - that you can bet on that, that you shouldn't.

05:08 - But you know, is there anything in place right now

05:11 - that can level the playing field that and maybe anticipates your legislation?

05:15 - Yeah. So

05:18 - this technology, this sort of platform that, that kind of

05:21 - came out around the time of the pandemic, around 2000, 2002.

05:25 - Excuse me, in 2020, 2021.

05:27 - These platforms have been really becoming popular.

05:34 - And now there is big money that's being placed on it.

05:38 - So the and the the sort of the the access to it, has been growing.

05:44 - So more people are using it and we don't feel that the safeguards

05:47 - that should be in place are in place currently.

05:51 - So, well, so then let's get into your bill then,

05:54 - what would it do to prevent someone from having an unfair advantage?

05:59 - That's that's the core of the issue.

06:00 - Yeah. Yeah.

06:01 - So we have, there's there's a couple provisions in

06:05 - that is first is making sure that the platforms themselves

06:08 - are guarding against insider trading because we need to make sure

06:12 - that these markets are safe and that people are being dis.

06:17 - Discouraged, from, from doing it from the actual platforms, standpoint.

06:22 - That's the first thing.

06:23 - The second one is we want to make sure that there are civil

06:25 - penalties here in the Commonwealth, so that if someone runs

06:28 - afoul of insider trading, they're hit and, and, and they feel it.

06:33 - So we're, we're actually setting, the penalty

06:36 - to $50,000, or twice

06:40 - the earnings, or of the wager that, that, that they have that they've made.

06:45 - So now let's get into the US Army soldier

06:48 - who used classified information to bet on real world events.

06:53 - And I'm sure this story

06:53 - will really bring the meaning of the whole thing home to our viewers.

06:57 - Yeah. So

07:00 - there there have been a

07:02 - number of bets made during this war that have raised, raised red flags.

07:07 - I think there were there were nine accounts that raised about $2.4 million,

07:12 - where the people that were on it made $2.4 million betting on the war

07:17 - with a 98% success rate, 98% success rate.

07:21 - So you think about making a bet.

07:22 - You said I had a 5050 proposition, 98% rate for those nine accounts.

07:27 - One of those accounts was a soldier who had access to classified information

07:32 - on the Maduro raid, and correctly bet that Maduro would be captured,

07:37 - when, when he was.

07:38 - And so he won $400,000 as part of that.

07:41 - And, you know, we need to make sure that

07:45 - there are clear penalties here in the how was he found out?

07:48 - How is that transaction flagged?

07:50 - So I think how he did it was after he won.

07:53 - He did it on Poly Market.

07:54 - After he won, I believe he pulled the money out and then closed the account.

07:58 - And there are there are suspicious activities

08:01 - that we need to make sure that these that these operators are looking at.

08:07 - So the bank perhaps thought that was suspicious activity.

08:10 - The actual, the actual

08:14 - the actual markets themselves so poorly marketed call

08:19 - we need to make sure that they are, are watching it, and flagging this

08:24 - activity, and also having consequences on their, on their own, for these.

08:29 - Well, now that you put it that way, representative, what would the betting

08:32 - platforms be required to do under your bill?

08:35 - Yeah, they would be required to monitor for suspicious activity

08:39 - and also have safeguards in place so that if anyone was engaging

08:43 - in insider trading, they would be banned.

08:45 - And then there would be also penalties that, that they would impose as well.

08:49 - And, tell me more

08:50 - about the penalties are fines that might be imposed

08:53 - when a platform catches somebody playing with an unfair advantage.

08:56 - Yeah. So we're looking at civil penalties

08:58 - right now and we're still drafting the bill.

09:00 - But as we're sort of crafting and we're looking at $50,000 for,

09:05 - fines up to 50, $50,000, or if the the winnings are more than that,

09:11 - then actually, having double the winnings, whatever,

09:15 - whatever the winnings are,

09:17 - and we also want to make sure that we're empowering our attorneys,

09:21 - our district attorney,

09:22 - our our law enforcement, our district attorneys,

09:24 - our attorney general to be able to prosecute these cases.

09:27 - So under a bill, just how explicit would the betting platform

09:30 - have to be with publishing the penalties?

09:35 - Oh, yeah, we would expect them to publish that.

09:37 - And we would expect them to, to make it very clear.

09:39 - So there's a warning out there. At least we would expect them to.

09:42 - Yeah.

09:43 - And, again, we're still working out the details of the bill.

09:46 - The point is that people, two people should not be in a race system.

09:49 - Some people think that this is a victimless crime.

09:52 - I'm going to make my money and and and that should be fine.

09:55 - But the reality is, is that there's always someone on the other

09:58 - end of the wager, right?

09:59 - Someone that's taking the other, and it skews the, the betting percentages

10:04 - of, of, of, of what's favored to see someone that, that places

10:07 - a bet thinking that, you know, they're going to pay off

10:10 - really had no shot because the person who had access to the information

10:14 - knew the outcome before.

10:15 - And I remember that movie, back to the future,

10:18 - Part two, Biff Tannen and the Sports Almanac,

10:21 - right before making those, those wagers, knowing what's going to happen.

10:25 - And then he becomes, you know, this evil, you know, billionaire.

10:29 - We need to make sure like that was direction.

10:32 - We need to make sure that like, that is that's real life

10:35 - if you have insider information.

10:37 - So, we need to protect the public, from things like that.

10:41 - We need to make sure that these markets are not rigged and that they are fair.

10:44 - Now, what kind of control

10:45 - would you like to see on which real world events can be bet on?

10:49 - Earlier, you made the example of

10:51 - you don't want to make a bet on the prospects of somebody's death.

10:54 - Yeah, we we want to make sure that, you know,

10:58 - our goal, right, right now is to protect the public.

11:01 - And I want to also mention that this is a bipartisan bill.

11:04 - We have Democrats and Republicans on the bill.

11:06 - So in forming the bill, one of our Republican co-prime sponsors,

11:11 - thought that this was important to include and I agree

11:14 - to make sure that we don't have death markets because, again, you start,

11:19 - you know, you start monkeying around with money

11:22 - and betting and on people's and then you add people's lives.

11:26 - We want to make sure that these are safe,

11:29 - that there is no harm that is caused as a result of these markets,

11:33 - without actually weighing on whether they should be, you know, legal or not.

11:37 - That's not what we're trying to do.

11:38 - We just want to make sure that they're safe.

11:40 - Also, with youth sports, you know, we should not have, again,

11:43 - when you're talking about bet on anything that's not include, you know,

11:47 - an eight year old, soccer game, because it can be dangerous.

11:51 - And also, we want to make sure we're protecting our our young,

11:53 - our young adults, so many young adults are getting caught

11:57 - up, and I say adults, some kids that are that are teenagers still, you know,

12:01 - 21 is the legal gambling age in Pennsylvania.

12:05 - And there are kids that are younger than that,

12:08 - that are getting on these platforms that are that are gambling.

12:12 - And, we need to make

12:14 - sure that these platforms are also, you know, preventing,

12:18 - underage kids, from getting on this platform, on these platforms,

12:21 - you know, and spending money.

12:22 - So it really is making sure that we're causing no harm.

12:26 - So we think, you know, the death markets, and youth sports are two examples

12:31 - of things that really should not be part of bet on anything.

12:35 - And we want to make sure that those are left out.

12:37 - You said that your bill has bipartisan support.

12:40 - Yeah, but here we are in the middle of June.

12:42 - Of course, legislators have the state budget on their mind.

12:45 - I, I wonder when they'll get around to your bill.

12:47 - Is there any sense of urgency?

12:49 - I mean, I have a sense of urgency.

12:51 - I would like them to pass it, soon.

12:53 - You know, we're still actually working on the language.

12:57 - It is, we want to make sure also

13:01 - that we're we're not running afoul of any federal preemption.

13:05 - The courts are still sort of dealing with this.

13:07 - As far as I know, I think there's been only one case

13:11 - of the feds prosecuting insider trading on the prediction markets.

13:14 - And that was a case of that soldier for $10,000.

13:16 - One case.

13:17 - So it's clearly this is a sort of,

13:20 - a nascent, development, these prediction markets.

13:24 - It's not something that that has that has been out.

13:26 - And that also I think it's really captured the public attention.

13:29 - You go on Fox News, you go on.

13:32 - Ms..

13:33 - Now, not to pull people away from PCN, but they're, they're,

13:37 - they're quoting these prediction markets, call

13:40 - she and Polly Market and they're saying, what are the odds based on this?

13:44 - And it's interesting.

13:45 - Again, I check it myself.

13:47 - I want to see like, you know, where

13:49 - where are people thinking, this is going to go

13:51 - because I'm interested, like, how is this race going to go?

13:54 - And, and and it's informative.

13:56 - But we also let's, let's remember that,

13:59 - people like Pete Rose were banned, from insider trading.

14:03 - And we want to make sure that, that, that if you're insider,

14:08 - if you're doing insider trading, you're, you're not on these sites.

14:12 - Representative Tarik Khan, Democrat from Philadelphia.

14:15 - Thanks for your time. Thanks, Larry.