AI transcript
0:00:00 [MUSIC]
0:00:06 Pushkin.
0:00:06 [MUSIC]
0:00:11 >> Hey everybody, I’m Kai Rizdal, the host of Marketplace,
0:00:13 your daily download on the economy.
0:00:16 Money influences so much of what we do and how we live.
0:00:19 That’s why it’s essential to understand how this economy works.
0:00:23 At Marketplace, we break down everything from inflation and
0:00:26 student loans to the future of AI so that you can understand what it all means for you.
0:00:32 Marketplace is your secret weapon for
0:00:34 understanding this economy, listen wherever you get your podcasts.
0:00:37 [MUSIC]
0:00:41 >> Hey, it’s Jacob.
0:00:42 This week, I want to play for you an episode from another podcast
0:00:46 that Pushkin just launched.
0:00:48 It’s a show called Risky Business and it’s hosted by Nate Silver and Maria Conocova.
0:00:53 It’s a show about making better decisions.
0:00:56 Both Nate and Maria are journalists and they are also high stakes poker players.
0:01:02 So they’re bringing their perspective both from their work in journalism and
0:01:06 from the poker table to help you think about risk and decision making.
0:01:10 On the show, they talk about everything from poker to politics to making better
0:01:14 choices in your own life.
0:01:16 The show is called Risky Business with Nate Silver and Maria Conocova.
0:01:20 You can find it wherever.
0:01:23 And I hope you like it.
0:01:24 Here it is.
0:01:26 [MUSIC]
0:01:28 >> Welcome back to Risky Business, a show about making better decisions.
0:01:32 I’m Maria Conocova.
0:01:33 >> And I’m Nate Silver.
0:01:34 >> Today, we’ll be talking about a few different things starting with
0:01:37 Justice Sonia Sotomayor and whether or not she should retire.
0:01:41 >> And we’ll talk about degenerate sports betting and
0:01:43 the world of professional athletes, a major league baseball player who was
0:01:46 suspended for life last week for betting on his own team’s games.
0:01:50 And talking about a different area of degeneracy.
0:01:53 We’re going to be giving you a little taste of the world of meme stocks with
0:01:58 the return of Roaring Kitty, aka Keith Gill.
0:02:02 Get a little bit into what that means for the world of trading more broadly.
0:02:06 [MUSIC]
0:02:13 So, so Nate, there’s been a lot of talk and
0:02:16 we’ve talked about the Supreme Court right now and what’s going on with it.
0:02:19 Something that we haven’t talked about is the fact that one of the only liberal
0:02:25 justices, Sonia Sotomayor, is reaching a point where she is getting older.
0:02:31 She’s 70 years old.
0:02:33 She is not in great health.
0:02:34 She has diabetes.
0:02:35 She often travels with a physician and we’re nearing the end of the Biden
0:02:41 administration and as you and I have discussed on previous episodes,
0:02:45 we don’t know if Biden is going to get reelected.
0:02:47 We don’t know if the Democrats are going to stay in power.
0:02:50 So, what does this mean for the Supreme Court?
0:02:53 What does this mean for Justice Sotomayor?
0:02:56 Should she be considering retiring right now while Biden can still definitely
0:03:00 replace her?
0:03:02 So she is 69.
0:03:04 She turns 70 later this month.
0:03:06 Sorry.
0:03:07 I’m so sorry, Sonia.
0:03:08 I aged you and I apologize.
0:03:11 That’s what we call a news peg in the business.
0:03:13 It’s almost her 70th birthday.
0:03:14 We’re getting ahead of the news and therefore that’s why we’re partly why
0:03:17 we’re doing this now, but also because we, as you said, Maria, maybe toward the end
0:03:22 of Biden’s, we are toward the end of his first term in office and maybe the end
0:03:25 of any terms in office.
0:03:27 If the polls are right, Donald Trump is ahead right now, although it’s close.
0:03:33 If Biden does prevail, Democrats could also lose the Senate.
0:03:37 There are Democratic held seats, for example, up in West Virginia and Montana.
0:03:43 In West Virginia, Joe Manchin has retired, so that seat’s like gone for sure.
0:03:49 Montana, to a lesser extent, Ohio are tough holds for Democrats.
0:03:52 So even if Biden returns to the presidency, you might have an
0:03:56 uncooperative Republican Senate.
0:03:59 So you asked, should she consider retiring?
0:04:03 And the answer is she should not just consider, she should retire today.
0:04:07 Go take one of these university president jobs that everybody is quitting.
0:04:10 Go be president of Yale or Harvard or go make lots of money selling a book.
0:04:16 Go enter the World Series of Poker Main Event.
0:04:18 I’m sure she’s a very candy poker player, but she should absolutely retire if she
0:04:22 actually cares about any of the values that she purports to care about, these kind of
0:04:26 liberal progressive values, because if she doesn’t retire, then she could very easily
0:04:30 be replaced by another conservative justice leading to a 7-2 conservative majority.
0:04:38 And that is, that’s going to be difficult to overcome.
0:04:42 I mean, if we have a 7-2 conservative majority, it could be, I mean, I don’t know how many
0:04:47 presidencies we’ll need before the Supreme Court is more balanced, could be a long time.
0:04:54 So it’s not just that like the Supreme Court would increase, or conservatives would increase
0:04:59 their majority.
0:05:00 It’s also that like, believe it or not, the Supreme Court agrees on more issues than you
0:05:04 might think.
0:05:07 But where that middle point falls is important, right?
0:05:11 The fact that it does fall with a Barrett or a Kavanaugh, or on some issues, Justice
0:05:16 Gorsuch is a little bit heterodox on some issues versus like an Alito or something like that.
0:05:23 That also has a material impact as far as how far they will go on certain issues.
0:05:28 I completely agree with you.
0:05:30 And I think that, and I think that we should really look at the past to kind of guide Justice
0:05:36 Sotomayor’s decision right now, because I’m just going to go ahead and say this.
0:05:41 And fellow female liberals are going to get really, really mad at me.
0:05:45 But I am so fucking mad at RBG that like for me, her entire legacy is tainted, like the
0:05:52 sheer hubris of not retiring when she could have been replaced and of being like, “No,
0:05:58 I’m going to live forever.
0:05:59 I’m fucking RBG.
0:06:01 Look at my legacy.
0:06:03 I’m invincible.”
0:06:04 And her legacy is Roe v. Wade being overturned.
0:06:09 That’s her legacy.
0:06:10 Because if she had retired early, we would have had an entirely different court.
0:06:14 And I used to be such an avid RBG fan.
0:06:18 And I’m not anymore because I think that with that one decision, she single-handedly set
0:06:22 woman back much further than she ever advanced them.
0:06:26 I said it.
0:06:27 I’m not going to get mad at me, but I think that that is the truth.
0:06:30 And I am so pissed at her from beyond the grave that I can rant forever.
0:06:36 No.
0:06:37 I’m glad you said it.
0:06:38 I mean, in the Silver Bulletin post, I wrote about Sotomayor and said that her retirement
0:06:42 is a political IQ test.
0:06:45 And that’s a little bit of an effective.
0:06:47 I’m sure a very smart woman.
0:06:49 I’m not sure how smart some of the kind of liberal political observers are, frankly.
0:06:55 Because the excuses are dumb, frankly.
0:06:59 Just dumb.
0:07:00 They’ll say, “Well, you can’t force a Latina justice to retire.”
0:07:03 Well, sure you can.
0:07:04 There are lots of qualified Latina-associated justices and things like that who could replace
0:07:09 her if you believe that’s an important thing to do, right?
0:07:12 Or people say, “Oh, it’s kind of like it’s ableist to worry about her diabetes.”
0:07:16 Well, I’m sorry.
0:07:17 If you write in the Constitution that you have a lifetime appointment to something, which
0:07:21 by the way, I think is a bad idea.
0:07:22 I think she’d be limited toward 18 years or something like that.
0:07:25 But if it’s a lifetime appointment, absolutely, it’s the public’s responsibility almost to
0:07:30 consider the health of the justices and how it plays out strategically.
0:07:34 But historically, justices wait to time their retirements for partisan reasons, right?
0:07:40 They want to be replaced by the same party that appointed them in the first place.
0:07:45 So that’s not new.
0:07:47 Justice Kennedy, for example, who was more moderate, did so under Trump when he had some
0:07:51 time to go.
0:07:53 So look, maybe Sotomayor is not a believer in the polls that show Biden trailing.
0:08:00 And again, that is close.
0:08:01 The issue is just as much, if not more, about the Senate in the long term.
0:08:05 Where in the Senate, North Dakota has as many senators as California, despite having what
0:08:10 it is in the 1/40th of the population or things like that.
0:08:14 Currently, in the Trumpian coalition, the GOP does better among rural voters, white
0:08:19 rural voters in particular.
0:08:21 And they are overrepresented by quite a lot in the Senate.
0:08:24 So look, if the GOP gets attacked together, they would have potentially a relatively
0:08:29 durable advantage in the Senate.
0:08:31 I do think like kind of once you go out more than five or 10 years, it kind of becomes
0:08:36 a fuzzy crystal ball.
0:08:38 But the basic math is that like, you don’t know what’s going to happen in terms of medium
0:08:42 term political future.
0:08:44 You’re about to turn 70 years old.
0:08:45 You have diabetes and like, and like, I don’t know.
0:08:48 Like by the way, what is the ego involved here?
0:08:51 Like it just kind of weirdly, it’s weirdly stubborn.
0:08:54 It makes me think less of people who seek out power, I suppose.
0:08:57 Yeah, absolutely.
0:08:58 I totally agree.
0:08:59 And by the way, an important point that you’re making that you didn’t make explicit is that
0:09:03 it matters not just who wins the presidency, but what the majority is in the Senate.
0:09:08 Because let’s not forget the Garland disaster where Obama tried to appoint him and the Senate
0:09:15 just literally blocked the hearings and Garland didn’t even get a chance to be considered.
0:09:21 And that’s something that can happen.
0:09:22 I mean, it reminds me a little bit of like, you know, sometimes the failure to make a
0:09:29 change is the biggest risk, right?
0:09:31 It’s like, well, why would I disrupt the status quo?
0:09:33 Why have this job, you know, 70 years old is not that old for a woman who presumably
0:09:38 has good healthcare, even if she has diabetes.
0:09:42 But like, sometimes the status quo is the riskier, is the riskier path, right?
0:09:46 You know right now that she can be replaced by another liberal justice.
0:09:51 Democrats in the Senate, even the Joe Manchin’s of the world have been very loyal to Biden
0:09:55 on judicial appointments.
0:09:56 You don’t know anything beyond what happens in November.
0:09:59 And by the way, in terms of like pure political tactics, to have a big fight over the Supreme
0:10:05 Court, this is an issue where Democrats now are more charged up.
0:10:09 Talk about abortion rights and things like that.
0:10:11 I’m sure whoever is nominated would be subject to lots of abuse from a public and commentators.
0:10:16 This would also be, I think, a good way to rile up Democrats, generate more enthusiasm,
0:10:21 which is a bit flagging for Biden right now.
0:10:23 But I don’t know, people are like, well, you shouldn’t think of politics in terms of expected
0:10:28 values.
0:10:29 Yes, you should.
0:10:30 Yes, you should.
0:10:31 By the way, everyone who says it’s not a game, like, did you look at, did you see what the
0:10:36 Senate tried to do, right?
0:10:37 They’re trying to figure out, how do I game it, right?
0:10:41 This is gamesmanship.
0:10:42 This is exactly what gamesmanship is, to try to figure out, how do I gain an edge?
0:10:46 How do I use the rules to try to do what I want, even though the intention is not that?
0:10:52 I understand what the spirit of the Constitution is, and I don’t give a fuck.
0:10:55 I’m just going to do what I can within the rules so that we win.
0:11:00 And I think that it’s absolutely a game in that respect.
0:11:04 And it brings out the types of people I’ve written before about kind of the difference
0:11:09 between sportsmanship and gamesmanship.
0:11:11 And the Republicans are definitely much more into gamesmanship.
0:11:16 And the Democrats are trying to take the higher sportsman-like road, and that ain’t working
0:11:20 out so well when the other people are better gamesmen.
0:11:24 Yeah, you know, the White House has also not said anything about this, in part because
0:11:30 they have a candidate who is 81 years old, and only a few people being too old for office
0:11:35 is a big no-no topic that they don’t want to get into, but also, like, some of it comes
0:11:39 down to identity politics, I think it’s fair to say.
0:11:42 I personally think if you kind of take progressive politics seriously, the notion that, like,
0:11:49 having someone who represents the group, I think that’s a substantively smaller impact
0:11:54 than, like, 6-3 vs. 7-2 or down the line, who knows, 7-2 vs. 8-1 or 5-4 vs. 6-3 or something
0:12:01 like that.
0:12:03 But this is why I don’t really find people who are into politics, I don’t really, they’re
0:12:08 not my crowd, really, right?
0:12:10 Because this is such a no-brainer.
0:12:12 This is not close.
0:12:13 It is, no.
0:12:14 Whereas, we talked about biting the other week, like, by retiring, that’s kind of really
0:12:17 tough either way.
0:12:18 That’s really close.
0:12:19 For sure.
0:12:20 This is not close.
0:12:21 No.
0:12:22 This is, like, absolute no-brainer.
0:12:23 I’m not with you.
0:12:24 And by the way, I learned the hard way, like, when you were saying, I think, a really important
0:12:27 point is that, you know, seeking the status quo, kind of saying, like, “Oh, like, this
0:12:32 is the safer way to do it,” is oftentimes not safer, right?
0:12:35 I learned this the hard way when I started playing poker, that, like, if you try to do
0:12:39 nothing, that’s also very much in action, right?
0:12:42 That is very much a choice, that is very much doing something, and it’s doing something
0:12:46 that’s not optimal, and you’re not doing it for the right reasons, and that’s what’s
0:12:49 happening right now.
0:12:51 So, like, get your ass in gear, actually look at the incentives, look at the future, and
0:12:56 try to figure out, I think this is also really important, what risks are worth it and what
0:13:00 risks aren’t, because there is so much uncertainty here.
0:13:03 We don’t know what the percentages are, because there is this uncertainty about, you know,
0:13:07 who’s going to win the presidency, who is going to win the Senate.
0:13:10 Is that risk worth it?
0:13:13 And I think in this particular case, it’s just a slam dunk, no, it absolutely is not.
0:13:17 We’ll be right back.
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0:14:21 Money influences so much of what we do and how we live.
0:14:25 That’s why it’s essential to understand how this economy works.
0:14:29 In Marketplace, we break down everything from inflation and student loans to the future
0:14:33 of AI so that you can understand what it all means for you.
0:14:37 Marketplace is your secret weapon for understanding this economy.
0:14:41 Listen wherever you get your podcasts.
0:14:48 Last week, Major League Baseball suspended San Diego Padres shortstop to Capita Marcano
0:14:52 permanently for allegedly having bet on baseball games while a member of the Pittsburgh Pirates.
0:14:58 It also suspended for other players who are now in the Minor Leagues for a year for betting
0:15:02 on games not involving their teams.
0:15:05 There’s been a lot of gambling scandal news coming out of baseball and other sports lately,
0:15:10 of course, earlier this year.
0:15:12 Maybe the best player in the world, Shohei Otane, his former interpreter and BFF.
0:15:18 Potentially former BFF too.
0:15:22 If I committed $17 million of wire fraud involving your account, Maria, would we still be friends?
0:15:29 Absolutely, Nate.
0:15:31 I would forgive you in a heartbeat because that would mean that I somehow had $17 million.
0:15:36 There you go.
0:15:37 What’s $17 million if you signed a $50 million a year?
0:15:40 Between friends, what’s $17 million?
0:15:42 What’s minus yours, Nate?
0:15:44 As you were saying, Mizuhara pled guilty, right?
0:15:47 He pled guilty and Major League Baseball closed the investigation, which I know I actually
0:15:52 still have a couple of questions about Otane’s involvement that we’ll conveniently never
0:15:56 hear anything about ever again.
0:15:59 But yeah, this is the first suspension for gambling at related reasons since Pete Rose,
0:16:03 who also was alleged to have bet on his own team.
0:16:06 Now Marcano from what I’ve read has not planned to appeal, at least not for right now.
0:16:14 Being fair to him, there is a somewhat mitigating circumstance, which is that when he was making
0:16:19 these bets, he was injured, not actively playing for the pirates, but still, the theory of
0:16:24 the case is that even if you’re betting on your own team, you still have inside information
0:16:28 that’s valuable, right?
0:16:30 If you know that a certain player is healthy and therefore likely to play, right?
0:16:34 If you know that the team was up all night at the strip club, maybe you choose not to
0:16:39 bet that game, for example.
0:16:40 So and this is like literally a rule posted in every Major League Baseball clubhouse.
0:16:46 You bet on games involving your own team, you are suspended for life.
0:16:49 It is one of the least ambiguous rules in all of baseball’s rulebook.
0:16:53 Yeah.
0:16:54 And I think that it’s a rule that makes complete sense, right?
0:16:57 Because if you’re betting on your own team or providing information, I mean that is like,
0:17:04 that’s a different kind of inside baseball, right?
0:17:07 That is not the good kind.
0:17:09 And I think that when we see suspensions like this, I think it’s really important as the
0:17:13 ubiquity of sports betting goes up, as we have these apps everywhere, as it’s possible
0:17:19 to do all these crazy parley bets, as it’s possible to bet while events are actually
0:17:23 going on, all of these new capabilities that haven’t existed in the past, I think it’s
0:17:28 incredibly important to be strict about this.
0:17:30 By the way, I also think it’s kind of hilarious in a way.
0:17:34 Hilarious might be the wrong word, but how bad Marcano still was.
0:17:38 I mean, I think he won just over 4% of his bets.
0:17:41 Well, that’s a little bit.
0:17:42 So this is some of that.
0:17:43 What was that misleading?
0:17:45 There’s spin involved here, right?
0:17:47 Okay.
0:17:48 I mean, the reason he’s winning 4% of his bets is because he’s betting multi-leg parlays,
0:17:52 right?
0:17:53 So you bet on the pirates to win and you bet on five other teams to win, and therefore,
0:17:57 you know, take like two to the fifth power if they’re all 50/50 bets.
0:18:00 And so, so he’s doing multi-team parlays where you usually lose, but like when you win,
0:18:05 you win a lot.
0:18:07 So the 4% is kind of misleading.
0:18:09 That might be the expected value in terms of how often he’s supposed to win.
0:18:14 There is one irony though, which is that like he was apparently using one of the legal sports
0:18:19 books that like tipped off Major League Baseball.
0:18:24 So yeah, these guys will, you know, squeal on you if you’re a Major League Baseball
0:18:29 player.
0:18:30 You decide to bet on games.
0:18:31 They are, they have incentives though to be concerned about, about action that could
0:18:35 compromise their deal with the leagues.
0:18:37 They have concerns about game integrity too.
0:18:39 In some ways, I’ve been surprised there hasn’t been even more of a backlash.
0:18:43 But look, if you’re a Major League Baseball player, my advice to you is do not use like
0:18:49 DraftKings or FanDuel or a partner that’s in bed with Major League Baseball, right?
0:18:53 Use some offshore illegal betting website.
0:18:55 There’s less likelihood of being detected.
0:18:57 Like E-Pay Muzuhara did for $17 billion.
0:19:01 At least E-Pay gave himself a chance, right?
0:19:05 E-Pay was smart enough to know you’re not going to fucking bet on FanDuel, then you’re
0:19:09 drawing dead.
0:19:10 By the way, it is, I think it’s interesting to note when I was saying that it’s crucial
0:19:16 that people are being caught, that the four players who were suspended for a year, they
0:19:20 all bet just a few hundred dollars, right?
0:19:23 That was, they didn’t make big bets, they made tiny bets and they were still suspended.
0:19:26 So I think that that’s actually a really important hard line to draw, that it doesn’t
0:19:30 have to be in the millions, it doesn’t have to be in the hundreds of thousands.
0:19:33 This was like 100 bucks, 200 bucks, 400 bucks.
0:19:37 Yeah.
0:19:38 And, you know, Marcano’s bets were larger, the total sum was low, six figures.
0:19:44 But, you know, I doubt that he is betting to make a profit, right?
0:19:50 I mean, you take a bunch of competitive young men in any industry.
0:19:55 There’s a lot of degen, as we would call it, a lot of degeneracy and things like poker,
0:20:01 high six poker games are often played on the back of team planes and things like that.
0:20:05 These people are around a lot of money all the time.
0:20:09 The rookies are not making that much, but they’re around people who are making lots
0:20:12 and lots and lots of money.
0:20:14 You know, the one case where there really was some kind of expected value for the person
0:20:20 making the bets was the NBA player, John Tay Porter, who was apparently had been dealt
0:20:25 in somehow to individual player parlays, where why people were betting on this obscure player
0:20:31 named John Tay Porter is hard to know.
0:20:33 But he basically intentionally tanked the games, right?
0:20:38 He would intentionally make up a fake injury allegedly.
0:20:41 He would intentionally, like, not hustle after rebounds allegedly, so that his bettors would
0:20:47 achieve the under on, like, how many points that John Tay Porter would receive.
0:20:51 And that was very suspicious.
0:20:52 I mean, I think the NBA got lucky that that scandal broke at about the same time as the
0:20:57 Otani scandal broke, because that actually directly affected game integrity.
0:21:03 And that’s like a kind of deeper level of hell, I think, than what Marcona did.
0:21:07 I totally agree with you.
0:21:08 And I’m really glad I was going to bring John Tay Porter up, because I think that what is
0:21:12 going on there is actually the bigger issue, because it’s amazing that he was caught.
0:21:18 And if you think about the fact that I think the much bigger issue isn’t players, like,
0:21:23 betting themselves, because they’ll get caught, right, like, you’ll figure it out.
0:21:27 But players giving other bettors inside information and then actually affecting outcomes when they’re
0:21:33 in the games, that’s much more difficult to police, especially if you’re smart about it,
0:21:37 right?
0:21:38 All of a sudden, if you see millions on this obscure player who’s then pulling off some
0:21:41 crazy shit that you are thinking of like what in the world, that’s a red flag.
0:21:48 But imagine you’re smarter about it, right?
0:21:50 Imagine you’re actually someone who kind of is a better cheater, who kind of stays under
0:21:54 the radar, who manages to do it a little bit less blatantly, less often, fakes, you know,
0:22:00 doesn’t fake injuries quite as much, doesn’t throw games in quite as obvious a way, but
0:22:03 does it anyway.
0:22:05 And that to me is the much bigger and much scarier issue, because that can really affect
0:22:10 game integrity, it can affect the entire kind of gaming community, because it just goes
0:22:16 against the heart of why people play games, why people watch games, you know, what this
0:22:21 is all about.
0:22:22 And I think that that’s the much bigger thing we should be thinking about.
0:22:25 Yeah, betting on individual accomplishments raises this risk a lot.
0:22:29 Like you should not be taking that much action on anything involving John T. Porter, right?
0:22:35 Like who the fuck is going to bet that unless they have some type of inside angle?
0:22:39 I mean, I was at like a summer league game in Las Vegas about a year ago now, the summer
0:22:45 league coincides with the end of the World Series of Poker, and watching the game and
0:22:50 see like some team executive two rows in front of me in giant font on his cell phone is tapping
0:22:58 about how the New York Knicks are going to trade for OG Anno Nobi, which didn’t happen
0:23:03 then, but did actually happen several months later.
0:23:06 If I having not really, that’s not really inside information.
0:23:09 I mean, a public area of the stadium, right?
0:23:12 But like information has a way of slipping out about injuries, about fatigue, you know,
0:23:19 about like, I know, you know, some people will hang around tennis tournaments, for example,
0:23:22 and see which player is having like a cheating scandal with his girlfriend, or looks like
0:23:27 they’re coming in hungover and things like that.
0:23:30 You know, information has a way of getting out and to limit your liability by focusing
0:23:35 on more major, more robust wagering categories would be prudent, but you know, but look,
0:23:41 it’s a money grab.
0:23:43 The long term sustainability of any of this, I think is not as assumed as some of the big
0:23:48 sports betting companies would would brighten their stock market and their 10 K’s and things
0:23:52 like that.
0:23:53 So, but, you know, at the very least, they are smart enough to partner with the leagues
0:23:58 when they detect activity that undermines game integrity to at least tip them off to
0:24:03 snitch on their customers.
0:24:05 No, absolutely.
0:24:06 And I think we’re not just talking about U.S. sports betting, U.S. sportsbook.
0:24:09 This is happening in sports all over the world.
0:24:12 And some of the worst are actually in Europe and in places where there are lots of athletes
0:24:16 who are not paid very well.
0:24:18 And a lot of times they’re young, right?
0:24:20 They’re, they’re teenagers, they’re still developing their sense of self, their sense
0:24:25 of kind of right and wrong and kind of gray areas and long term consequences isn’t fully
0:24:30 developed.
0:24:31 Because by the way, if you’re like a 17 year old guy, your prefrontal cortex ain’t fully
0:24:35 developed yet.
0:24:36 Your ability to kind of think through long term decisions isn’t fully developed.
0:24:40 And if someone says, do you want to make, you know, a quick 10 grand, a quick, you know,
0:24:44 a quick this, you’re like, okay, you know, this might not be a bad idea.
0:24:48 All I have to do is, you know, if I’m a tennis player, I just serve a little bit off, right?
0:24:53 Just one time.
0:24:54 That’s all it takes.
0:24:55 I just lose one point.
0:24:57 What’s one point?
0:24:58 I just do this a few times and all of a sudden I have money and you don’t think, wait, if
0:25:03 I’m caught, there goes my career and there goes kind of any chance I have of all these
0:25:08 future earnings.
0:25:09 You just don’t make that math.
0:25:11 You’re thinking much more in the moment.
0:25:13 You’re thinking much more immediate gratification as opposed to kind of long term expected value.
0:25:20 And I think that that is something that people just need to be aware of, need to be aware
0:25:24 of who the vulnerable players are.
0:25:26 And I think that teams need to guard against that, need to train against that, need to
0:25:29 kind of talk to them and explicitly say what the long term consequences are and remind
0:25:34 them of it.
0:25:35 I know you said in baseball, you know, it can’t be more explicit, but still like have
0:25:40 more reminders, constantly have these reminders of like, this is what you don’t want to do
0:25:44 or else it’s going to be bad.
0:25:46 But in an environment that like encourages gambling, where there’s like draft kings or
0:25:50 fan duel or Caesar’s ads on the outfield wall and poker games in the team plane, you’re
0:25:56 inevitably going to have some of this with rich young men and not fully formed prefrontal
0:26:02 cortexes.
0:26:03 What does it call?
0:26:04 Yep, prefrontal cortex.
0:26:05 Okay.
0:26:06 Yeah.
0:26:07 No, I think that’s exactly right.
0:26:09 And if we want to give kind of a nod to the next layer, which is the Mizuhara of it all,
0:26:16 that you have also these situations where even if someone like Otani isn’t cheating directly,
0:26:22 isn’t sports betting, there are incentives for people close to these individuals to try
0:26:28 to take advantage.
0:26:30 Make sure like baseball seemed pretty excited about being able to wrap up that investigation.
0:26:34 I mean, there’s still a question about like, why didn’t Otani notice $17 million missing
0:26:40 from his account?
0:26:41 Like that’s a pretty fucking good question, I think.
0:26:45 It is.
0:26:46 Yeah.
0:26:47 And we don’t know, right?
0:26:48 But I think that it’s important to just throw those questions out there because it is even
0:26:54 though as someone who has seen a lot of victims of con artists, I’m very sympathetic to Otani
0:26:59 if we look at it as this typical con situation that he was potentially conned by Mizuhara,
0:27:05 you know, charmed by him, that Mizuhara is the one who had access to his bank accounts,
0:27:10 got all the alerts, et cetera, et cetera, et cetera.
0:27:12 Like you can make excuses up to a point.
0:27:15 But as you say, $17 million is a big number for anyone.
0:27:21 And so you have to then ask like, was he knowingly looking the other way?
0:27:27 Was he involved?
0:27:28 Like what was going on?
0:27:29 And I think these are questions that should be asked, but that won’t be asked because the
0:27:33 incentives are completely misaligned here because nobody wants Otani to be involved
0:27:39 because he’s the star and we want the star to keep being an untarnished star and we want
0:27:44 this other guy to take the fall.
0:27:46 And I do agree with you though that like there are still some question marks.
0:27:49 And unfortunately, I think that all we can do is speculate, we’re never going to know.
0:27:54 But I want to be careful and not to just say, oh, like this is a problem of modern sports
0:27:58 books because like, let’s not forget, you know, the Chicago Black Sox, like shit like
0:28:03 this has been going on in sports for a very, very long time before FanDuel or DraftKings
0:28:10 or any of these things.
0:28:12 And so these are kind of, these are problems and deep kind of issues of humanity that I
0:28:18 think are never going to quite go away no matter what the regulations say.
0:28:22 Yeah, look, there are two categories.
0:28:24 One is there may be cases where it is in your financial interest to throw a game, right?
0:28:29 One preventative measure is just paying everybody really well, including the umpires, by the
0:28:33 way, where it’s kind of on the surface irrational for you to gamble at that point.
0:28:38 Although sometimes people gamble for irrational reasons.
0:28:40 Maria, one thing you always remind me of is that like most con artists are not motivated
0:28:44 strictly by money.
0:28:45 Yes, absolutely true.
0:28:48 Something I also remind you of, Nate, is that even though most con artists are not motivated
0:28:52 by money, most people are not con artists.
0:28:55 And so I think that that’s a more hopeful way to end this segment that most athletes
0:29:00 are also, you know, not degenerate gamblers, not con artists and going to be in the sport
0:29:06 for the right reason.
0:29:07 They want to excel.
0:29:08 They want to do well.
0:29:09 They don’t want to throw the game.
0:29:13 We’ll be back in a minute.
0:29:20 Hey everybody, I’m Kai Rizdal, the host of Marketplace, your daily download on the economy.
0:29:35 Money influences so much of what we do and how we live.
0:29:38 That’s why it’s essential to understand how this economy works.
0:29:42 At Marketplace, we break down everything from inflation and student loans to the future
0:29:46 of AI so that you can understand what it all means for you.
0:29:51 Marketplace is your secret weapon for understanding this economy.
0:29:54 Listen, wherever you get your podcasts.
0:30:00 So recently, we’ve seen a resurgence of a stock that we haven’t heard talked about for
0:30:06 a few years now, GameStop, because Roaring Kitty, aka Keith Gill, is back.
0:30:14 And for those of you who followed the GameStop short squeeze several years ago, Roaring Kitty
0:30:21 was kind of the big force that had GameStop just go on an unprecedented run and put some
0:30:29 very famous hedge funds out of business and ended up, you know, having this just insane
0:30:35 impact on the markets.
0:30:37 And then Keith Gill, Roaring Kitty, went silent.
0:30:40 And a few weeks ago, all of a sudden, for the first time, this dormant account started
0:30:45 posting memes.
0:30:48 And what happened?
0:30:50 GameStop is back, baby.
0:30:51 The stock just went through the roof once again.
0:30:56 And Roaring Kitty has since made more posts and shown his own holdings, including over
0:31:02 a hundred million in GameStop stock.
0:31:06 And the markets are reacting and GameStop is reacting.
0:31:09 The SEC is reacting.
0:31:11 Lots of players are reacting to this and trying to figure out what’s going on.
0:31:16 Is it legal?
0:31:17 Kind of what are the repercussions of this?
0:31:19 Nate, is this something that you’ve been following?
0:31:22 I wrote about GameStop a little bit in my book from the standpoint of game theory, actually.
0:31:29 So Maria, maybe we should actually talk about some of the game theory behind shitcoins and
0:31:34 meme stocks.
0:31:35 Yeah, I think that’s a great idea, Nate, because I do think that that’s central to
0:31:38 this conversation.
0:31:40 And the memeing part of it, M-E-M-E, is actually very central to how the game theory works,
0:31:47 believe it or not.
0:31:48 So to simplify a bit, typically what you have is, let’s say you have an overvalued asset.
0:31:55 In principle, people who own that asset could literally conspire or collude to keep the asset
0:32:03 at an artificial value as long as nobody sells, then it maintains at least nominally its value
0:32:09 or maybe it keeps going up if everyone is being like, hold on for dear life and wants
0:32:13 to boost the asset further.
0:32:15 So the problem with that is that you have, in game theory terms, a prisoner’s dilemma
0:32:20 where every party has a strong incentive to defect.
0:32:26 If GameStop is priced at $50 when the fundamentals price should be $2 or something like that,
0:32:34 a share, you really have a strong incentive to get out while you can and take your profits
0:32:41 that could trigger a collapse in the share price.
0:32:46 However, due to the power of memes, a sort of coordination is possible.
0:32:51 In the prisoner’s dilemma, this is what happens when, Maria, let’s say you and I commit a
0:32:56 crime and we’re in separate jail, so I don’t know what crime we, what’s the most likely
0:33:01 crime we were to commit?
0:33:02 I don’t want to speculate on this, Nate.
0:33:05 You and I are completely, we’re not going to commit any crimes ever.
0:33:09 So let’s say we kidnapped Justice Sonia Sotomayor.
0:33:13 Okay.
0:33:14 Okay.
0:33:15 That would be a pretty serious crime.
0:33:16 Very serious.
0:33:17 But let’s say the government is having trouble proving it and therefore we are in separate
0:33:20 prison cells and the government says, well, you can confess to the crime and get a lower
0:33:27 sentence or you can remain silent and we’ll see what happens, right?
0:33:32 Now if neither of us were to confess the way this works, we would kind of get like a slap
0:33:37 on the wrist because the government can’t really prove its case.
0:33:40 But the game theory is such that not being able to coordinate on our strategy, we both
0:33:45 wind up stitching on one another and wind up getting a worse sentence as a result.
0:33:50 That’s kind of the very simplified podcast-friendly version of the prisoner’s dilemma.
0:33:54 If we could coordinate though, I went to a prediction markets conference this weekend
0:33:58 in California where a guy had a t-shirt on saying, “I cooperate in the prisoner’s dilemma,”
0:34:05 meaning that if we can signal to one another that we are cooperating and this happens.
0:34:08 It’s a great t-shirt.
0:34:09 Yeah.
0:34:10 This is what happens in situations like the internet, right?
0:34:14 If you’re like, we’re all in this together against a stupid hedge fund against Wall Street
0:34:17 and inherently a stock like AMC theaters or GameStop is like, it’s kind of a joke, right?
0:34:23 These are like kind of blockbuster video dinosaur companies.
0:34:26 It’s kind of funny and the fact that like that through Matt Levine, the economics writer
0:34:32 for Bloomberg calls it the meme theory of value, you are kind of literally creating something
0:34:37 out of nothing.
0:34:38 Yeah.
0:34:39 So I think that we have some bigger questions here though that are like much bigger than
0:34:43 roaring kitty and is more about like the roaring kitties of the world, right?
0:34:47 So what happened in 2021, totally unprecedented, what’s happening right now shows that this
0:34:53 is a thing that might actually not be so one-off, right?
0:34:57 It might actually be repeating and we might be in a position where kind of meme stocks,
0:35:02 shitcoins, these types of things really do have an impact on the broader financial markets
0:35:08 that we see these degrees of irrationality or is it irrational that are playing out in
0:35:14 the broader stock market where people in kind of the traditional market analysis are going
0:35:20 to have to look at this differently and try to figure out, has the world changed?
0:35:24 Do we need to change how we think about this?
0:35:27 Do we need to change where we think the dumb money is or how it operates or whether it’s
0:35:31 actually dumb?
0:35:32 And I think that these are really important questions, especially as crypto becomes a
0:35:37 much bigger world and memes are the universal language in some ways.
0:35:43 These are things that just did not exist in the stock market or in the financial markets
0:35:47 in the past.
0:35:48 Yeah, look, it’s a little bit of a blow to kind of efficient market hypothesis.
0:35:53 Clearly stocks like AMC or GameStop are unmoored from any notion of kind of the fundamental
0:35:59 values, although with that said, like a lot of things are kind of in the eye of a beholder.
0:36:05 You know, why everyone thinks that like a Picasso or a Keith Herring or whatever else,
0:36:11 you know, why are those works of art valuable?
0:36:13 I mean, often I think they do have aesthetic value, but it’s inherently kind of subjective.
0:36:19 It speaks to, I think, the kind of maybe inherent unpredictability of the modern world.
0:36:24 It speaks a little bit to like the way that these kind of faceless, leaderless internet
0:36:29 mobs, because Warren Kiddy is not like doing explicit instructions, he’s just kind of
0:36:33 communicating through memes and vibes and people kind of infer what he’s saying.
0:36:39 And it kind of starts a chain of momentum that kind of can sustain itself for some
0:36:42 period of time.
0:36:44 And can you time it well enough that you kind of get out before the bubble inevitably bursts?
0:36:48 Yeah, and is this something that is going to be replicable, right?
0:36:52 I think that that’s another question because I think other people have tried to be Warren
0:36:57 Kiddy and have failed.
0:36:59 But I do think that, you know, there is irrationality in the stock markets in general and always
0:37:05 has been one of my favorite quotes from Daniel Kahneman, who won the Nobel Prize in Economics
0:37:12 for his work on kind of biases and irrationality.
0:37:15 He consulted for a bunch of hedge funds and he came to the conclusion that basically traders
0:37:21 were gambling.
0:37:23 They were not playing poker and he said that poker players are, you know, much more rational
0:37:28 and can actually, you know, you can figure out who the winning players are, where the
0:37:32 edge is, et cetera, gambling.
0:37:34 If you’re just gambling in a casino, you can’t.
0:37:35 And he said what you guys are doing is gambling and no one listened to him.
0:37:39 And they thought that he was, you know, just full of it.
0:37:42 And so they didn’t take any of his recommendations to heart.
0:37:47 But I think that that’s a really kind of important insight that this is not necessarily counter
0:37:52 to how a lot of decision making in the stock markets has worked in the past.
0:37:56 It’s just a new element, a new world and kind of putting some of the stuff on steroids,
0:38:02 right?
0:38:03 Blowing it up in a way that it hasn’t been blown up before and potentially kind of making
0:38:08 that exponentially more powerful.
0:38:10 Maria, I’m not, I’m not one to like dispute too much the late Daniel Kahneman, right?
0:38:16 Well, that’s why, that’s why I consulted for, okay.
0:38:19 That’s why I couched my views with Danny Kahneman, right?
0:38:22 Because I know that you can disagree with me, but he’s, he’s harder to disagree with.
0:38:25 Please continue.
0:38:26 I don’t know, like I, when you have like the practice of like actual traders betting millions
0:38:35 of dollars versus academics, even academics as smart as Daniel Kahneman, I’m not sure
0:38:43 I’d take the academic side.
0:38:46 I think it’s really easy to like come to some theoretical conclusion when you don’t have
0:38:50 skin in the game that might not be robust necessarily.
0:38:54 I talked to a guy named John Coates for my book who was a former trader turned neuroscientists
0:39:01 and he actually thought when he was working on desks at Wall Street that the traders didn’t
0:39:04 take enough risk that it’s hard to get people to be properly, properly risk adjusted until
0:39:09 they kind of had a winning streak.
0:39:10 Then they got all this testosterone and other chemicals running around their brain and become
0:39:13 like feral animals and, and go kind of crazy, right?
0:39:16 And that’s kind of what can cause bubbles.
0:39:19 But yeah, look, I mean, because there’s kind of two forms of efficient market hypothesis,
0:39:25 right?
0:39:26 There’s kind of like the hard form that yes, stocks actually do represent a probabilistic
0:39:32 discounted projection of future corporate earnings.
0:39:36 Like that’s clearly not true when it comes to something like, like GameStop.
0:39:40 The softer form is just that, okay, you think you can beat the market, go ahead and try.
0:39:46 You might understand that like yes, GameStop is overvalued, but good luck in trying to
0:39:50 time exactly kind of when that bubble bursts.
0:39:54 Yeah.
0:39:55 And I think that the bigger point here when you said that anyone can try and something
0:40:01 that I think Kahneman was trying to get at is that of course there are traders and there
0:40:05 are certain investors who can beat the markets, right?
0:40:08 There are people who are very good at this, who kind of understand, who analyze well,
0:40:12 who have the right data, right approach, whatever it is.
0:40:16 But that’s not true for the majority, but if you talk to any one individual, they always
0:40:22 think that they’re the ones who are actually more rational and can beat the markets and
0:40:26 are making better decisions.
0:40:28 And I think that that’s just an overall human flaw.
0:40:32 Yeah.
0:40:33 Look, if 10% of people in the world are the truly rational ones, there’s no guarantee
0:40:37 that you’re in the 10%.
0:40:38 Absolutely.
0:40:39 But self-perception in reality is probably fairly discordant sometimes.
0:40:44 Yeah.
0:40:45 And I think that that’s just something that’s very important to remember, whether you’re
0:40:48 roaring kitty, whether you’re one of the portfolio managers who is on the other side
0:40:54 and short GameStop, or whether you’re someone who’s just an outside observer thinking, “How
0:41:00 do I get in on this in the future and make a killing?”
0:41:03 You and I have totally switched positions this week, Nate, because last week when we
0:41:16 were recording, I was in New Haven about to go to Ireland and you were deep in the World
0:41:21 Series and now I am finally back in Vegas and you are back in New York City.
0:41:27 So we have swapped.
0:41:29 And unfortunately, I’m not making a deep run.
0:41:32 I’ve played exactly one event since I’ve been back and I busted, so that didn’t go
0:41:38 according to plan and I’ll play again today.
0:41:40 But you managed to go deep in a second event.
0:41:44 That was not the event that we were talking about, so congratulations.
0:41:48 Thank you.
0:41:49 Although it ended in a very disappointing way, this was the $5,000 Element Hold’em
0:41:53 event number 16.
0:41:55 That’s a big deal, Nate.
0:41:56 I finished 18th place out of 800 and something runners.
0:41:59 However…
0:42:00 Congratulations.
0:42:01 Thank you, Maria.
0:42:02 I still am mildly heartbroken about it because you want to…
0:42:06 Congratulations.
0:42:07 Congratulations is like the most common poker emotion, basically.
0:42:13 So I kind of lost on a bad beat, which I’m not going to dwell on.
0:42:18 I saw your new sub-stack post, Maria, about players complaining about bad beats, but basically
0:42:22 I had pocket fives against Jack-10 off-suit on a board of Jack-10-5.
0:42:28 So I had a set.
0:42:30 My opponent had the kind of next best hand that isn’t a set, which is Jack-10 for two
0:42:34 pairs.
0:42:35 Unfortunately, a jacket on the turn.
0:42:37 And so this dude, by the way, won the fucking event.
0:42:40 I think I deserve half his prize pool, basically.
0:42:43 Wouldn’t it be awesome, Nate, by the way, if they worked that way?
0:42:47 That would be a great role.
0:42:48 You tagged the chips that you have equity in.
0:42:51 I’m not complaining about this bad beat.
0:42:53 Yes, you are.
0:42:54 Yes, you are.
0:42:55 Just acknowledge that you’re complaining about the bad beat and move on.
0:42:58 We cover important news, the World Series of Poker, and part of the news is that a player
0:43:03 who had a lot of chips was eliminated in 18th place, conveying the news in a useful way.
0:43:08 All right, Nate, keep conveying the news.
0:43:11 My reporting suggests this player got very lucky at several earlier points in this tournament.
0:43:17 For example, this player had pocket queens all against aces, and the queens won.
0:43:22 This player had pocket 10s, almost all in against pocket kings, and the 10s won, for
0:43:28 example.
0:43:29 All right, so this player, Mr. Nathaniel Silver, got ridiculously lucky to even get to the
0:43:37 point where his set could be cracked.
0:43:40 All right, so let’s reframe that as bad beats are good now.
0:43:45 You did bust an unfortunate circumstances.
0:43:49 Maria, what about your update?
0:43:52 How’s the series going for you so far?
0:43:53 My update sucks.
0:43:54 Oh, no.
0:43:58 Are you over?
0:44:00 Well, no.
0:44:01 My first event, I won the 10k bounties.
0:44:04 Oh, that’s pretty good.
0:44:06 Yeah.
0:44:07 That’s pretty good.
0:44:09 But otherwise, zero cash is.
0:44:11 It’s the line between success and failure is so thin in poker, by the way, because the
0:44:16 first week into it, I had one mini-cash out of it, and now it’s like, “Oh, I’m having
0:44:20 a really great World Series.”
0:44:22 It’s all pretty fucking arbitrary, and it doesn’t necessarily even out.
0:44:26 It’s like the gambler’s fallacy, but over the long run.
0:44:28 Thanks for reading my sub-stack, Nate.
0:44:33 Read Maria’s sub-stack.
0:44:34 She needs revenue now to make up for her poker losses, folks.
0:44:37 Yes, because my update sucks is because the one event I played was a $25,000 buy-in event,
0:44:44 and I did not cash in it.
0:44:45 So I went from being flat for the World Series to being down $25,000.
0:44:51 Maybe if you concentrated more on the poker and not your newsletter, Maria, you wouldn’t
0:44:55 have busted out.
0:44:57 But I feel like I owe it to my fans, and my newsletter is about all the things I did wrong
0:45:01 or other people did wrong so that I played better, and today is the day we change all
0:45:05 of that so that next week when we’re recording, we can talk about my deep run.
0:45:10 How’s that for optimism?
0:45:12 It’s a deal.
0:45:13 All right, let’s do it.
0:45:24 That’s it for today.
0:45:26 We have already been getting some listener questions, which is amazing.
0:45:30 Please keep them coming.
0:45:31 We want to hear from you, and we will be addressing some of the questions in segments
0:45:35 on our podcast going forward.
0:45:38 We even have an email address for you to use now.
0:45:41 It’s just riskybusiness, one word, at pushkin.fm.
0:45:46 And don’t forget to rate and review the show.
0:45:48 We will not tell you which rate and a gift, but you can probably infer which ones we like
0:45:52 more.
0:45:54 Risky Business is hosted by me, Maria Kanakova, and me, Nate Silver.
0:45:58 The show is a co-production of Pushkin Industries and iHeart Media.
0:46:03 This episode was produced by Isabel Carter.
0:46:06 Our associate producer is Gabriel Hunter-Chang.
0:46:08 Our executive producer is Jacob Goldstein.
0:46:11 And if you want to listen to an ad-free version, sign up for Pushkin Plus.
0:46:14 For $6.99 a month, you get access to ad-free listening.
0:46:18 Thanks for tuning in.
0:46:21 Hey everybody, I’m Kai Rizdal, the host of Marketplace, your daily download on the economy.
0:46:37 Money influences so much of what we do and how we live.
0:46:40 That’s why it’s essential to understand how this economy works.
0:46:45 At Marketplace, we break down everything from inflation and student loans to the future
0:46:49 of AI so that you can understand what it all means for you.
0:46:53 Marketplace is your secret weapon for understanding this economy.
0:46:56 Listen wherever you get your podcasts.
0:46:58 (upbeat music)
0:00:06 Pushkin.
0:00:06 [MUSIC]
0:00:11 >> Hey everybody, I’m Kai Rizdal, the host of Marketplace,
0:00:13 your daily download on the economy.
0:00:16 Money influences so much of what we do and how we live.
0:00:19 That’s why it’s essential to understand how this economy works.
0:00:23 At Marketplace, we break down everything from inflation and
0:00:26 student loans to the future of AI so that you can understand what it all means for you.
0:00:32 Marketplace is your secret weapon for
0:00:34 understanding this economy, listen wherever you get your podcasts.
0:00:37 [MUSIC]
0:00:41 >> Hey, it’s Jacob.
0:00:42 This week, I want to play for you an episode from another podcast
0:00:46 that Pushkin just launched.
0:00:48 It’s a show called Risky Business and it’s hosted by Nate Silver and Maria Conocova.
0:00:53 It’s a show about making better decisions.
0:00:56 Both Nate and Maria are journalists and they are also high stakes poker players.
0:01:02 So they’re bringing their perspective both from their work in journalism and
0:01:06 from the poker table to help you think about risk and decision making.
0:01:10 On the show, they talk about everything from poker to politics to making better
0:01:14 choices in your own life.
0:01:16 The show is called Risky Business with Nate Silver and Maria Conocova.
0:01:20 You can find it wherever.
0:01:23 And I hope you like it.
0:01:24 Here it is.
0:01:26 [MUSIC]
0:01:28 >> Welcome back to Risky Business, a show about making better decisions.
0:01:32 I’m Maria Conocova.
0:01:33 >> And I’m Nate Silver.
0:01:34 >> Today, we’ll be talking about a few different things starting with
0:01:37 Justice Sonia Sotomayor and whether or not she should retire.
0:01:41 >> And we’ll talk about degenerate sports betting and
0:01:43 the world of professional athletes, a major league baseball player who was
0:01:46 suspended for life last week for betting on his own team’s games.
0:01:50 And talking about a different area of degeneracy.
0:01:53 We’re going to be giving you a little taste of the world of meme stocks with
0:01:58 the return of Roaring Kitty, aka Keith Gill.
0:02:02 Get a little bit into what that means for the world of trading more broadly.
0:02:06 [MUSIC]
0:02:13 So, so Nate, there’s been a lot of talk and
0:02:16 we’ve talked about the Supreme Court right now and what’s going on with it.
0:02:19 Something that we haven’t talked about is the fact that one of the only liberal
0:02:25 justices, Sonia Sotomayor, is reaching a point where she is getting older.
0:02:31 She’s 70 years old.
0:02:33 She is not in great health.
0:02:34 She has diabetes.
0:02:35 She often travels with a physician and we’re nearing the end of the Biden
0:02:41 administration and as you and I have discussed on previous episodes,
0:02:45 we don’t know if Biden is going to get reelected.
0:02:47 We don’t know if the Democrats are going to stay in power.
0:02:50 So, what does this mean for the Supreme Court?
0:02:53 What does this mean for Justice Sotomayor?
0:02:56 Should she be considering retiring right now while Biden can still definitely
0:03:00 replace her?
0:03:02 So she is 69.
0:03:04 She turns 70 later this month.
0:03:06 Sorry.
0:03:07 I’m so sorry, Sonia.
0:03:08 I aged you and I apologize.
0:03:11 That’s what we call a news peg in the business.
0:03:13 It’s almost her 70th birthday.
0:03:14 We’re getting ahead of the news and therefore that’s why we’re partly why
0:03:17 we’re doing this now, but also because we, as you said, Maria, maybe toward the end
0:03:22 of Biden’s, we are toward the end of his first term in office and maybe the end
0:03:25 of any terms in office.
0:03:27 If the polls are right, Donald Trump is ahead right now, although it’s close.
0:03:33 If Biden does prevail, Democrats could also lose the Senate.
0:03:37 There are Democratic held seats, for example, up in West Virginia and Montana.
0:03:43 In West Virginia, Joe Manchin has retired, so that seat’s like gone for sure.
0:03:49 Montana, to a lesser extent, Ohio are tough holds for Democrats.
0:03:52 So even if Biden returns to the presidency, you might have an
0:03:56 uncooperative Republican Senate.
0:03:59 So you asked, should she consider retiring?
0:04:03 And the answer is she should not just consider, she should retire today.
0:04:07 Go take one of these university president jobs that everybody is quitting.
0:04:10 Go be president of Yale or Harvard or go make lots of money selling a book.
0:04:16 Go enter the World Series of Poker Main Event.
0:04:18 I’m sure she’s a very candy poker player, but she should absolutely retire if she
0:04:22 actually cares about any of the values that she purports to care about, these kind of
0:04:26 liberal progressive values, because if she doesn’t retire, then she could very easily
0:04:30 be replaced by another conservative justice leading to a 7-2 conservative majority.
0:04:38 And that is, that’s going to be difficult to overcome.
0:04:42 I mean, if we have a 7-2 conservative majority, it could be, I mean, I don’t know how many
0:04:47 presidencies we’ll need before the Supreme Court is more balanced, could be a long time.
0:04:54 So it’s not just that like the Supreme Court would increase, or conservatives would increase
0:04:59 their majority.
0:05:00 It’s also that like, believe it or not, the Supreme Court agrees on more issues than you
0:05:04 might think.
0:05:07 But where that middle point falls is important, right?
0:05:11 The fact that it does fall with a Barrett or a Kavanaugh, or on some issues, Justice
0:05:16 Gorsuch is a little bit heterodox on some issues versus like an Alito or something like that.
0:05:23 That also has a material impact as far as how far they will go on certain issues.
0:05:28 I completely agree with you.
0:05:30 And I think that, and I think that we should really look at the past to kind of guide Justice
0:05:36 Sotomayor’s decision right now, because I’m just going to go ahead and say this.
0:05:41 And fellow female liberals are going to get really, really mad at me.
0:05:45 But I am so fucking mad at RBG that like for me, her entire legacy is tainted, like the
0:05:52 sheer hubris of not retiring when she could have been replaced and of being like, “No,
0:05:58 I’m going to live forever.
0:05:59 I’m fucking RBG.
0:06:01 Look at my legacy.
0:06:03 I’m invincible.”
0:06:04 And her legacy is Roe v. Wade being overturned.
0:06:09 That’s her legacy.
0:06:10 Because if she had retired early, we would have had an entirely different court.
0:06:14 And I used to be such an avid RBG fan.
0:06:18 And I’m not anymore because I think that with that one decision, she single-handedly set
0:06:22 woman back much further than she ever advanced them.
0:06:26 I said it.
0:06:27 I’m not going to get mad at me, but I think that that is the truth.
0:06:30 And I am so pissed at her from beyond the grave that I can rant forever.
0:06:36 No.
0:06:37 I’m glad you said it.
0:06:38 I mean, in the Silver Bulletin post, I wrote about Sotomayor and said that her retirement
0:06:42 is a political IQ test.
0:06:45 And that’s a little bit of an effective.
0:06:47 I’m sure a very smart woman.
0:06:49 I’m not sure how smart some of the kind of liberal political observers are, frankly.
0:06:55 Because the excuses are dumb, frankly.
0:06:59 Just dumb.
0:07:00 They’ll say, “Well, you can’t force a Latina justice to retire.”
0:07:03 Well, sure you can.
0:07:04 There are lots of qualified Latina-associated justices and things like that who could replace
0:07:09 her if you believe that’s an important thing to do, right?
0:07:12 Or people say, “Oh, it’s kind of like it’s ableist to worry about her diabetes.”
0:07:16 Well, I’m sorry.
0:07:17 If you write in the Constitution that you have a lifetime appointment to something, which
0:07:21 by the way, I think is a bad idea.
0:07:22 I think she’d be limited toward 18 years or something like that.
0:07:25 But if it’s a lifetime appointment, absolutely, it’s the public’s responsibility almost to
0:07:30 consider the health of the justices and how it plays out strategically.
0:07:34 But historically, justices wait to time their retirements for partisan reasons, right?
0:07:40 They want to be replaced by the same party that appointed them in the first place.
0:07:45 So that’s not new.
0:07:47 Justice Kennedy, for example, who was more moderate, did so under Trump when he had some
0:07:51 time to go.
0:07:53 So look, maybe Sotomayor is not a believer in the polls that show Biden trailing.
0:08:00 And again, that is close.
0:08:01 The issue is just as much, if not more, about the Senate in the long term.
0:08:05 Where in the Senate, North Dakota has as many senators as California, despite having what
0:08:10 it is in the 1/40th of the population or things like that.
0:08:14 Currently, in the Trumpian coalition, the GOP does better among rural voters, white
0:08:19 rural voters in particular.
0:08:21 And they are overrepresented by quite a lot in the Senate.
0:08:24 So look, if the GOP gets attacked together, they would have potentially a relatively
0:08:29 durable advantage in the Senate.
0:08:31 I do think like kind of once you go out more than five or 10 years, it kind of becomes
0:08:36 a fuzzy crystal ball.
0:08:38 But the basic math is that like, you don’t know what’s going to happen in terms of medium
0:08:42 term political future.
0:08:44 You’re about to turn 70 years old.
0:08:45 You have diabetes and like, and like, I don’t know.
0:08:48 Like by the way, what is the ego involved here?
0:08:51 Like it just kind of weirdly, it’s weirdly stubborn.
0:08:54 It makes me think less of people who seek out power, I suppose.
0:08:57 Yeah, absolutely.
0:08:58 I totally agree.
0:08:59 And by the way, an important point that you’re making that you didn’t make explicit is that
0:09:03 it matters not just who wins the presidency, but what the majority is in the Senate.
0:09:08 Because let’s not forget the Garland disaster where Obama tried to appoint him and the Senate
0:09:15 just literally blocked the hearings and Garland didn’t even get a chance to be considered.
0:09:21 And that’s something that can happen.
0:09:22 I mean, it reminds me a little bit of like, you know, sometimes the failure to make a
0:09:29 change is the biggest risk, right?
0:09:31 It’s like, well, why would I disrupt the status quo?
0:09:33 Why have this job, you know, 70 years old is not that old for a woman who presumably
0:09:38 has good healthcare, even if she has diabetes.
0:09:42 But like, sometimes the status quo is the riskier, is the riskier path, right?
0:09:46 You know right now that she can be replaced by another liberal justice.
0:09:51 Democrats in the Senate, even the Joe Manchin’s of the world have been very loyal to Biden
0:09:55 on judicial appointments.
0:09:56 You don’t know anything beyond what happens in November.
0:09:59 And by the way, in terms of like pure political tactics, to have a big fight over the Supreme
0:10:05 Court, this is an issue where Democrats now are more charged up.
0:10:09 Talk about abortion rights and things like that.
0:10:11 I’m sure whoever is nominated would be subject to lots of abuse from a public and commentators.
0:10:16 This would also be, I think, a good way to rile up Democrats, generate more enthusiasm,
0:10:21 which is a bit flagging for Biden right now.
0:10:23 But I don’t know, people are like, well, you shouldn’t think of politics in terms of expected
0:10:28 values.
0:10:29 Yes, you should.
0:10:30 Yes, you should.
0:10:31 By the way, everyone who says it’s not a game, like, did you look at, did you see what the
0:10:36 Senate tried to do, right?
0:10:37 They’re trying to figure out, how do I game it, right?
0:10:41 This is gamesmanship.
0:10:42 This is exactly what gamesmanship is, to try to figure out, how do I gain an edge?
0:10:46 How do I use the rules to try to do what I want, even though the intention is not that?
0:10:52 I understand what the spirit of the Constitution is, and I don’t give a fuck.
0:10:55 I’m just going to do what I can within the rules so that we win.
0:11:00 And I think that it’s absolutely a game in that respect.
0:11:04 And it brings out the types of people I’ve written before about kind of the difference
0:11:09 between sportsmanship and gamesmanship.
0:11:11 And the Republicans are definitely much more into gamesmanship.
0:11:16 And the Democrats are trying to take the higher sportsman-like road, and that ain’t working
0:11:20 out so well when the other people are better gamesmen.
0:11:24 Yeah, you know, the White House has also not said anything about this, in part because
0:11:30 they have a candidate who is 81 years old, and only a few people being too old for office
0:11:35 is a big no-no topic that they don’t want to get into, but also, like, some of it comes
0:11:39 down to identity politics, I think it’s fair to say.
0:11:42 I personally think if you kind of take progressive politics seriously, the notion that, like,
0:11:49 having someone who represents the group, I think that’s a substantively smaller impact
0:11:54 than, like, 6-3 vs. 7-2 or down the line, who knows, 7-2 vs. 8-1 or 5-4 vs. 6-3 or something
0:12:01 like that.
0:12:03 But this is why I don’t really find people who are into politics, I don’t really, they’re
0:12:08 not my crowd, really, right?
0:12:10 Because this is such a no-brainer.
0:12:12 This is not close.
0:12:13 It is, no.
0:12:14 Whereas, we talked about biting the other week, like, by retiring, that’s kind of really
0:12:17 tough either way.
0:12:18 That’s really close.
0:12:19 For sure.
0:12:20 This is not close.
0:12:21 No.
0:12:22 This is, like, absolute no-brainer.
0:12:23 I’m not with you.
0:12:24 And by the way, I learned the hard way, like, when you were saying, I think, a really important
0:12:27 point is that, you know, seeking the status quo, kind of saying, like, “Oh, like, this
0:12:32 is the safer way to do it,” is oftentimes not safer, right?
0:12:35 I learned this the hard way when I started playing poker, that, like, if you try to do
0:12:39 nothing, that’s also very much in action, right?
0:12:42 That is very much a choice, that is very much doing something, and it’s doing something
0:12:46 that’s not optimal, and you’re not doing it for the right reasons, and that’s what’s
0:12:49 happening right now.
0:12:51 So, like, get your ass in gear, actually look at the incentives, look at the future, and
0:12:56 try to figure out, I think this is also really important, what risks are worth it and what
0:13:00 risks aren’t, because there is so much uncertainty here.
0:13:03 We don’t know what the percentages are, because there is this uncertainty about, you know,
0:13:07 who’s going to win the presidency, who is going to win the Senate.
0:13:10 Is that risk worth it?
0:13:13 And I think in this particular case, it’s just a slam dunk, no, it absolutely is not.
0:13:17 We’ll be right back.
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0:14:48 Last week, Major League Baseball suspended San Diego Padres shortstop to Capita Marcano
0:14:52 permanently for allegedly having bet on baseball games while a member of the Pittsburgh Pirates.
0:14:58 It also suspended for other players who are now in the Minor Leagues for a year for betting
0:15:02 on games not involving their teams.
0:15:05 There’s been a lot of gambling scandal news coming out of baseball and other sports lately,
0:15:10 of course, earlier this year.
0:15:12 Maybe the best player in the world, Shohei Otane, his former interpreter and BFF.
0:15:18 Potentially former BFF too.
0:15:22 If I committed $17 million of wire fraud involving your account, Maria, would we still be friends?
0:15:29 Absolutely, Nate.
0:15:31 I would forgive you in a heartbeat because that would mean that I somehow had $17 million.
0:15:36 There you go.
0:15:37 What’s $17 million if you signed a $50 million a year?
0:15:40 Between friends, what’s $17 million?
0:15:42 What’s minus yours, Nate?
0:15:44 As you were saying, Mizuhara pled guilty, right?
0:15:47 He pled guilty and Major League Baseball closed the investigation, which I know I actually
0:15:52 still have a couple of questions about Otane’s involvement that we’ll conveniently never
0:15:56 hear anything about ever again.
0:15:59 But yeah, this is the first suspension for gambling at related reasons since Pete Rose,
0:16:03 who also was alleged to have bet on his own team.
0:16:06 Now Marcano from what I’ve read has not planned to appeal, at least not for right now.
0:16:14 Being fair to him, there is a somewhat mitigating circumstance, which is that when he was making
0:16:19 these bets, he was injured, not actively playing for the pirates, but still, the theory of
0:16:24 the case is that even if you’re betting on your own team, you still have inside information
0:16:28 that’s valuable, right?
0:16:30 If you know that a certain player is healthy and therefore likely to play, right?
0:16:34 If you know that the team was up all night at the strip club, maybe you choose not to
0:16:39 bet that game, for example.
0:16:40 So and this is like literally a rule posted in every Major League Baseball clubhouse.
0:16:46 You bet on games involving your own team, you are suspended for life.
0:16:49 It is one of the least ambiguous rules in all of baseball’s rulebook.
0:16:53 Yeah.
0:16:54 And I think that it’s a rule that makes complete sense, right?
0:16:57 Because if you’re betting on your own team or providing information, I mean that is like,
0:17:04 that’s a different kind of inside baseball, right?
0:17:07 That is not the good kind.
0:17:09 And I think that when we see suspensions like this, I think it’s really important as the
0:17:13 ubiquity of sports betting goes up, as we have these apps everywhere, as it’s possible
0:17:19 to do all these crazy parley bets, as it’s possible to bet while events are actually
0:17:23 going on, all of these new capabilities that haven’t existed in the past, I think it’s
0:17:28 incredibly important to be strict about this.
0:17:30 By the way, I also think it’s kind of hilarious in a way.
0:17:34 Hilarious might be the wrong word, but how bad Marcano still was.
0:17:38 I mean, I think he won just over 4% of his bets.
0:17:41 Well, that’s a little bit.
0:17:42 So this is some of that.
0:17:43 What was that misleading?
0:17:45 There’s spin involved here, right?
0:17:47 Okay.
0:17:48 I mean, the reason he’s winning 4% of his bets is because he’s betting multi-leg parlays,
0:17:52 right?
0:17:53 So you bet on the pirates to win and you bet on five other teams to win, and therefore,
0:17:57 you know, take like two to the fifth power if they’re all 50/50 bets.
0:18:00 And so, so he’s doing multi-team parlays where you usually lose, but like when you win,
0:18:05 you win a lot.
0:18:07 So the 4% is kind of misleading.
0:18:09 That might be the expected value in terms of how often he’s supposed to win.
0:18:14 There is one irony though, which is that like he was apparently using one of the legal sports
0:18:19 books that like tipped off Major League Baseball.
0:18:24 So yeah, these guys will, you know, squeal on you if you’re a Major League Baseball
0:18:29 player.
0:18:30 You decide to bet on games.
0:18:31 They are, they have incentives though to be concerned about, about action that could
0:18:35 compromise their deal with the leagues.
0:18:37 They have concerns about game integrity too.
0:18:39 In some ways, I’ve been surprised there hasn’t been even more of a backlash.
0:18:43 But look, if you’re a Major League Baseball player, my advice to you is do not use like
0:18:49 DraftKings or FanDuel or a partner that’s in bed with Major League Baseball, right?
0:18:53 Use some offshore illegal betting website.
0:18:55 There’s less likelihood of being detected.
0:18:57 Like E-Pay Muzuhara did for $17 billion.
0:19:01 At least E-Pay gave himself a chance, right?
0:19:05 E-Pay was smart enough to know you’re not going to fucking bet on FanDuel, then you’re
0:19:09 drawing dead.
0:19:10 By the way, it is, I think it’s interesting to note when I was saying that it’s crucial
0:19:16 that people are being caught, that the four players who were suspended for a year, they
0:19:20 all bet just a few hundred dollars, right?
0:19:23 That was, they didn’t make big bets, they made tiny bets and they were still suspended.
0:19:26 So I think that that’s actually a really important hard line to draw, that it doesn’t
0:19:30 have to be in the millions, it doesn’t have to be in the hundreds of thousands.
0:19:33 This was like 100 bucks, 200 bucks, 400 bucks.
0:19:37 Yeah.
0:19:38 And, you know, Marcano’s bets were larger, the total sum was low, six figures.
0:19:44 But, you know, I doubt that he is betting to make a profit, right?
0:19:50 I mean, you take a bunch of competitive young men in any industry.
0:19:55 There’s a lot of degen, as we would call it, a lot of degeneracy and things like poker,
0:20:01 high six poker games are often played on the back of team planes and things like that.
0:20:05 These people are around a lot of money all the time.
0:20:09 The rookies are not making that much, but they’re around people who are making lots
0:20:12 and lots and lots of money.
0:20:14 You know, the one case where there really was some kind of expected value for the person
0:20:20 making the bets was the NBA player, John Tay Porter, who was apparently had been dealt
0:20:25 in somehow to individual player parlays, where why people were betting on this obscure player
0:20:31 named John Tay Porter is hard to know.
0:20:33 But he basically intentionally tanked the games, right?
0:20:38 He would intentionally make up a fake injury allegedly.
0:20:41 He would intentionally, like, not hustle after rebounds allegedly, so that his bettors would
0:20:47 achieve the under on, like, how many points that John Tay Porter would receive.
0:20:51 And that was very suspicious.
0:20:52 I mean, I think the NBA got lucky that that scandal broke at about the same time as the
0:20:57 Otani scandal broke, because that actually directly affected game integrity.
0:21:03 And that’s like a kind of deeper level of hell, I think, than what Marcona did.
0:21:07 I totally agree with you.
0:21:08 And I’m really glad I was going to bring John Tay Porter up, because I think that what is
0:21:12 going on there is actually the bigger issue, because it’s amazing that he was caught.
0:21:18 And if you think about the fact that I think the much bigger issue isn’t players, like,
0:21:23 betting themselves, because they’ll get caught, right, like, you’ll figure it out.
0:21:27 But players giving other bettors inside information and then actually affecting outcomes when they’re
0:21:33 in the games, that’s much more difficult to police, especially if you’re smart about it,
0:21:37 right?
0:21:38 All of a sudden, if you see millions on this obscure player who’s then pulling off some
0:21:41 crazy shit that you are thinking of like what in the world, that’s a red flag.
0:21:48 But imagine you’re smarter about it, right?
0:21:50 Imagine you’re actually someone who kind of is a better cheater, who kind of stays under
0:21:54 the radar, who manages to do it a little bit less blatantly, less often, fakes, you know,
0:22:00 doesn’t fake injuries quite as much, doesn’t throw games in quite as obvious a way, but
0:22:03 does it anyway.
0:22:05 And that to me is the much bigger and much scarier issue, because that can really affect
0:22:10 game integrity, it can affect the entire kind of gaming community, because it just goes
0:22:16 against the heart of why people play games, why people watch games, you know, what this
0:22:21 is all about.
0:22:22 And I think that that’s the much bigger thing we should be thinking about.
0:22:25 Yeah, betting on individual accomplishments raises this risk a lot.
0:22:29 Like you should not be taking that much action on anything involving John T. Porter, right?
0:22:35 Like who the fuck is going to bet that unless they have some type of inside angle?
0:22:39 I mean, I was at like a summer league game in Las Vegas about a year ago now, the summer
0:22:45 league coincides with the end of the World Series of Poker, and watching the game and
0:22:50 see like some team executive two rows in front of me in giant font on his cell phone is tapping
0:22:58 about how the New York Knicks are going to trade for OG Anno Nobi, which didn’t happen
0:23:03 then, but did actually happen several months later.
0:23:06 If I having not really, that’s not really inside information.
0:23:09 I mean, a public area of the stadium, right?
0:23:12 But like information has a way of slipping out about injuries, about fatigue, you know,
0:23:19 about like, I know, you know, some people will hang around tennis tournaments, for example,
0:23:22 and see which player is having like a cheating scandal with his girlfriend, or looks like
0:23:27 they’re coming in hungover and things like that.
0:23:30 You know, information has a way of getting out and to limit your liability by focusing
0:23:35 on more major, more robust wagering categories would be prudent, but you know, but look,
0:23:41 it’s a money grab.
0:23:43 The long term sustainability of any of this, I think is not as assumed as some of the big
0:23:48 sports betting companies would would brighten their stock market and their 10 K’s and things
0:23:52 like that.
0:23:53 So, but, you know, at the very least, they are smart enough to partner with the leagues
0:23:58 when they detect activity that undermines game integrity to at least tip them off to
0:24:03 snitch on their customers.
0:24:05 No, absolutely.
0:24:06 And I think we’re not just talking about U.S. sports betting, U.S. sportsbook.
0:24:09 This is happening in sports all over the world.
0:24:12 And some of the worst are actually in Europe and in places where there are lots of athletes
0:24:16 who are not paid very well.
0:24:18 And a lot of times they’re young, right?
0:24:20 They’re, they’re teenagers, they’re still developing their sense of self, their sense
0:24:25 of kind of right and wrong and kind of gray areas and long term consequences isn’t fully
0:24:30 developed.
0:24:31 Because by the way, if you’re like a 17 year old guy, your prefrontal cortex ain’t fully
0:24:35 developed yet.
0:24:36 Your ability to kind of think through long term decisions isn’t fully developed.
0:24:40 And if someone says, do you want to make, you know, a quick 10 grand, a quick, you know,
0:24:44 a quick this, you’re like, okay, you know, this might not be a bad idea.
0:24:48 All I have to do is, you know, if I’m a tennis player, I just serve a little bit off, right?
0:24:53 Just one time.
0:24:54 That’s all it takes.
0:24:55 I just lose one point.
0:24:57 What’s one point?
0:24:58 I just do this a few times and all of a sudden I have money and you don’t think, wait, if
0:25:03 I’m caught, there goes my career and there goes kind of any chance I have of all these
0:25:08 future earnings.
0:25:09 You just don’t make that math.
0:25:11 You’re thinking much more in the moment.
0:25:13 You’re thinking much more immediate gratification as opposed to kind of long term expected value.
0:25:20 And I think that that is something that people just need to be aware of, need to be aware
0:25:24 of who the vulnerable players are.
0:25:26 And I think that teams need to guard against that, need to train against that, need to
0:25:29 kind of talk to them and explicitly say what the long term consequences are and remind
0:25:34 them of it.
0:25:35 I know you said in baseball, you know, it can’t be more explicit, but still like have
0:25:40 more reminders, constantly have these reminders of like, this is what you don’t want to do
0:25:44 or else it’s going to be bad.
0:25:46 But in an environment that like encourages gambling, where there’s like draft kings or
0:25:50 fan duel or Caesar’s ads on the outfield wall and poker games in the team plane, you’re
0:25:56 inevitably going to have some of this with rich young men and not fully formed prefrontal
0:26:02 cortexes.
0:26:03 What does it call?
0:26:04 Yep, prefrontal cortex.
0:26:05 Okay.
0:26:06 Yeah.
0:26:07 No, I think that’s exactly right.
0:26:09 And if we want to give kind of a nod to the next layer, which is the Mizuhara of it all,
0:26:16 that you have also these situations where even if someone like Otani isn’t cheating directly,
0:26:22 isn’t sports betting, there are incentives for people close to these individuals to try
0:26:28 to take advantage.
0:26:30 Make sure like baseball seemed pretty excited about being able to wrap up that investigation.
0:26:34 I mean, there’s still a question about like, why didn’t Otani notice $17 million missing
0:26:40 from his account?
0:26:41 Like that’s a pretty fucking good question, I think.
0:26:45 It is.
0:26:46 Yeah.
0:26:47 And we don’t know, right?
0:26:48 But I think that it’s important to just throw those questions out there because it is even
0:26:54 though as someone who has seen a lot of victims of con artists, I’m very sympathetic to Otani
0:26:59 if we look at it as this typical con situation that he was potentially conned by Mizuhara,
0:27:05 you know, charmed by him, that Mizuhara is the one who had access to his bank accounts,
0:27:10 got all the alerts, et cetera, et cetera, et cetera.
0:27:12 Like you can make excuses up to a point.
0:27:15 But as you say, $17 million is a big number for anyone.
0:27:21 And so you have to then ask like, was he knowingly looking the other way?
0:27:27 Was he involved?
0:27:28 Like what was going on?
0:27:29 And I think these are questions that should be asked, but that won’t be asked because the
0:27:33 incentives are completely misaligned here because nobody wants Otani to be involved
0:27:39 because he’s the star and we want the star to keep being an untarnished star and we want
0:27:44 this other guy to take the fall.
0:27:46 And I do agree with you though that like there are still some question marks.
0:27:49 And unfortunately, I think that all we can do is speculate, we’re never going to know.
0:27:54 But I want to be careful and not to just say, oh, like this is a problem of modern sports
0:27:58 books because like, let’s not forget, you know, the Chicago Black Sox, like shit like
0:28:03 this has been going on in sports for a very, very long time before FanDuel or DraftKings
0:28:10 or any of these things.
0:28:12 And so these are kind of, these are problems and deep kind of issues of humanity that I
0:28:18 think are never going to quite go away no matter what the regulations say.
0:28:22 Yeah, look, there are two categories.
0:28:24 One is there may be cases where it is in your financial interest to throw a game, right?
0:28:29 One preventative measure is just paying everybody really well, including the umpires, by the
0:28:33 way, where it’s kind of on the surface irrational for you to gamble at that point.
0:28:38 Although sometimes people gamble for irrational reasons.
0:28:40 Maria, one thing you always remind me of is that like most con artists are not motivated
0:28:44 strictly by money.
0:28:45 Yes, absolutely true.
0:28:48 Something I also remind you of, Nate, is that even though most con artists are not motivated
0:28:52 by money, most people are not con artists.
0:28:55 And so I think that that’s a more hopeful way to end this segment that most athletes
0:29:00 are also, you know, not degenerate gamblers, not con artists and going to be in the sport
0:29:06 for the right reason.
0:29:07 They want to excel.
0:29:08 They want to do well.
0:29:09 They don’t want to throw the game.
0:29:13 We’ll be back in a minute.
0:29:20 Hey everybody, I’m Kai Rizdal, the host of Marketplace, your daily download on the economy.
0:29:35 Money influences so much of what we do and how we live.
0:29:38 That’s why it’s essential to understand how this economy works.
0:29:42 At Marketplace, we break down everything from inflation and student loans to the future
0:29:46 of AI so that you can understand what it all means for you.
0:29:51 Marketplace is your secret weapon for understanding this economy.
0:29:54 Listen, wherever you get your podcasts.
0:30:00 So recently, we’ve seen a resurgence of a stock that we haven’t heard talked about for
0:30:06 a few years now, GameStop, because Roaring Kitty, aka Keith Gill, is back.
0:30:14 And for those of you who followed the GameStop short squeeze several years ago, Roaring Kitty
0:30:21 was kind of the big force that had GameStop just go on an unprecedented run and put some
0:30:29 very famous hedge funds out of business and ended up, you know, having this just insane
0:30:35 impact on the markets.
0:30:37 And then Keith Gill, Roaring Kitty, went silent.
0:30:40 And a few weeks ago, all of a sudden, for the first time, this dormant account started
0:30:45 posting memes.
0:30:48 And what happened?
0:30:50 GameStop is back, baby.
0:30:51 The stock just went through the roof once again.
0:30:56 And Roaring Kitty has since made more posts and shown his own holdings, including over
0:31:02 a hundred million in GameStop stock.
0:31:06 And the markets are reacting and GameStop is reacting.
0:31:09 The SEC is reacting.
0:31:11 Lots of players are reacting to this and trying to figure out what’s going on.
0:31:16 Is it legal?
0:31:17 Kind of what are the repercussions of this?
0:31:19 Nate, is this something that you’ve been following?
0:31:22 I wrote about GameStop a little bit in my book from the standpoint of game theory, actually.
0:31:29 So Maria, maybe we should actually talk about some of the game theory behind shitcoins and
0:31:34 meme stocks.
0:31:35 Yeah, I think that’s a great idea, Nate, because I do think that that’s central to
0:31:38 this conversation.
0:31:40 And the memeing part of it, M-E-M-E, is actually very central to how the game theory works,
0:31:47 believe it or not.
0:31:48 So to simplify a bit, typically what you have is, let’s say you have an overvalued asset.
0:31:55 In principle, people who own that asset could literally conspire or collude to keep the asset
0:32:03 at an artificial value as long as nobody sells, then it maintains at least nominally its value
0:32:09 or maybe it keeps going up if everyone is being like, hold on for dear life and wants
0:32:13 to boost the asset further.
0:32:15 So the problem with that is that you have, in game theory terms, a prisoner’s dilemma
0:32:20 where every party has a strong incentive to defect.
0:32:26 If GameStop is priced at $50 when the fundamentals price should be $2 or something like that,
0:32:34 a share, you really have a strong incentive to get out while you can and take your profits
0:32:41 that could trigger a collapse in the share price.
0:32:46 However, due to the power of memes, a sort of coordination is possible.
0:32:51 In the prisoner’s dilemma, this is what happens when, Maria, let’s say you and I commit a
0:32:56 crime and we’re in separate jail, so I don’t know what crime we, what’s the most likely
0:33:01 crime we were to commit?
0:33:02 I don’t want to speculate on this, Nate.
0:33:05 You and I are completely, we’re not going to commit any crimes ever.
0:33:09 So let’s say we kidnapped Justice Sonia Sotomayor.
0:33:13 Okay.
0:33:14 Okay.
0:33:15 That would be a pretty serious crime.
0:33:16 Very serious.
0:33:17 But let’s say the government is having trouble proving it and therefore we are in separate
0:33:20 prison cells and the government says, well, you can confess to the crime and get a lower
0:33:27 sentence or you can remain silent and we’ll see what happens, right?
0:33:32 Now if neither of us were to confess the way this works, we would kind of get like a slap
0:33:37 on the wrist because the government can’t really prove its case.
0:33:40 But the game theory is such that not being able to coordinate on our strategy, we both
0:33:45 wind up stitching on one another and wind up getting a worse sentence as a result.
0:33:50 That’s kind of the very simplified podcast-friendly version of the prisoner’s dilemma.
0:33:54 If we could coordinate though, I went to a prediction markets conference this weekend
0:33:58 in California where a guy had a t-shirt on saying, “I cooperate in the prisoner’s dilemma,”
0:34:05 meaning that if we can signal to one another that we are cooperating and this happens.
0:34:08 It’s a great t-shirt.
0:34:09 Yeah.
0:34:10 This is what happens in situations like the internet, right?
0:34:14 If you’re like, we’re all in this together against a stupid hedge fund against Wall Street
0:34:17 and inherently a stock like AMC theaters or GameStop is like, it’s kind of a joke, right?
0:34:23 These are like kind of blockbuster video dinosaur companies.
0:34:26 It’s kind of funny and the fact that like that through Matt Levine, the economics writer
0:34:32 for Bloomberg calls it the meme theory of value, you are kind of literally creating something
0:34:37 out of nothing.
0:34:38 Yeah.
0:34:39 So I think that we have some bigger questions here though that are like much bigger than
0:34:43 roaring kitty and is more about like the roaring kitties of the world, right?
0:34:47 So what happened in 2021, totally unprecedented, what’s happening right now shows that this
0:34:53 is a thing that might actually not be so one-off, right?
0:34:57 It might actually be repeating and we might be in a position where kind of meme stocks,
0:35:02 shitcoins, these types of things really do have an impact on the broader financial markets
0:35:08 that we see these degrees of irrationality or is it irrational that are playing out in
0:35:14 the broader stock market where people in kind of the traditional market analysis are going
0:35:20 to have to look at this differently and try to figure out, has the world changed?
0:35:24 Do we need to change how we think about this?
0:35:27 Do we need to change where we think the dumb money is or how it operates or whether it’s
0:35:31 actually dumb?
0:35:32 And I think that these are really important questions, especially as crypto becomes a
0:35:37 much bigger world and memes are the universal language in some ways.
0:35:43 These are things that just did not exist in the stock market or in the financial markets
0:35:47 in the past.
0:35:48 Yeah, look, it’s a little bit of a blow to kind of efficient market hypothesis.
0:35:53 Clearly stocks like AMC or GameStop are unmoored from any notion of kind of the fundamental
0:35:59 values, although with that said, like a lot of things are kind of in the eye of a beholder.
0:36:05 You know, why everyone thinks that like a Picasso or a Keith Herring or whatever else,
0:36:11 you know, why are those works of art valuable?
0:36:13 I mean, often I think they do have aesthetic value, but it’s inherently kind of subjective.
0:36:19 It speaks to, I think, the kind of maybe inherent unpredictability of the modern world.
0:36:24 It speaks a little bit to like the way that these kind of faceless, leaderless internet
0:36:29 mobs, because Warren Kiddy is not like doing explicit instructions, he’s just kind of
0:36:33 communicating through memes and vibes and people kind of infer what he’s saying.
0:36:39 And it kind of starts a chain of momentum that kind of can sustain itself for some
0:36:42 period of time.
0:36:44 And can you time it well enough that you kind of get out before the bubble inevitably bursts?
0:36:48 Yeah, and is this something that is going to be replicable, right?
0:36:52 I think that that’s another question because I think other people have tried to be Warren
0:36:57 Kiddy and have failed.
0:36:59 But I do think that, you know, there is irrationality in the stock markets in general and always
0:37:05 has been one of my favorite quotes from Daniel Kahneman, who won the Nobel Prize in Economics
0:37:12 for his work on kind of biases and irrationality.
0:37:15 He consulted for a bunch of hedge funds and he came to the conclusion that basically traders
0:37:21 were gambling.
0:37:23 They were not playing poker and he said that poker players are, you know, much more rational
0:37:28 and can actually, you know, you can figure out who the winning players are, where the
0:37:32 edge is, et cetera, gambling.
0:37:34 If you’re just gambling in a casino, you can’t.
0:37:35 And he said what you guys are doing is gambling and no one listened to him.
0:37:39 And they thought that he was, you know, just full of it.
0:37:42 And so they didn’t take any of his recommendations to heart.
0:37:47 But I think that that’s a really kind of important insight that this is not necessarily counter
0:37:52 to how a lot of decision making in the stock markets has worked in the past.
0:37:56 It’s just a new element, a new world and kind of putting some of the stuff on steroids,
0:38:02 right?
0:38:03 Blowing it up in a way that it hasn’t been blown up before and potentially kind of making
0:38:08 that exponentially more powerful.
0:38:10 Maria, I’m not, I’m not one to like dispute too much the late Daniel Kahneman, right?
0:38:16 Well, that’s why, that’s why I consulted for, okay.
0:38:19 That’s why I couched my views with Danny Kahneman, right?
0:38:22 Because I know that you can disagree with me, but he’s, he’s harder to disagree with.
0:38:25 Please continue.
0:38:26 I don’t know, like I, when you have like the practice of like actual traders betting millions
0:38:35 of dollars versus academics, even academics as smart as Daniel Kahneman, I’m not sure
0:38:43 I’d take the academic side.
0:38:46 I think it’s really easy to like come to some theoretical conclusion when you don’t have
0:38:50 skin in the game that might not be robust necessarily.
0:38:54 I talked to a guy named John Coates for my book who was a former trader turned neuroscientists
0:39:01 and he actually thought when he was working on desks at Wall Street that the traders didn’t
0:39:04 take enough risk that it’s hard to get people to be properly, properly risk adjusted until
0:39:09 they kind of had a winning streak.
0:39:10 Then they got all this testosterone and other chemicals running around their brain and become
0:39:13 like feral animals and, and go kind of crazy, right?
0:39:16 And that’s kind of what can cause bubbles.
0:39:19 But yeah, look, I mean, because there’s kind of two forms of efficient market hypothesis,
0:39:25 right?
0:39:26 There’s kind of like the hard form that yes, stocks actually do represent a probabilistic
0:39:32 discounted projection of future corporate earnings.
0:39:36 Like that’s clearly not true when it comes to something like, like GameStop.
0:39:40 The softer form is just that, okay, you think you can beat the market, go ahead and try.
0:39:46 You might understand that like yes, GameStop is overvalued, but good luck in trying to
0:39:50 time exactly kind of when that bubble bursts.
0:39:54 Yeah.
0:39:55 And I think that the bigger point here when you said that anyone can try and something
0:40:01 that I think Kahneman was trying to get at is that of course there are traders and there
0:40:05 are certain investors who can beat the markets, right?
0:40:08 There are people who are very good at this, who kind of understand, who analyze well,
0:40:12 who have the right data, right approach, whatever it is.
0:40:16 But that’s not true for the majority, but if you talk to any one individual, they always
0:40:22 think that they’re the ones who are actually more rational and can beat the markets and
0:40:26 are making better decisions.
0:40:28 And I think that that’s just an overall human flaw.
0:40:32 Yeah.
0:40:33 Look, if 10% of people in the world are the truly rational ones, there’s no guarantee
0:40:37 that you’re in the 10%.
0:40:38 Absolutely.
0:40:39 But self-perception in reality is probably fairly discordant sometimes.
0:40:44 Yeah.
0:40:45 And I think that that’s just something that’s very important to remember, whether you’re
0:40:48 roaring kitty, whether you’re one of the portfolio managers who is on the other side
0:40:54 and short GameStop, or whether you’re someone who’s just an outside observer thinking, “How
0:41:00 do I get in on this in the future and make a killing?”
0:41:03 You and I have totally switched positions this week, Nate, because last week when we
0:41:16 were recording, I was in New Haven about to go to Ireland and you were deep in the World
0:41:21 Series and now I am finally back in Vegas and you are back in New York City.
0:41:27 So we have swapped.
0:41:29 And unfortunately, I’m not making a deep run.
0:41:32 I’ve played exactly one event since I’ve been back and I busted, so that didn’t go
0:41:38 according to plan and I’ll play again today.
0:41:40 But you managed to go deep in a second event.
0:41:44 That was not the event that we were talking about, so congratulations.
0:41:48 Thank you.
0:41:49 Although it ended in a very disappointing way, this was the $5,000 Element Hold’em
0:41:53 event number 16.
0:41:55 That’s a big deal, Nate.
0:41:56 I finished 18th place out of 800 and something runners.
0:41:59 However…
0:42:00 Congratulations.
0:42:01 Thank you, Maria.
0:42:02 I still am mildly heartbroken about it because you want to…
0:42:06 Congratulations.
0:42:07 Congratulations is like the most common poker emotion, basically.
0:42:13 So I kind of lost on a bad beat, which I’m not going to dwell on.
0:42:18 I saw your new sub-stack post, Maria, about players complaining about bad beats, but basically
0:42:22 I had pocket fives against Jack-10 off-suit on a board of Jack-10-5.
0:42:28 So I had a set.
0:42:30 My opponent had the kind of next best hand that isn’t a set, which is Jack-10 for two
0:42:34 pairs.
0:42:35 Unfortunately, a jacket on the turn.
0:42:37 And so this dude, by the way, won the fucking event.
0:42:40 I think I deserve half his prize pool, basically.
0:42:43 Wouldn’t it be awesome, Nate, by the way, if they worked that way?
0:42:47 That would be a great role.
0:42:48 You tagged the chips that you have equity in.
0:42:51 I’m not complaining about this bad beat.
0:42:53 Yes, you are.
0:42:54 Yes, you are.
0:42:55 Just acknowledge that you’re complaining about the bad beat and move on.
0:42:58 We cover important news, the World Series of Poker, and part of the news is that a player
0:43:03 who had a lot of chips was eliminated in 18th place, conveying the news in a useful way.
0:43:08 All right, Nate, keep conveying the news.
0:43:11 My reporting suggests this player got very lucky at several earlier points in this tournament.
0:43:17 For example, this player had pocket queens all against aces, and the queens won.
0:43:22 This player had pocket 10s, almost all in against pocket kings, and the 10s won, for
0:43:28 example.
0:43:29 All right, so this player, Mr. Nathaniel Silver, got ridiculously lucky to even get to the
0:43:37 point where his set could be cracked.
0:43:40 All right, so let’s reframe that as bad beats are good now.
0:43:45 You did bust an unfortunate circumstances.
0:43:49 Maria, what about your update?
0:43:52 How’s the series going for you so far?
0:43:53 My update sucks.
0:43:54 Oh, no.
0:43:58 Are you over?
0:44:00 Well, no.
0:44:01 My first event, I won the 10k bounties.
0:44:04 Oh, that’s pretty good.
0:44:06 Yeah.
0:44:07 That’s pretty good.
0:44:09 But otherwise, zero cash is.
0:44:11 It’s the line between success and failure is so thin in poker, by the way, because the
0:44:16 first week into it, I had one mini-cash out of it, and now it’s like, “Oh, I’m having
0:44:20 a really great World Series.”
0:44:22 It’s all pretty fucking arbitrary, and it doesn’t necessarily even out.
0:44:26 It’s like the gambler’s fallacy, but over the long run.
0:44:28 Thanks for reading my sub-stack, Nate.
0:44:33 Read Maria’s sub-stack.
0:44:34 She needs revenue now to make up for her poker losses, folks.
0:44:37 Yes, because my update sucks is because the one event I played was a $25,000 buy-in event,
0:44:44 and I did not cash in it.
0:44:45 So I went from being flat for the World Series to being down $25,000.
0:44:51 Maybe if you concentrated more on the poker and not your newsletter, Maria, you wouldn’t
0:44:55 have busted out.
0:44:57 But I feel like I owe it to my fans, and my newsletter is about all the things I did wrong
0:45:01 or other people did wrong so that I played better, and today is the day we change all
0:45:05 of that so that next week when we’re recording, we can talk about my deep run.
0:45:10 How’s that for optimism?
0:45:12 It’s a deal.
0:45:13 All right, let’s do it.
0:45:24 That’s it for today.
0:45:26 We have already been getting some listener questions, which is amazing.
0:45:30 Please keep them coming.
0:45:31 We want to hear from you, and we will be addressing some of the questions in segments
0:45:35 on our podcast going forward.
0:45:38 We even have an email address for you to use now.
0:45:41 It’s just riskybusiness, one word, at pushkin.fm.
0:45:46 And don’t forget to rate and review the show.
0:45:48 We will not tell you which rate and a gift, but you can probably infer which ones we like
0:45:52 more.
0:45:54 Risky Business is hosted by me, Maria Kanakova, and me, Nate Silver.
0:45:58 The show is a co-production of Pushkin Industries and iHeart Media.
0:46:03 This episode was produced by Isabel Carter.
0:46:06 Our associate producer is Gabriel Hunter-Chang.
0:46:08 Our executive producer is Jacob Goldstein.
0:46:11 And if you want to listen to an ad-free version, sign up for Pushkin Plus.
0:46:14 For $6.99 a month, you get access to ad-free listening.
0:46:18 Thanks for tuning in.
0:46:21 Hey everybody, I’m Kai Rizdal, the host of Marketplace, your daily download on the economy.
0:46:37 Money influences so much of what we do and how we live.
0:46:40 That’s why it’s essential to understand how this economy works.
0:46:45 At Marketplace, we break down everything from inflation and student loans to the future
0:46:49 of AI so that you can understand what it all means for you.
0:46:53 Marketplace is your secret weapon for understanding this economy.
0:46:56 Listen wherever you get your podcasts.
0:46:58 (upbeat music)
This week on Risky Business, Nate and Maria discuss whether Supreme Court Justice Sonia Sotomayor should retire, the perils of sports betting among professional athletes, and what the return of Roaring Kitty means for traditional market analysis.
Further Reading:
“Sonia Sotomayor Should Retire Now” from The Atlantic
“Should Sonia Sotomayor Retire?” from Slate
“MLB bans Padres’ Tucupita Marcano permanently for betting on baseball” from the NYT
For more from Nate and Maria, subscribe to their newsletters:
“The Leap” from Maria Konnikova
“Silver Bulletin” from Nate Silver
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