Prediction markets exhibit a structural long-shot bias that makes heavy favorites slightly underpriced, creating an exploitable edge for an ETF that exclusively bets on favorites.

29:13accelerate. Next chart. Todd has the annual number of ETF launches by exposure and it's pretty diversified. There's obviously a lot of leverage. There's equity as usual, fixed income, buffer is now a real category. Option income is a real category. Crypto is smaller, but commodities are still doing it. I mean, there's there's a lot going on here. Here's one category that you're going to see. I don't know when.

29:33Predictions. >> Oo, yeah. >> Okay. Here's my here's my thesis. Uh Mike Moesson and Dan Callahan wrote a paper last week about prediction markets and all markets and the wisdom of the crowds and how it works and they showed a line between what Koshi predicts like what's implied in the odds and what actually happens and it's basically one for one up and to the right. The market

29:57is usually right, the betting market is usually right. However, there's something called the long shot bias, which means that people are more structurally people are more likely to bet at a long shot >> that will not win. So, the long shots are over are overpriced, but the heavy favorites are slightly underpriced. So, if you are minus 900, nobody's taking that bet, right? Who the is risking $900 to win $100, right? Nobody does

30:22that. So, the heavy favorites are slightly undervalued. Okay, hear me out. If there is a market, a basket, an index, an ETF that only buys the heavy favorites and set the line where it's an 85% chance to win. All right, so there's a 50% upside, there'll be some slippage, right? But that is a structural >> 15% is great. >> That is a structural impairment product. That's great.

30:45>> So it's now it's not fun. It's not fun, but who cares? So, if you take every heavy favorite across not just the NFL and the NBA, but across the Oscars, whatever the betting market is, and you say, "We bet on every heavy favorite minus 850 and above when there's $10 million in liquidity or whatever it is, that's going to be an ETF. >> It's already been filed.

31:04>> Who's going to who's doing it?" >> Um, Subversive. >> That sounds perfect. >> It's the company. >> That's the That's the That's literally >> It's the company who did the the the Nancy the Democratic and Republican trading ETFs like the Cruz and Nancy. But you're going to see a million of these >> I think it's subversive. >> So it sounds like a company that's going out of their way to do things that

31:24>> the SEC put the brakes on these things for now. Yeah. >> They're open for comment because once you open up prediction market ETFs >> going to have 50 of them. >> We're going to be doing >> that's going to be insane. >> We're just we are inventing new and exciting ways to lose our money grind our portfolios. >> You will not be disrupted by AI. You are

31:41safe. >> Yeah. >> I hope so. >> People need you. I but so so the idea though behind ETFs was to hire a professional like sports betting manager who finds value in the lines. >> So there'll be that too. >> Yeah. >> Like an actively managed hedge fund of of betting. >> You're talking about like uh what's Matt Tamman's character in Rounders? >> Uh not Worm. Um