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This is a segment from The Breakdown newsletter. To read full editions, subscribe<\/a>.<\/em><\/em><\/p>\n \u201cEven when I was little, I was big.\u201d<\/p>\n \u2014 William Perry<\/p>\n<\/blockquote>\n<\/figure>\n The first prop bet<\/strong><\/a><\/p>\n Michael Lewis dates the beginning of betting on everything<\/em> to 1985 when Caesars Palace offered 20-1 odds on William \u201cRefrigerator\u201d Perry scoring a touchdown in the Super Bowl.<\/p>\n He did \u2014 a one-yard rumble into the end zone \u2014 and Caesars lost at least $250,000 on the bet (a substantial sum in an era when bettors had to call Las Vegas by phone to place wagers).<\/p>\n That was the first known \u201cproposition\u201d bet \u2014 a bet on anything other than the score or result of a game, and as such, the primordial ancestor to today\u2019s prediction markets that offer odds on seemingly everything.<\/p>\n Despite the loss it took, the president of Caesars called it the best bet they\u2019d ever taken: \u201cWe\u2019ve had so much publicity on the bet, whatever we\u2019ve lost was worth it.\u201d<\/p>\n \u201cThe next day, just about every book in town, your phone started to light up from every big city in the country,\u201d the bookmaker Jimmy Vaccaro told Lewis. \u201cThey heard about Perry scoring a touchdown.\u201d<\/p>\n Now, bookmakers \u201cwrite\u201d more business on the props \u2014 will the coin toss be heads or tails? what will the first commercial be for? will there be a wardrobe malfunction? \u2014 than they do on the games.<\/p>\n Before The Fridge, there were only about three bets to make on the Super Bowl: the winner, the total points, the halftime score.<\/p>\n Now, there are hundreds.<\/p>\n As it turned out, that was the last of The Fridge\u2019s three career touchdowns despite his 10 additional years in the league (playing on defense).<\/p>\n But those three short rumbles set us on the path to today\u2019s world of betting on virtually anything with prediction markets.\u00a0<\/p>\n (Although we still mostly want to bet on sports<\/a>.)<\/p>\n A look inside political markets<\/strong><\/a><\/p>\n Here\u2019s a measure of how sophisticated prediction markets have gotten: When Andy Hall watches sports, he\u2019s now gotten in the habit of checking prediction markets right before a big play \u201cbecause the markets move several seconds before my TV feed does.\u201d<\/p>\n Hall teaches political science at Stanford, so he\u2019s more interested in how prediction markets are \u201cchanging how we monitor and understand politics.\u201d<\/p>\n Hall seems cautiously optimistic that booming prediction markets will prove to be a public good because they should offer \u201ca clearer shared picture of a highly complex political environment.\u201d<\/p>\n But he\u2019s also concerned about the \u201cstrange feedback loops\u201d they create.<\/p>\n As an example, he cites a Virginia Attorney General race where unverified claims about exit polls circulating on social media moved prediction markets, which caused social media to post the \u201cBREAKING NEWS\u201d of the move in prediction markets, which, in turn, caused the prediction markets to move even further.\u00a0<\/p>\n That probably did not do the public any good.\u00a0<\/p>\n Hall notes that prediction markets are also raising questions about what it means to \u201cwin\u201d an election.<\/p>\n \u201cIn a world where prediction markets are increasingly seen as sources of truth \u2014 many people pointed to when Kalshi \u2018called\u2019 the mayoral election in New York City as the proof that Mamdani had won \u2014 determining these edge cases will be exceedingly fraught.\u201d<\/p>\n So what does it mean if Kalshi calls a close presidential election in 2028?<\/p>\n I\u2019m not sure I want to find out.<\/p>\n (For another foreboding example of prediction markets affecting reality, see this story<\/a> about bettors changing maps of the frontline in Ukraine.)<\/p>\n\n