Episode summary
Thomas Peterffy on Interactive Brokers' Plan to Professionalize Prediction Markets | Odd Lots
Odd Lots
· · Hosts: Tracy Alloway, Joe Weisenthal · Guests: Thomas Peterffy
Summary
Thomas Peterffy argues that prediction markets should be treated less like a curiosity and more like a cleaner way to express probabilities about important future outcomes. He says Interactive Brokers’ new Forecast Trader is aimed at serious investors who want contracts tied to questions with economic consequences, such as recession odds, global warming, AI adoption, or tuition levels, rather than sports or pop-culture bets. In his view, prediction markets can become a standard reference for “what the market thinks” about the future, much like options or Fed funds pricing became widely used signals over time.
He says the main obstacle is liquidity, not the basic concept, and compares the market’s development to the early years of options trading. Peterffy expects institutional use to grow as contracts become simpler and more standardized, and he says Interactive Brokers plans a consolidated feed across venues and identical contract specs where possible. He also expects the market to support leverage eventually, though he warns that leverage can be dangerous.
The conversation broadens into market structure, where Peterffy says prediction markets could eventually help traders bypass economists and instead force experts to put money behind their views. He also makes a blunt case against insider-trading restrictions, arguing that information should reach the market as fast as possible, even as the hosts push back on the risks.
Key takeaways
- Peterffy says Interactive Brokers is targeting serious, economically meaningful contracts, not sports or pop culture, as its edge in prediction markets.
- He expects prediction market prices to become a standard reference for probabilities, similar to how options and Fed funds pricing are used today.
- Peterffy says liquidity is the central bottleneck, but he thinks prediction markets should develop faster than options because the contracts are simpler.
- Interactive Brokers plans a consolidated feed across platforms and wants contracts to be identical where possible so they are more fungible.
- Peterffy argues against insider-trading laws in general, saying markets are better off if information becomes public as quickly as possible.
Notable quotes
“the prediction market is no different than the stock market except it addresses much larger and more important on the one hand, on the other hand, much sillier and and less important questions”
“Definitely. I'm absolutely convinced”
“we are choosing contracts that in our minds have questions, the answers to which have serious economic consequences”
“I would like all the information out there as soon as it's available”
How the episode opens
Hey there Oddlots listeners, Joe and I are very excited to announce that we will be hosting a live show in London on Thursday, May 7th. Yep, that's right. We've never been to London before.
Well, we've been to London before, but in other capacities, we've never done a public episode, a public show in London. We've done them in other cities, New York City, DC, Chicago, San Francisco, and so forth. This will be our first London one, and I'm really excited about it.
Very exciting. So, if you want to hear some fantastic conversations being recorded live on stage, if you want to hang out with Joe and me, or if you want to hang out with other Oddlots listeners, you should definitely save the date for your calendar. It's going to be at Wilton's Music Hall in East London, again on Thursday, May 7th, doors opening at 6:00 p.m.
And the key thing is, you know, every time we do a live show and they sell out, people complain like, "Oh, I didn't see the link. I wish I would have bought them sooner. We're going to be putting the link in the Oddlots newsletter.
So, go find the Oddlots newsletter, just search for subscribe to it, and the link will be there before it's anywhere else. So, this is your chance. Plus, if you like Oddlots, if you like if you're listening to the podcast, you probably really like the newsletter.
You should really subscribe anyway. So, if you like the podcast and so forth, subscribe to the newsletter, get the newsletter, and get first crack at tickets. Hope to see you there.
Bloomberg Audio Studios. Podcasts, radio, news. — Hello and welcome to another episode of the Oddlots podcast. I'm Tracy Alloway.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- prediction markets
- institutional trading
- election and sports markets
- prediction market regulation
- professionalizing prediction platforms
Companies and tickers mentioned
- Polymarket
- Kalshi
- Interactive Brokers
Watch the episode
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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