# Visa to Buy Fraud-Prevention Firm BioCatch for $2.4 Billion

An episode of [Bloomberg Intelligence](https://invisiblenetwork.ai/podcast/326301337), 3 Aug 2026, 22 min.

Audio: https://podtrac.com/pts/redirect.mp3/tracking.swap.fm/track/UVBrz8bN8aM2Xe47PEPu/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/7f534b8c-9e91-429a-b102-ae3c00090c6d/cf1c9e77-dbc3-44fb-8d90-b49b01103045/audio.mp3?utm_source=Podcast&in_playlist=0ad812bf-fd15-4012-a18c-ae3c00090c76

Watch Paul and Scarlet LIVE every day on YouTube: http://bit.ly/3vTiACF. Bloomberg Intelligence hosted by Paul Sweeney and Scarlet Fu -Diksha Gera, Bloomberg Intelligence Global Fintech and Payments Analyst, discusses Visa striking a deal to buy BioCatch, which uses artificial intelligence to detect fraud, for $2.4 billion in cash. The company is purchasing BioCatch from funds advised by Permira and other shareholders, and the transaction is expected to close in the fiscal second quarter of 2027, according to a statement Monday. BioCatch works with more than 350 banking clients across the world. -Brian Egger, Bloomberg Intelligence Senior Gaming and Lodging Analyst, discusses Marriott International Earnings. Marriott International shares declined after the company said that room growth for 2026 would likely come in at the lower end of earlier guidance, driven by construction delays in the Middle East. -Sam Fazeli, Bloomberg Intelligence, Director of Research: Healthcare, Defence, Industrials & Autos, discusses AstraZeneca exploring an acquisition of Bristol-Myers Squibb in a potential megadeal that would rank as the largest ever in pharma. The companies have held early-stage discussions about combining, but it’s unclear if discussions are ongoing or whether they will result in a transaction. -Jonathan Kay, Founder & CEO at Apptopia, discusses sports betting and prediction market apps performance and competition. He also talks about Kalshi, and Demographic differences between OSB’s and Prediction markets. See omnystudio.com/listener for privacy information.

## Transcript

[0:00] Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the
[0:10] Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am
[0:14] Speaker 1: Eastern on Apple, Cocklay and Android Auto with the Bloomberg
[0:17] Speaker 1: Business App. Listen on demand wherever you get your podcasts,
[0:21] Speaker 1: or watch us live on YouTube.
[0:24] Speaker 2: We talked about how it's m and a Monday. There
[0:25] Speaker 2: is some deal making fintech. Sure, why not Visa making
[0:29] Speaker 2: a purchase, buying Biocatch for two point four billion dollars
[0:33] Speaker 2: in cash.
[0:34] Speaker 3: This is a fraud prevention firm. Let's bring in Dick
[0:37] Speaker 3: sha Gera.
[0:37] Speaker 2: She is our global fintech and payments analyst joining us
[0:40] Speaker 2: from San Francisco. So is this a part of the
[0:43] Speaker 2: business that Visa really needed to bolster that it didn't
[0:47] Speaker 2: have already. Biocatch shut using artificial intelligence to detect fraud.
[0:53] Speaker 4: Yes, Hi, Scarlett, always a pleasure to be here. So
[0:57] Speaker 4: that's a good question, right. Visa actually did to cybersauce
[1:01] Speaker 4: acquisition in the past, so it's important to understand why
[1:05] Speaker 4: are they dropping this kind of money for Biocatch. But
[1:08] Speaker 4: what biocatch actually does it is it evaluates user risk
[1:12] Speaker 4: before the payment actually happens. It's during the account registration,
[1:17] Speaker 4: during the log in, during the profile updates and navigation.
[1:21] Speaker 5: That's what it's new. So the business itself is not new.
[1:25] Speaker 4: Visa has a risk and security solutions business which actually generates.
[1:29] Speaker 5: A two billion dollar revenue.
[1:31] Speaker 4: That's what our estimate is already, and this basically adds
[1:35] Speaker 4: to it.
[1:36] Speaker 6: Dick should talk to us about AI in the FinTechs
[1:41] Speaker 6: and payment space as it relates to fraud. I mean,
[1:43] Speaker 6: you know that that's always one of the big risks
[1:46] Speaker 6: in you know, the payment space here. I would think
[1:49] Speaker 6: AI would be would hance if I'm a criminal, would
[1:52] Speaker 6: really enhance my ability for fraud? How did the companies
[1:56] Speaker 6: think about that?
[1:57] Speaker 4: That's very true, Pauland if you notice, if you read
[2:00] Speaker 4: the tele's, these card networks are obviously quite ahead of
[2:03] Speaker 4: the curve in terms of identifying that issue. Right, So
[2:06] Speaker 4: you're right, AI is actually accentuated fraud. It's a topic
[2:10] Speaker 4: that is in every bank boardroom. If you think about
[2:15] Speaker 4: what happened with Methos, the anthropic model, it exposed a
[2:18] Speaker 4: lot of vulnerability. So financial fraud overall is growing and
[2:22] Speaker 4: within payments. What was happening is the traditional gateway tools
[2:26] Speaker 4: that authorize like they struggle with the app scams, which
[2:31] Speaker 4: is basically when a legitimate user is tricked bioscammer into
[2:35] Speaker 4: approving a transaction themselves, so they make the credentials device
[2:39] Speaker 4: and OTP look valid. What companies like these, like biocatchs
[2:43] Speaker 4: do is that they detect cognitive behavior and indicators of coversion.
[2:48] Speaker 4: Basically if you're taking a long pause, if there's unusual
[2:51] Speaker 4: navigation behavior or the phone call patterns during the session,
[2:55] Speaker 4: and that helps them to prevent So this is preventative
[2:59] Speaker 4: threatened eeligence as opposed to when you were acting or in.
[3:02] Speaker 5: The moment of the payment.
[3:04] Speaker 4: So Visa and MasterCard are both strengthening their aperture like
[3:09] Speaker 4: to basically address these issues and also help their plans
[3:12] Speaker 4: with it.
[3:13] Speaker 2: So they're trying to come up with solutions. As a consumer,
[3:17] Speaker 2: how would I experience the use of biocatch in preventing fraud?
[3:23] Speaker 2: Would I not be able to make a purchase or
[3:26] Speaker 2: am I going to get an alert? How would it
[3:28] Speaker 2: affect me?
[3:30] Speaker 4: Yeah, Scarlett, I'm yet to take a look at what
[3:32] Speaker 4: exactly is the modality of it. But if you were
[3:34] Speaker 4: to take a cue from what Visa did with cybersauce
[3:37] Speaker 4: a lot of this happens in the back end. The
[3:41] Speaker 4: Holy Grail is actually walking a very tight rope wherein
[3:45] Speaker 4: you approve most or all of the good transactions and
[3:49] Speaker 4: you block as many of the bad transactions without actually
[3:52] Speaker 4: blocking the good transactions. So that's what all these companies
[3:56] Speaker 4: are trying to approve. And authorization rates are one metric
[4:00] Speaker 4: with which all of the payment companies actually sell their services.
[4:03] Speaker 4: So they go and boast about their perfect authorization rates
[4:07] Speaker 4: and minimal fraud rates.
[4:08] Speaker 5: That's the metric that they're judged on by the merchants.
[4:11] Speaker 6: I've got at least one Visa car in my pocket,
[4:14] Speaker 6: so I applaud this deal that can help cybersecurity, so
[4:18] Speaker 6: diction real quick. Just for Visa, just for example, over
[4:21] Speaker 6: the last I know ten years, how is their fraud rate?
[4:24] Speaker 6: Whatever you look at, has it gotten better or worse?
[4:27] Speaker 6: What's going on out there in the marketplace.
[4:29] Speaker 4: So actually the metric I would watch for this Paull
[4:32] Speaker 4: is how are they doing on their revenue side, because
[4:34] Speaker 4: like I mentioned, this is not just strengthening their own
[4:38] Speaker 4: internal fraud protection, it actually is generating direct revenue for Visa.
[4:42] Speaker 4: So to give you an example, Visa is actually creating
[4:46] Speaker 4: a lot more of this services revenue line, and we
[4:50] Speaker 4: project that their services business by itself could be about
[4:53] Speaker 4: fifteen plus billion dollars by twenty twenty seven. That's about
[4:57] Speaker 4: thirty one percent of their revenue from ten billion in
[5:00] Speaker 4: twenty twenty five. So the fraud and the risk and
[5:04] Speaker 4: security solutions itself is doing two billion dollars annual revenue
[5:09] Speaker 4: run rate right now, and I think they're trying to
[5:11] Speaker 4: build and catch on this opportunity that has come along
[5:14] Speaker 4: with increased requirements.
[5:16] Speaker 5: And by the way, the timing is amazing.
[5:18] Speaker 4: Because a lot of global regulators are increasingly holding the
[5:21] Speaker 4: banks libel for social engineering and scam losses. So this
[5:25] Speaker 4: allows Visa to kind of bring a very monetizable solution
[5:29] Speaker 4: to sell to financial institutions facing these complies.
[5:32] Speaker 3: Stay with us. More from Bloomberg Intelligence coming up after this.
[5:39] Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
[5:43] Speaker 1: weekdays at ten am Eastern on Apple Coarclay, and Android
[5:46] Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever
[5:49] Speaker 1: you get your podcasts, or watch us live on YouTube.
[5:54] Speaker 6: Marriott report a second quarter earnings that beat estimates, spooking
[5:59] Speaker 6: demand threw of high room prices in the US, but
[6:01] Speaker 6: the stocks down, So I'm guessing their forward guidance wasn't
[6:04] Speaker 6: that great. Let's check in with an expert on all
[6:06] Speaker 6: this stuff. Brian Egger, Senior Gaming and Lodging analyst for
[6:08] Speaker 6: Bloomberg and Tellent just joins us life here in our
[6:10] Speaker 6: Bloomberg Get Active Brokers studio, no Nantucket office for him.
[6:14] Speaker 3: Talk to us about Mary. What did they release today?
[6:17] Speaker 7: So Mary had had an above expected level of revenue
[6:21] Speaker 7: p available room growth we like to call it ref
[6:23] Speaker 7: park and they also raised their full year metric as well,
[6:27] Speaker 7: so there was some second half upside. So I don't
[6:29] Speaker 7: think they really lower guidance. There may been some expectation
[6:32] Speaker 7: that the third quarter could have been even higher. They
[6:35] Speaker 7: got to bump in the second quarter and they'll get
[6:37] Speaker 7: some of that in the third quarter from the World Cup.
[6:40] Speaker 7: I mean the we reek spots globally are obviously the
[6:42] Speaker 7: Middle East, and there were some pockets of weakness, but
[6:46] Speaker 7: overall quite strong. I think I think the outlook may
[6:49] Speaker 7: have been people are looking for a bit more, but
[6:53] Speaker 7: taking a step back, it was overall a pretty positive prints.
[6:57] Speaker 6: So for these full service hotel groups, like Mariatt High.
[7:00] Speaker 6: At Hilton, they have like a million brands, right, they
[7:03] Speaker 6: really segment the market.
[7:05] Speaker 7: Thirty thirty one if you count Bonvoy from Aria.
[7:09] Speaker 6: Well, yeah, I'm a bond boy person. I guess that works, right,
[7:14] Speaker 6: I mean, that's proven to be the way to cut
[7:16] Speaker 6: this market up.
[7:17] Speaker 7: Yeah, you know. They and they report separately trends for
[7:21] Speaker 7: luxury versus mid scale versus limited service, and they've been
[7:24] Speaker 7: differing a trends since we emerge from the pandemic. But
[7:27] Speaker 7: it does benefit them to have different segments.
[7:29] Speaker 3: Overall.
[7:30] Speaker 7: They skewed a bit more upscale and luxury then let's
[7:33] Speaker 7: say win them or even Hilton a little bit more like.
[7:36] Speaker 6: Kyat, so they see I presume the K shaped economy
[7:41] Speaker 6: out there is that in fact reflected.
[7:44] Speaker 7: In their results to a large degree, although I think
[7:47] Speaker 7: increasingly the CEO of Hilton the last quarter used the
[7:50] Speaker 7: term C shaped, which is interesting because I think what
[7:52] Speaker 7: you're seeing is upscale luxury is still quite strong, but
[7:55] Speaker 7: the limited service, which have been lagging in your last
[8:00] Speaker 7: year or two, is actually coming back really and I
[8:03] Speaker 7: think we're seeing a bit more strength in that part
[8:05] Speaker 7: of the business, whether it's you know, whether it's a
[8:08] Speaker 7: business travel or leisure travel.
[8:10] Speaker 6: So are these companies like again Marriotta High, Are these
[8:13] Speaker 6: global companies?
[8:15] Speaker 7: Yeah, I mean they are, and so when you when
[8:18] Speaker 7: they disclose the results, you get a picture into what's
[8:20] Speaker 7: happening in Asia or Middle East, Africa, Latin America as
[8:25] Speaker 7: well as the US. So they are quite global. It's interesting.
[8:27] Speaker 6: I think a lot of businesses today that over the
[8:29] Speaker 6: last decade or maybe even more, we're really investing in
[8:33] Speaker 6: the Middle East UAE by I mean that Ara.
[8:37] Speaker 7: And the casinos too. When yes, you know exactly.
[8:39] Speaker 6: Are they rethinking that?
[8:41] Speaker 5: Now?
[8:42] Speaker 6: How are they What are they getting that's over there
[8:44] Speaker 6: that's not us, don't worry about.
[8:45] Speaker 7: Yeah, I don't think they're rethinking it. But obviously a
[8:49] Speaker 7: major tragic world event happens and then it affects their
[8:52] Speaker 7: overall growth. Like for example, in the second quarter for
[8:55] Speaker 7: Marriott rev, par in the Middle East is down forty
[8:58] Speaker 7: three percent, you know, not prizing given the level of disruption.
[9:02] Speaker 7: I think the expectation is if you get a normalization
[9:04] Speaker 7: in the geopolitical climate, that that growth will come back.
[9:09] Speaker 7: But obviously Near Terman has had an effect, and there's
[9:12] Speaker 7: also been a little bit of a slow down not much,
[9:14] Speaker 7: but a little bit in new openings in the pace
[9:16] Speaker 7: of net unit growth or room growth because of some
[9:19] Speaker 7: opening or construction delays in the Middle East as well.
[9:22] Speaker 6: Interesting, how about here in the US, what's the industry
[9:25] Speaker 6: doing capacity wise or are we still are we building
[9:27] Speaker 6: new hotels? Are referring existing ones?
[9:30] Speaker 5: What's going on?
[9:31] Speaker 7: There's kind of a mid single digit rate of overall growth. Now,
[9:33] Speaker 7: some of that is new construction. Some of that, and
[9:36] Speaker 7: it's true in the case of Mariotte and Hilton comes
[9:39] Speaker 7: from conversions, you know, so you basically get non branded
[9:43] Speaker 7: Hilton branded hotels are not marribranded, and so some of
[9:47] Speaker 7: that moroom growth of some conversions and not necessarily new
[9:50] Speaker 7: ground up construction.
[9:51] Speaker 6: All Right, it's been i don't know ten twenty years
[9:54] Speaker 6: of the airbnbs of the world. How is it all
[9:57] Speaker 6: shaken out with that segment. I'm not sure what the
[10:00] Speaker 6: term is for the airbnb part of the world versus hotels.
[10:03] Speaker 7: Yeah, I mean, first of all, remember some of these
[10:06] Speaker 7: entities have the equivalent of a you know, vacation ownership
[10:10] Speaker 7: type interest type of experience, and you know, I think
[10:14] Speaker 7: for a price sensitive short term bookings window wizure customer
[10:19] Speaker 7: had some effect on the margin, but I think the
[10:22] Speaker 7: overall perception is that the leisure consumer and traveler, particularly
[10:26] Speaker 7: for you know, high end stays, has been really resilient.
[10:29] Speaker 7: And that's kind of the sweet spot of a Mariotte because.
[10:32] Speaker 6: I see, like you know, some of these court by
[10:34] Speaker 6: marriage or some of the over ends. I mean they
[10:37] Speaker 6: are dominated by travel teams. You pull into there and
[10:40] Speaker 6: then you know, like twenty seven lacrosse teams or ice
[10:43] Speaker 6: hockey teams. That's a part of the business that didn't
[10:45] Speaker 6: exist a while ago.
[10:47] Speaker 7: I mean, it's a different type of experience and travel
[10:50] Speaker 7: purchase obviously if you're looking at a vacation ownership or
[10:53] Speaker 7: a home renting for short term, but it does not
[10:56] Speaker 7: seem to have detracted in any way for the overall,
[10:58] Speaker 7: weizure travel strength.
[11:00] Speaker 6: That's amazing because you think about all the Airbnb inventory
[11:03] Speaker 6: that's come on to the market.
[11:04] Speaker 7: I mean, at one point we thought are individual consumers,
[11:07] Speaker 7: certainly we'll choose one over the other, But overall, I
[11:10] Speaker 7: think it represents a very neat segment of the market.
[11:12] Speaker 3: So stay with us. More from Bloomberg Intelligence coming up
[11:16] Speaker 3: after this.
[11:20] Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
[11:24] Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android
[11:27] Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever
[11:31] Speaker 1: you get your podcasts, or watch us live on YouTube.
[11:35] Speaker 6: I thought we were going to come in potentially for
[11:36] Speaker 6: another farmer merger Monday.
[11:40] Speaker 3: Sure, I'm not sure that's gooding.
[11:41] Speaker 2: We've got some noise, but a lot of noise because
[11:44] Speaker 2: you have the UK drug maker Astrazenica in talks reportedly
[11:48] Speaker 2: to combine with US rival Bristol Myers.
[11:52] Speaker 3: If they combine, this.
[11:53] Speaker 2: Would be a deal valued at almost four hundred billion dollars.
[11:56] Speaker 6: But I don't know if it's a deal or not
[11:58] Speaker 6: a deal. So let's check out somebody who follows this
[11:59] Speaker 6: stuf for a living. Sam Fazelli. Uh he is. I
[12:03] Speaker 6: don't know what his titles, but he's just the top
[12:06] Speaker 6: drug bosses shaking his head, pharma analyst in the city
[12:09] Speaker 6: of London. Sam talkers, You've known Asseneca and brister Miles
[12:14] Speaker 6: squib of Prince in New Jersey for decades. Here, what
[12:18] Speaker 6: do you think about a potential type of these two companies?
[12:20] Speaker 8: So Paul and Scola go into your terminal and ask
[12:24] Speaker 8: me and type what has Pascal Soio, CEO of Astenka,
[12:28] Speaker 8: said about nego mergers negative negative negative negative negative? How
[12:33] Speaker 8: is this credulous? What happened since the results that came
[12:36] Speaker 8: out recently and the last time the CEO said this?
[12:40] Speaker 8: So I'm going to speculate here right, all speculation. This
[12:44] Speaker 8: is FT saying, which of course is a very credible source,
[12:49] Speaker 8: that perhaps there have been some discussions and maybe on
[12:52] Speaker 8: some segment to be put together cardiovascular oncology or call
[12:59] Speaker 8: it operation, on an area where they could collaborate the
[13:03] Speaker 8: merger together. Why would you do that if you'd be
[13:06] Speaker 8: telling us the story just a few days ago at
[13:08] Speaker 8: the Q two that we have double digit growth Ernie's
[13:11] Speaker 8: growth to twenty thirty, and then go and buy yourself
[13:14] Speaker 8: a company that's got flat or negative earnings growth potentially
[13:19] Speaker 8: depending on how quickly these patent experience hit Bristol Myers.
[13:24] Speaker 8: Why would you do that? In which corporate finance book
[13:26] Speaker 8: does that make sense?
[13:28] Speaker 2: I guess part of this is that Astra Zeneca, which
[13:31] Speaker 2: is listed of course in the UK, a member of
[13:34] Speaker 2: the Footy one hundred, completed a direct listing in New
[13:37] Speaker 2: York this year and maybe that got people thinking that
[13:40] Speaker 2: it has greater ambitions in the US.
[13:42] Speaker 3: And I hear what you're saying about how.
[13:43] Speaker 2: There might be specific partnerships with BMY, But how did
[13:47] Speaker 2: that direct listing in New York get people talking and
[13:50] Speaker 2: thinking about what its ambitions could be.
[13:53] Speaker 8: I think there's a little bit of effort going on
[13:56] Speaker 8: by all pharma companies to show how US friendly they
[13:59] Speaker 8: are because of all the obvious conversations that have been
[14:03] Speaker 8: going Some of it is sincere, some of it is not. Also,
[14:06] Speaker 8: I think it's a signal to the Europeans and the
[14:09] Speaker 8: UK specifically saying your environment is not great for research
[14:12] Speaker 8: the US is some of that's going on. But as
[14:15] Speaker 8: Zenica is already an international company, they've had no problem
[14:18] Speaker 8: growing their business in the US, in China, in Asia,
[14:21] Speaker 8: in any other country that they want to. So really,
[14:24] Speaker 8: I don't buy that story that this is geographic to
[14:28] Speaker 8: get a better foothold in the US. And if you
[14:30] Speaker 8: really want that, at least get go after something that's
[14:32] Speaker 8: complimentary as opposed to exactly the same build business area,
[14:35] Speaker 8: which would cause quite a lot of questions at least
[14:38] Speaker 8: whether it's real or not on the anti trust side
[14:42] Speaker 8: of things.
[14:43] Speaker 3: Yeah, I just I don't buy it. I don't buy it.
[14:46] Speaker 8: I think there's something else maybe going on, but I
[14:48] Speaker 8: don't buy the full merger.
[14:50] Speaker 6: I mean, is there a sense that if you're ever
[14:52] Speaker 6: to want to get a deal of this size done,
[14:56] Speaker 6: you do it with this well this administration is in office?
[14:59] Speaker 6: Is that maybe just feeling us a little bit?
[15:02] Speaker 7: Maybe?
[15:02] Speaker 8: Maybe, but again, going to do something that's secretive not dilutive.
[15:06] Speaker 8: I mean, you know, it would take them, It would
[15:08] Speaker 8: take the everything that Pascal has already been saying, we
[15:11] Speaker 8: take their eyes off of the pipeline. It would cause
[15:13] Speaker 8: a huge amount of consternation within the companies, people wondering
[15:17] Speaker 8: whether they have a job or not in a year.
[15:18] Speaker 8: What do you think happened. We've been around long enough
[15:20] Speaker 8: to know these mega emergency from it don't tend to
[15:23] Speaker 8: work unless you have a massive patent clip coming up.
[15:26] Speaker 8: You merge two pattern clips here, they get even worse.
[15:29] Speaker 8: I just doesn't make sense, you know. Ockham's raiser simple
[15:33] Speaker 8: answer is it doesn't make sense.
[15:34] Speaker 3: It doesn't make sense.
[15:35] Speaker 2: But if you mentioned something about how Bristol Meyer's scribe
[15:38] Speaker 2: has seen flat growth, why why is it such a laggard?
[15:41] Speaker 2: What is it having trouble doing right now? And does
[15:45] Speaker 2: it need someone to buy it out.
[15:48] Speaker 8: It doesn't need someone to buy that. They do have
[15:50] Speaker 8: what they need to get to the Greek growth or
[15:54] Speaker 8: the or the re startup growth. The thing is they're
[15:57] Speaker 8: suffering from what all former companies at some point patent expirers,
[16:01] Speaker 8: which is great for consumers. We forget all that. They
[16:04] Speaker 8: go and invent drugs, spend billions developing them and creating
[16:07] Speaker 8: a market, improving that drugs are good and safe, et cetera,
[16:10] Speaker 8: and then twelve years or ten years in they become generic.
[16:12] Speaker 8: People you can buy them for by a tenth of
[16:15] Speaker 8: the price or if not less. So that's what's happening
[16:19] Speaker 8: in Bristol Myers. A couple of drugs are going off
[16:20] Speaker 8: patent that they're dealing with that they have a pipeline
[16:23] Speaker 8: that's developing. I want to point to a podcast I
[16:26] Speaker 8: did on our Angles of Healthcare Podcasts with the head
[16:29] Speaker 8: of Oncology, Christian Message c from bms A Bmy. You
[16:34] Speaker 8: going and listen to that. You hear a lot of
[16:36] Speaker 8: great stuff going on in the company.
[16:39] Speaker 3: Stay with us. More from Bloomberg Intelligence coming up after this.
[16:46] Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
[16:49] Speaker 1: weekdays at ten am Eastern on Applecarplay and Android Auto
[16:53] Speaker 1: with the Bloomberg Business App. Listen on demand wherever you
[16:56] Speaker 1: get your podcasts, or watch us live on YouTube.
[17:00] Speaker 2: On Friday, New York State sued Calshie for running allegedly
[17:04] Speaker 2: an illegal, unlicensed gambling operation in the state. Right They're
[17:09] Speaker 2: basically saying that Calshi's prediction market exposes New York State
[17:12] Speaker 2: residents to serious personal and financial risk, and that the
[17:15] Speaker 2: company did not seek a license from the New York
[17:17] Speaker 2: State Gaming Commission. That gets to the heart of the
[17:20] Speaker 2: matter here with prediction markets and whether they're gambling or
[17:23] Speaker 2: something else, And so the discussion continues. The debate continues.
[17:28] Speaker 2: Jonathan Kay is founder and CEO of Aptopia. He joins
[17:32] Speaker 2: us right now from Boston. Jonathan, different states have different
[17:35] Speaker 2: points of view on this. We know the federal government
[17:38] Speaker 2: looks at prediction markets and says it's okay, just give
[17:41] Speaker 2: us the lay of the land right now in terms
[17:43] Speaker 2: of how much market share prediction markets have taken when
[17:47] Speaker 2: it comes to sports betting, or in this case, the
[17:51] Speaker 2: terminology they use as events contracts.
[17:54] Speaker 9: Yeah, well, Paul and Scarlett, thank you so much for
[17:57] Speaker 9: having me nice to be here today. Generally, what we're
[18:01] Speaker 9: seeing is, I think we're here today because we've seen
[18:03] Speaker 9: prediction markets daily active users, right, the amount of people
[18:07] Speaker 9: that go back to the app each day actually start
[18:10] Speaker 9: to meaningfully surpass those of online sports books often known
[18:15] Speaker 9: as DraftKings and FanDuel. And what you've seen is actually
[18:19] Speaker 9: since the Super Bowl, the last like kind of four
[18:21] Speaker 9: or five months, you've seen parody. So you've seen DraftKings
[18:25] Speaker 9: and FanDuel and Calshi kind of be in a dog fight,
[18:29] Speaker 9: frankly in terms of daily active users, which I think
[18:32] Speaker 9: for people that are avid gamblers or avid investors in
[18:35] Speaker 9: this space. Super Bowl to now is kind of a
[18:38] Speaker 9: slow period. So we were looking to see what would
[18:40] Speaker 9: come out of the World Cup, and what you saw
[18:43] Speaker 9: was like the dog fight break up, right. You saw
[18:45] Speaker 9: Calshi essentially grow to be materially larger in terms of
[18:50] Speaker 9: daily active users than the sports books and polymarket kind
[18:54] Speaker 9: of come out of this tier two positioning and now
[18:57] Speaker 9: enter into the dogfight with DraftKings and sports and fandom.
[19:01] Speaker 6: So is it easier less expensive? Why are people going
[19:05] Speaker 6: from the online sports books to these prediction markets? Are
[19:08] Speaker 6: these prediction markets easier to use cheaper to use. What's
[19:11] Speaker 6: driving it?
[19:12] Speaker 5: Do you think?
[19:14] Speaker 9: Yeah, it's a really really good question, And so we
[19:17] Speaker 9: beat up three angles guys. So we looked at is
[19:20] Speaker 9: it the location of the user, because there's states where
[19:23] Speaker 9: it's legal and non legal. Is it the demographic of
[19:26] Speaker 9: the user, the age or the gender, or is it
[19:29] Speaker 9: something specific to an event where like an elections or
[19:33] Speaker 9: Love Island which is ridiculously popular. Is that driving the activity? Right?
[19:40] Speaker 9: And what we saw is that location, whether you're in
[19:44] Speaker 9: a state that you can legally use DraftKings and fend
[19:47] Speaker 9: or not, was really not a contributor to activity at
[19:50] Speaker 9: all during this low period. Then we saw non legal
[19:55] Speaker 9: states be a significant driver of activity to cal She
[20:00] Speaker 9: and polymarket during the World Cup. So I would say
[20:02] Speaker 9: the first thing is that you have somebody who's in
[20:04] Speaker 9: a state where they don't think sports betting is legal.
[20:08] Speaker 9: And even though DraftKings and FanDuel have like snuck prediction
[20:11] Speaker 9: markets into their app, I think the perception is, hey,
[20:14] Speaker 9: I'm going to state that it's not legal. I'm not
[20:16] Speaker 9: doing that cal She is this thing I heard is okay,
[20:18] Speaker 9: so I'm gonna do it right. And so location was
[20:21] Speaker 9: a big driver and and frankly, gender was a huge driver, right.
[20:27] Speaker 9: I think it's it's probably widely understood that male like
[20:31] Speaker 9: young males pretty much dominate like a sports betting industry.
[20:35] Speaker 9: What that means in number sense is that twenty two
[20:37] Speaker 9: percent of FanDuel and DraftKings users are female all shee
[20:42] Speaker 9: that number is up to thirty two percent. That is
[20:45] Speaker 9: a material shift. That's a whole new tam that it
[20:48] Speaker 9: opened up.
[20:50] Speaker 3: How did it do that?
[20:51] Speaker 2: How did Calshi and prediction markets like a polymarket manage
[20:55] Speaker 2: to find their way to female users so quickly?
[21:02] Speaker 9: Yeah, I think like we talk a lot about politics
[21:04] Speaker 9: as like a big driver, and we talk a lot
[21:07] Speaker 9: about well, I can kind of gamble on SNP five
[21:11] Speaker 9: hundred reportings on there. But the reality is that there's
[21:14] Speaker 9: a lot of social gambling, right And just like there's
[21:18] Speaker 9: fantasy leagues for Love Island today and all these like
[21:21] Speaker 9: dating shows. It just creates a surface to both look
[21:26] Speaker 9: there and potentially gamble there. And I think once we
[21:30] Speaker 9: get into in a couple of minutes, maybe the competitive story,
[21:33] Speaker 9: I think there's a big there's a bit The story
[21:36] Speaker 9: lives in how deep you go versus how wide you go?
[21:39] Speaker 9: But I think they've made it fun and if you
[21:41] Speaker 9: talk to a Calshi user, Scarlett, you'd see that it's
[21:45] Speaker 9: a non intimidating interface that doesn't feel like I'm doing
[21:49] Speaker 9: some gambling, which is, you know, kind of black like
[21:52] Speaker 9: not viewed as well.
[21:53] Speaker 1: This is the Bloomberg Intelligence Podcast, available on Apple, of Spotify,
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