Matt Levine’s Money Stuff: Prediction Market Structured Notes

Binary bonds

Yessss here’s a trade:

1. You give me $100.
2. I spend $96.90 buying a US Treasury bill that will mature at $100 in February 2027.
3. I spend $2 buying Kalshi event-market contracts (that is, sports bets) on the Los Angeles Rams winning the pro football championship in February 2027. (The “pro football championship” is the Super Bowl.) The Rams have the best odds on Polymarket right now, but there are 31 other teams, and the Rams’ probability of winning is only 10%. I can buy 20 contracts for my $2. If the Rams win the Super Bowl, those contracts will pay ...