Sunday’s Golden Globes ceremony served up the usual mix of tired jokes and political grandstanding — the novelty this year being that the charade was sponsored by betting website Polymarket.
For the dozens of people watching at home, Polymarket’s role as the ceremony’s “exclusive prediction market partner” was impossible to ignore:
How did it come to this? In 2023, after a series of scandals, the Golden Globes were sold by the Hollywood Foreign Press Association to a joint venture of sports conglomerator Todd Boehly’s Eldridge Industries and Penske Media.
Jay Penske, whose father built a fortune in motor racing, had by then bought up media properties including Hollywood’s top trade magazines. This means Penske now controls both the Golden Globes awards show and the main media outlets — Variety, the Hollywood Reporter and Deadline — that cover it, raising obvious questions about fair coverage and promotion.
Evidence of the Penske takeover was on full display during Sunday night’s telecast, with a skit involving “security guards” protecting the stars of Heated Rivalry serving as an advertisement for UFC, which happens to have a deal with CBS, the Globes’ broadcaster.
That wasn’t all. During a Variety-anchored pre-show, senior writers Angelique Jackson and Marc Malkin repeatedly reminded viewers to “get your predictions in” as a chyron displayed Polymarket probabilities for various awards.
All the fun was to be had on Polymarket’s website, where almost $250,000 was ultimately wagered on who would win Best Picture. Another contract asking “what will be said” at the ceremony — options included “Venezuela/Maduro” (no mention); “Jesus” (mentioned); and “Epstein” (no mention) — attracted $86,000 worth of bets.
But it was a handful of other film-related Polymarket contracts that caught our attention.
Bets on how much Greenland 2 or the latest Avatar film will gross by the end of January might seem innocuous enough, but there’s a good reason why you won’t see similar wagers on Polymarket’s US-regulated rival Kalshi, the roots of which lie in the 1955 cornering of the US onion market.
…onions?
New York State-born Vincent Kosuga was an amateur pilot who reportedly carried a billy club with him wherever he went. He began trading onion futures on the Chicago Mercantile Exchange sometime in the late forties or early fifties, and quickly became very good at it.
By late 1955, Kosuga and his business partner held about 1,000 “carlots”, each containing 600 50-pound bags of “cash” onions, vegetables ready for delivery through the spot market. That represented a staggering 98 per cent of the available deliverable supply in Chicago, according to a fantastic CFTC case file published five years later.
A summary by Sherwood Financial Partners describes how Kosuga then:
. . . sat down with the other onion growers and told them that he would flood the market unless they collectively agreed to raise the price of onions. The other [grower-shippers] agreed and began purchasing Kosuga’s inventory at these elevated prices.
Seeing yet another opportunity to take advantage of the markets, Kosuga and his business partner turned around and bought short positions on a massive amount of onions contracts.
Going back on their word, they then flooded the market with all of the onions they had physically stored up in various local warehouses. At one point, the price of onions had dropped so much that the canvas bag they were in were worth more than the onions themselves. The situation got so bad that truckloads of onions had to be dumped into the Chicago River.
The episode proved so costly that by the summer of 1956 Congress was holding hearings to consider a blanket ban on the onion futures trade. The Onion Futures Act, signed into law two years later, did just that.
History became legend, legend became myth, and for 52 years, onions were the only commodity for which futures trading was prohibited in the US.
That all changed in 2010, when lobbying by the Motion Picture Association of America led to an amendment to the onion derivatives ban that forbade the trade of any futures based on cinema box office receipts — the argument being that trading on how a film might fare could affect how many people went to see it, and incentivise other studio shenanigans.
Today, the law stipulates that any person caught trading contracts “for the sale of motion picture box office receipts (or any index, measure, value, or data related to such receipts) or onions for future delivery” shall upon conviction thereof be fined “not more than $5,000”.
Now, Polymarket’s offerings at the Golden Globes involved event contracts for awards outcomes, not box office receipts. Nothing iffy there.
But separate contracts offered on its site concerning ticket sales for Avatar, Greenland 2 and various other films — which weren’t advertised on US television during the awards ceremony — look at first glance like they may fall foul of the 2010 amendment.
So how is Polymarket able to offer such bets? As ever, the answer lies offshore.
KYOs
Although Polymarket received CFTC clearance to re-enter the US last year, it currently operates a restricted US version of its website — focused on largely trivial events like sports outcomes and which country Donald Trump might “acquire” next. The Dodd-Frank Act’s specific ban on futures contracts based on motion picture box office receipts remains very much in place, but by offering separate platforms for US and non-US users, Polymarket is able to adhere to regulatory boundaries in different jurisdictions.
As a result, the Avatar and Greenland 2 box office propositions can only be offered on the main, non-regulated Polymarket site. US punters are blocked from accessing this platform to comply with a CFTC order in 2022, when Polymarket paid a $1.4mn penalty and agreed to cease certain operations for US customers and wind down non-compliant markets.
“It’s sort of the ‘void where prohibited’ admonition,” said Bill Singer, a lawyer and former Wall Street regulator. “If Polymarket accepted bets from US based customers, such would seem illegal absent a compelling clarification from the company.”
Polymarket did not respond to a request for comment. A person familiar with the matter said Kalshi offers neither box office futures nor onion derivatives. FTAV plans to move to international waters to begin trading both, VPNs be damned.
Further reading:
— Prediction markets barely make money; sportsbooks make money (FTAV)
— Wall Street groups hire traders to wade into prediction markets (FT)
