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The rise of prediction markets ahead of Super Bowl weekend has become a major overhang for legacy sportsbooks, prompting investors to de-risk their equity positions and sending shares of Flutter Entertainment (owner of FanDuel) and rival DraftKings sharply lower year to date.

Today’s matchup between Seattle and New England at Levi’s Stadium in Santa Clara is expected to drive record trading volumes on prediction markets, according to Jordan Bender, a senior equity analyst at Citizens.

“A big piece of why we think Super Bowl handle will be down is that prediction markets are taking a bite out of that,” Bender said.

Since the 2024 presidential election cycle, prediction markets such as Kalshi and Polymarket have attracted growing trading volumes that would have traditionally flowed to sportsbook apps.

Professional sports gambler Rufus Peabody told Bloomberg, “It really feels like everything’s prediction markets, prediction markets, prediction markets.”

Peabody, who began trading on Kalshi in September, noted, “Maybe not for the average recreational bettor, but certainly in the sharp community.”

Kalshi and other federally regulated exchanges have opened prediction markets to millions of Americans living in states where sportsbooks remain illegal, sparking a fierce legal battle with federal and local gaming regulators.

These event contracts are not just for sports but also offer bets across markets, elections, and geopolitics. The fastest growth, however, is in sports betting.

According to the Dune data dashboard, Kalshi saw nearly $10 billion in contracts traded in January, with the vast majority tied to sports betting (about $8.5 billion).

Traders on Kalshi and rival Polymarket have swapped $800 million worth of contracts tied to the Super Bowl so far, the American Gaming Association wrote in a report. This compares with $1.8 billion Americans are expected to bet on the game through traditional regulated sportsbooks.

In November, Polymarket received regulatory approval from the Commodity Futures Trading Commission to return to the US markets.

“Polymarket is back. Polymarket’s U.S. app is now being rolled out to those on the waitlist,” Polymarket states on its platform.

Despite the rise of prediction markets, several Wall Street analysts still expect the existing US sportsbook companies to take in a record Super Bowl haul this weekend.

https://t.co/7qawl9HAt5

— Polymarket Sports (@PolymarketSport) February 8, 2026

H2 Gambling Capital senior analyst Ed Birkin forecasted that total wagers – before prediction markets are taken into account – will soar 9% this year to $1.78 billion. He pointed out that prediction markets will attract $630 million in bets for the Super Bowl and account for 80% year-over-year growth in wagering activity for the event.

Polymarket’s latest Super Bowl bets:

More bets 

Let the games begin. 

By Peter Tchir of Academy Securities

Markets have experienced high levels of volatility over the past few weeks. From silver, to software stocks, to cryptocurrency, we have seen violent price swings on almost a daily basis. We have political risks, geopolitical risks, as well as the implications of a rapidly evolving technological shift. We touched on Non-Standard Deviations last week, and are going to expand on that today.

We will attempt to examine the bigger picture of the potential volatility from transitioning from one world economic order to another. We also highlight how liquidity, or in our view, the lack of a true depth of liquidity, plays in this world.

Molotov Cocktails

Gasoline, in a tank (or a bottle) at room temperature, is stable. Apply a catalyst (a rag lit on fire) and we enter the “volatility” phase. An explosive, hot, and unpredictable phase.

Once the heat has dissipated, we are left with CO2 and H2O (carbon dioxide and water). Both are very stable. And in our example, there is some broken glass from the bottle, which isn’t as stable as when it was in the form of a bottle, but it isn’t doing much of anything.

There are all sorts of examples of these transitions from one form of stability to another form of stability, with some sort of volatility in between. A rock near the edge of a cliff that is pushed over. Nuclear fission may also fit. I think we could even apply the word entropy here, but we went with the Molotov Cocktail since it implies an intentional act of destruction.

The Global Economic System

We had settled into a multilateral, trade-based global economic system. The complexity of supply chains grew over time. Dependent on trade, but optimized by companies to serve their purpose.

Companies grew and became increasingly global in their scope. For many, the concept of national boundaries was vastly diminished.

While global tensions existed, the big, richer nations were all free to trade. Many resource rich nations prospered (or at least their leaders did).

Then China, quietly, and barely noticed by anyone, tossed out the first Molotov Cocktail. That may sound provocative (and may even be provocative), but it is a good place to start this discussion. It fits with our work under Trump 1.0, when so many were lamenting that the U.S. was “starting” a trade war, and we argued that we had been in a trade war for years, if not decades, and were “finally” firing a shot.

In the past decades, China has quietly, though overtly:

• Taken Intellectual Property. There is no question that the IP theft occurred. We can argue about the size of the theft, but it did occur. This was as much on “us” for letting it go on and continuing to believe that we could trade “normally” with China.
• Cornered the Market on Processed and Refined Rare Earths and Critical Minerals. This is largely on “us.” We didn’t want the “dirty” aspects of this industry in our own backyards. NIMBY (Not In My Backyard) played a key role in allowing this development to occur. It was almost as though the “lack of greenness” was “hidden” if “we” let China do all the “dirty” work. Clearly the latest round of trade negotiations (and viable threats from China) have highlighted this.
• Subsidies and unfair trade practices. Long after the Chinese economy developed into a high- powered, industrialized, and sophisticated manufacturing hub, the world gave it many trade advantages (on “us”). The flipside was that China was very good at subsidizing businesses by keeping prices of certain things at a level where China could then squeeze competitors out of the market. That was largely on “China” but “we” were more enamored with the cheaper prices than we were concerned about the repercussions of being de-industrialized. Heck, less industry (and carbon) was a “feature” not a “bug.”

Without a doubt, this administration has tossed a Molotov Cocktail, or two (or even a hundred), and this is reshaping the global economic system.

The administration’s policies have set off a chain reaction that is re-shaping the global economy, but much of it is in response to (or in an effort to change the path of) China, which had been steering for the world.

A ProSec System Can Be Stable As Well

As you know (and might be sick of hearing about), we think a ProSec Economy is the direction we are headed. That production for security and resiliency will dominate policy for governments (across the globe), corporations, and asset managers. We could also describe this as a “Me First” or “Me Mostly First” world order, but I think that has more negative connotations than it really should have.

In this ProSec world countries will:

• Produce a significant “amount” of “things” they NEED domestically. There will be levels of “NEED” that apply. Just like humans need air more than water, and in turn, need water more than food to live, countries will identify their true “NEEDS” and develop businesses around those “things.” “Things” like electricity and energy will be high on that list. For advanced countries, semiconductors will fit into that. The need for processed, refined, and smelted materials will be addressed. Ultimately, healthcare and pharmaceuticals will be prioritized. See ProSec 2026 for a more detailed list of “things.”
• The “amount” that a country can produce domestically will vary by the “thing” that it is producing. Some things, like energy and electricity, can be done fully domestically by almost any advanced country (if they adopt an array of products). Though even there, they may be dependent on others for some level of supply. There will be things that are not economically feasible to produce at scale in some countries. Countries will need to rely on close relationships (by proximity and values) to ensure a robust and resilient economy. One that cannot easily be threatened by another country’s economic policies.
• There is still plenty of scope for “regular” trade. Not every good or product will be important enough for security and resilience to deserve focused efforts from governments (which will play an outsized role at the start of this changing mindset). And even on some “things” there is opportunity to trade – just not at a level where the trading partner can hold you hostage.

It is easy (at least for me) to see a STABLE global economy, based on the principles of ProSec.

It is the TRANSITION from the existing global economic state of play to this increasingly self-sufficient world that will be difficult and volatile.

Faux Liquidity Adding to The Volatility

When you look at your screens and see bids and offers lined up, the market looks quite liquid. There is some truth to it. Never has the market been more liquid for small trades. I would completely agree with that statement.

Having said that, I think we have an “illusion of liquidity” or what I prefer to call Faux Liquidity. When I “imagine” the state of liquidity, here is what I see:

• Hundreds if not thousands of algos (because no human can do this) trying to compete to “scalp” the next tick or fraction of a penny on any trade. Generating bids and offers, trying to capture some portion of the flow profitably.
• Some portion of these algos (the more sophisticated and presumably more profitable ones) rely heavily on correlation. Commodities might be the easiest example of this to see. Different exchanges list different contracts. There are futures, but there are also ETFs. In some cases, you have those who can participate in the “physical” space. They can try to capture what they see as “arbitrages” between markets. As you move to equities and fixed income, the ETFs (and the create/redeem process for those) can play an even larger role. There are all sorts of opportunities to manage risk (and market making) profitably.
• When functioning well, this creates orderly markets that seem incredibly liquid.

The downside is:

• Correlations changing rapidly. Maybe there are margin calls in one specific product on some exchange creating issues. Maybe two things that are generally correlated break apart due to a political announcement, or even a geopolitical event.
• Bid/offer spreads widen as algos drop out. The beauty of thousands of algos chasing a trade means the “inside market” (best bid and offer) can be tight. If algos start losing money (using a function of increased volatility and shifting correlations), they drop out, or don’t chase as aggressively. The bid/offer spread can widen. The size that can be executed on the bid or offer decreases.

That is when we get “air pockets” or what I call “faux liquidity.”

Large trades can no longer be absorbed “easily” by the system, causing prices to lurch to and fro. One minute we are at 100. The next minute at 105. Now the bid/offers start filling back in around 105, but how the heck did we jump from 100 to 105 in seconds? Nobody knows (well, we do, it is the symptom of faux liquidity). Just like the school of fish avoids the shark (images by Grok), only to congregate moments later in another location, the algos adjust to the new level and get back to their job of making small increments while avoiding being eaten by the big move.

I didn’t even mention:

• Passive investing. In a world dominated by the market cap of a handful of stocks, passive looks a lot more like momentum, where inflows (and believe it or not outflows) reinforce momentum as the flow is concentrated in so few names.
• Leveraged ETFs. I have no idea why the SEC approves 2x or 3x leverage on single stocks. I barely understand it on indices, where the path dependent nature takes a toll on the investor, but I cannot begin to understand the need to have it on single stocks. These amplify movements.
• 0DTE. I haven’t forgotten about zero day to expiration options. Daily and weekly options dominate options trading. VIX is increasingly like the DOW – fun for old timers to talk about wistfully, but far less relevant than it once was to market discussions. As what started the day as a far out of the money option becomes an at the money option, the delta hedging needs the market to continue to move in that direction.

We live in a world where the trading instruments and the market making functionality, on any given day, have the risk of amplifying moves, creating bigger gains or losses, than might otherwise have occurred

Bottom Line

We are transitioning:

• From a more global system of trading, to one where countries are more conscious of the risks of being overly dependent on others for “things” that are necessary.
• From a “deterministic” world of compute, to one where probability-based AI is reshaping industries and investment at a record pace.
• A shift from a U.S. dollar denominated world, where dollars were needed to trade, to provide reserves, and could play a prominent role in sanctions and other mechanisms to influence behavior, to a world where the dollar may not be as important.
  • Some would argue that maybe we are even shifting from a “fiat” currency world, to a “digital” or cryptocurrency world. I do think we will see more digitization, but it will be digitization of existing currencies and instruments, more than the dominance of Bitcoin (as an example). I won’t discount the idea out of hand, but it is far from my base case.

The mix of Molotov Cocktails and Faux Liquidity make for a challenging environment.

On the other hand, I think the market is underpricing the number of cuts and timing (I think at least 3 by September with a 50/50 chance that Powell cuts once before his term as Chair is over). I am worried about jobs and the “working” poor. See The Fed, Affordability, and Electricity for more on this view.

Stay warm and enjoy the Super Bowl.

The Trump administration has drawn a line in the sand.

It will not comply with a federal court order demanding due process for 252 Venezuelan migrants deported to a maximum-security prison in El Salvador last March under the 1798 Alien Enemies Act.

The Justice Department made that position clear in a new filing, setting up a collision course with U.S. District Judge James Boasberg and a near-certain return to the Supreme Court.

The case has emerged as a defining test of judicial power in Trump’s second term, pitting the executive branch’s immigration authority against the federal courts and their ability to enforce constitutional protections for illegal immigrant gang members.

The Venezuelans were flown to El Salvador in March 2025 despite an emergency order from Boasberg instructing the administration to halt the deportations and turn the planes around mid-flight. That decision triggered an eleven-month legal battle that reached the Supreme Court in April after months of wrangling in the lower courts. 

The justices ruled in the government’s favor on its authority to invoke the Alien Enemies Act, but Boasberg, an Obama appointee, doubled down in December, issuing another order directing the government to “facilitate” due process for the migrants who had already been deported. He presented two options: bring the men back to the United States for in-person hearings or facilitate hearings abroad that meet constitutional standards.

The Justice Department rejected both options in its Monday filing.

“In its filing Monday, the Justice Department argued again that the administration is powerless to return the Venezuelan migrants who were summarily deported last year,” reports Fox News. “The department rejected the notion that the U.S. could ‘facilitate’ due process proceedings for the migrants in question as previously ordered by the court, describing the options to do so as either legally impossible or practically unworkable due to national security concerns and the fragile political situation in Venezuela after the U.S. capture of Venezuelan strongman Nicolás Maduro during a raid in Caracas last month.”

Justice Department lawyers argued that returning the migrants is legally impossible and presents national security risks. They cited strained diplomatic relations with Venezuela and the alleged gang ties of the deportees. The filing also dismissed the idea of holding hearings at the U.S. embassy in Caracas, citing the recent capture of Nicolás Maduro and the resulting political instability. The department further contended that the United States lacks jurisdiction to conduct habeas proceedings abroad and that attempting to do so would interfere with delicate diplomatic efforts.

The filing made clear that the administration believes it owes the migrants no additional due process. If Boasberg orders otherwise, Justice Department lawyers said they would immediately appeal and seek a stay from higher courts.

The department maintained that the president’s use of the Alien Enemies Act represents a national security decision outside the proper reach of judicial review.

“If, over defendants’ vehement legal and practical objections, the Court issues an injunction, defendants intend to immediately appeal, and will seek a stay pending appeal from this Court (and, if necessary, from the D.C. Circuit),” the Justice Department said in a statement.

Boasberg has attempted to dictate what the executive branch can do on immigration policy, an area where presidential authority is broad and judicial deference is typically the norm. Similar demands for court-mandated due process protocols were absent during the Obama administration, which deported immigrants in record numbers. During those years, the federal government shifted sharply from judicial removals to fast-track, nonjudicial proceedings. By 2012, 75 percent of illegals removed did not see a judge before being deported from the United States, amounting to 313,000 nonjudicial removals in a single fiscal year.

The Trump administration views the current legal fight as an extension of that same presidential authority enjoyed by Barack Obama. It sees Boasberg and other judges issuing immigration orders as rogue actors seeking to seize control of enforcement policy from the executive branch.

Authored by Jeff Louderback via The Epoch Times (emphasis ours),

Three years have passed since a Norfolk Southern freight train carrying hazardous chemicals derailed in East Palestine, an eastern Ohio village near the Pennsylvania border.

On Feb. 3, the disaster’s third anniversary, The National Institutes of Health (NIH) held a grand opening ceremony for the East Palestine Train Derailment Health Research Program Office.

The office will serve as the home to a five-year, $10 million research initiative to assess and address the long-term health outcomes stemming from the derailment.

“NIH’s research hub offers the people of East Palestine a pathway to clear answers about their health they deserve,” said Health Secretary Robert F. Kennedy Jr.

“Everyone affected by this environmental disaster deserves access to independent, gold-standard science that puts their well-being first.”

Life in East Palestine abruptly changed around 9 p.m. on Feb. 3, 2023.

The crew of a Norfolk Southern Railway freight train carrying 151 cars saw smoke and fire, and realized that 38 cars had derailed.

The flammable, toxic chemicals in 11 derailed cars had ignited, with flames spreading to an additional 12 cars.

According to the National Transportation Safety Board, nine cars were carrying hazardous materials in addition to the 11 that derailed.

The hazardous chemicals, including vinyl chloride in some of the rail cars, began to spill onto the ground and into the air.

Vinyl chloride is used to make PVC pipes and other products.

The National Cancer Institute notes that the toxic chemical has been linked to cancers of the brain, lungs, blood, lymphatic system, and liver.

Vinyl chloride creates carbon monoxide and hydrogen chloride when it burns.

When the latter mixes with water, it generates hydrochloric acid, a corrosive substance that can burn the skin and eyes, and is toxic if inhaled.

Burning vinyl chloride also produces a small amount of phosgene gas, which was used as a chemical weapon on World War I battlefields.

As the fire continued, authorities on Feb. 6—fearing shrapnel from a major explosion—decided on a controlled detonation of five cars, which sent a massive cloud of black smoke into the sky.

Visible for miles, it was likened to the mushroom cloud caused by a nuclear weapon.

The government characterized it as a “controlled burn,” but residents said it was anything but controlled.

A dark cloud of chemical-filled smoke could be seen for miles, and debris landed on properties several miles away.

The train cars were ruptured in the detonation, and spilled the rest of their contents into a drainage ditch connecting to Sulphur Run, a stream that flows through the heart of East Palestine.

Before the burn, Ohio Gov. Mike DeWine urged residents to evacuate a one-by-two-mile area surrounding East Palestine, which included parts of Ohio and Pennsylvania.

DeWine described the urgent evacuation as a “matter of life and death.”

Three days later, DeWine held a press conference announcing that the evacuation order had been lifted and residents could return to their homes.

Norfolk Southern trains resumed their routes through East Palestine, and federal and state officials said testing showed that the air and water were safe.

Fear and uncertainty remain among East Palestine residents.

Many locals complained about a toxic smell in the air, burning eyes, rashes, headaches, and other health issues.

These reports prompted concerns about potential long-term health effects, including “maternal and child health, as well as psychological, immunological, respiratory and cardiovascular health,” according to the NIH.

“This research program is designed to bring rigorous, independent science directly to the community,” NIH Director Dr. Jay Bhattacharya said.

“By establishing a local presence, we can better engage residents, support enrollment in studies, and ensure the research reflects the real experiences and concerns of the people affected.”

After the grand opening, a community meeting was held to outline the research program, explain how residents can enroll in studies, and provide people a chance to ask questions and share their experiences directly with researchers.

Jami Wallace was a lifelong East Palestine resident until the derailment.

She no longer lives in the community but has served as an outspoken advocate for people who have experienced health consequences from the disaster.

“I was diagnosed after the derailment with hypothyroidism. I’ve been diagnosed with asthma, I’ve been diagnosed with an adult chronic cough, I have a cyst on my right ovary that I have to have an operation on,” said Wallace, who is co-founder of the Chemically Impacted Communities Coalition.

“I get phone calls every day from people who are seeing cancers and thyroid disease, respiratory and neurological issues. You can’t tell me it’s not from those chemicals.

“I’ll fight Norfolk Southern, and I will fight my own government until we get accountability and we get justice.”

The Feb. 3 event included researchers and representatives from NIH’s National Institute of Environmental Health Sciences, the University of Kentucky, the University of Pittsburgh, and Yale University.

“Since the beginning, we have seen the public experience respiratory issues, we’ve seen and heard about rashes, nose bleeds in children, eczema, reproductive health questions and concerns, so now we have a team of about sixteen scientists on our team that can help answer those questions for the public,” Dr. Erin Haynes of the University of Kentucky said.

“We have learned that the community is experiencing health conditions from the derailment, and we want to be able to give them answers to know if it is a true direct association.

“A lot of things are unanswered, but this large-scale study that we now have funding to do will really help answer those questions.”

Authored by Jonathan Turley,

With polling showing over 80 percent of Americans in favor of voter ID laws, it is hard to come up with reasons why you need an ID to board a plane but not vote in a federal election. That was particularly glaring this week when Sen. Jon Ossoff (D-Ga.) required people to show an ID to attend his campaign events after opposing an ID requirement to vote. So if you want to hear Ossoff speak against voter ID, you will have to show your ID. Now Rep. Jamie Raskin (D-MD) has a rather bizarre argument: the Safeguard American Voter Eligibility (SAVE) Act, if passed, would likely violate the 19th Amendment to the Constitution.

CNN Host Kasie Hunt told Raskin that “Voter ID is supported by the majority of Americans. But there are Democrats on the Hill and you voted against this? Why not support voter ID?”

Raskin then had this curious response:

“… what’s wrong with the Save act? What’s wrong with it is that it might violate the 19th Amendment, which gives women the right to vote, because you’ve got to show that all of your different IDs match.

So if you’re a woman who’s gotten married and you’ve changed your name to your husband’s name, but you’re so now your current name is different from your name at birth.

Now you’ve got to go ahead and document that you need an affidavit explaining why. And why would we go to all of these, troubles in order to keep people from voting when none of the states that are actually running the elections are telling us that there’s any problem.”

In fact, under various voter ID laws, states can create systems to address issues such as different maiden names or name changes following a divorce, including requiring a standard attestation provided by the state.

Nothing in the SAVE Act requires birth certificates be brought to polling places. 

It allows for the use of a signed attestation supplied by the state.

As for identification, various forms are allowed:

The legislation would require documentation that shows an individual was born in the U.S., including either:

• An ID that complies with the REAL ID Act and indicates the holder is a citizen;

• A passport;

• A military ID card and military record of service that shows a person was born in the U.S.;

• A government-issued photo ID that shows the person’s place of birth was in the U.S.;

• Other forms of government-issued photo ID, if they’re accompanied by a birth certificate, comparable document or naturalization certificate.

Now, on the 19th Amendment, Raskin’s argument is simply ridiculous. Indeed, if this were credible, why has it not been used successfully against prior state voting ID laws? Rather than making this claim on CNN, it would be interesting for Raskin to try it in court once the SAVE Act passes.

It is unlikely to succeed because the 19th Amendment guarantees the right to vote, but, like all citizens, women can be asked to prove their eligibility to vote. The suggestion that requiring a signature on an attestation form is a barrier to voting is simply incredible.

The Nineteenth Amendment provides:

The right of citizens of the United States to vote shall not be denied or abridged by the United States or by any State on account of sex.

Congress shall have power to enforce this article by appropriate legislation.

Requiring proof of your identity neither denies nor abridges the right to vote. Indeed, for supporters of voter ID laws, it protects the right to vote by ensuring that only eligible voters are counted in elections.

Would requiring the REAL ID also violate constitutional rights like the right to travel or association for those with name changes? Of course not. The government may require basic identification for such transactions while creating reasonable methods of addressing name or address changes.

The claim of a 19th Amendment violation is spurious but par for the course in our current political environment. As with claims that democracy is about to die, these inflammatory claims are designed to distract voters who overwhelmingly support Voter ID. Democratic members are unified in opposing such laws. That is a debate that should be resolved on the merits, not meritless constitutional claims.

Jonathan Turley is a law professor and the best-selling author of “Rage and the Republic: The Unfinished Story of the American Revolution.”