Trump’s Reversal on Housing Bill Costs Kalshi Bonders Dearly
Picking up pennies in front of a steamroller.
The 21st Century ROAD to Housing Act looked like a done deal until it suddenly wasn’t, causing a Kalshi market on the bill to crash from 99 cents to less than 50 in a matter of minutes.
Earlier in the month, President Trump had called on Congress to pass the bill urgently. One would expect that to mean that he intended to sign it. However, after the bill passed in the Senate on Tuesday and the House on Wednesday, the President abruptly announced that he would not be doing so.
The reason is that he now wants to hold the important affordability package hostage to try to force Congress to pass the SAVE America Act — a voter ID bill that the President claims is necessary for election integrity, but which would also have the effect of suppressing lower-income voters due to the costs of complying with its requirements.
“Today’s Housing News Conference and Signing is hereby cancelled until such time as we pass the desperately needed SAVE AMERICA ACT, which I consider to be a National Emergency. Thank you for your attention to this matter!” Trump posted on Truth Social.
That post came at 10:26 AM Eastern time. Over the following three minutes, there were three trades worth a combined $50,981 on when the bill would become law. The first, at just under $10,000, was on whether that would be before July 1. The largest, for exactly $40,000, came at 10:29 AM, on the later August 1 cutoff date.
Both trades happened at a 99-cent price, likely indicating someone taking advantage of open orders on the book before the party posting them could remove them.
Bonding, or Picking Up Pennies In Front of a Steamroller
It’s the sort of scenario dreaded by so-called “bonders,” a subset of Kalshi traders who target markets that are already effectively decided, but haven’t yet settled.
The name comes from the idea that these users are treating near-certain markets as a conventional investor would think of bonds. That is, the return is quite small, but the risk should, in principle, be zero or close to it.
Except when it isn’t.
There’s a saying in both the gambling and financial spaces for this sort of strategy: “Picking up pennies in front of a steamroller.” It seems like free money, except that all it takes is one thing to go wrong and suddenly that small, incremental gain turns into a catastrophic loss.
One thing about the Trump Presidency in particular is that there are no sure things. Trump is notoriously mercurial in a way that’s either a brilliant strategy or a sign of mental instability, depending on who you ask. Either way, this isn’t the first time he’s burned people who’ve banked on him following through with his promises, whether on prediction markets or conventional ones.
Fortunately, in this case, only $100,000 changed hands during the day of the crash. It’s still painful to think about, however. The person holding the Yes end of that single $40,000 trade, for instance, was only going to make $400 (less trading fees) if everything had gone according to plan. Fortunately, traders still give the bill 89% odds of passing by August. Yet, that person now either needs to sell at a $4,000 loss, or hold and sweat the possibility of a $40,000 loss for the next month.
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