TheChek News Flow

Main idea: A New York Times investigation found that DraftKings uses machine learning to direct its promotions toward the customers most likely to keep betting and losing. The article is based on more than 40 former employees and internal documents. DraftKings hands out about $3bn in promotions a year against $8.7bn of gross revenue, and the model gives each customer an "elasticity" score: the expected loss per promotional dollar. The company also shelved at least three internal attempts to use the same data to predict problem gambling. It says such risk scoring is not "evidence-based".

Consequences:

Conflict of interest: the most profitable promotional target is likely to be a problem gambler. Slots, among the most addictive forms of gambling, showed the highest elasticity, and one gambler in recovery received 40 promotions in two weeks.

Behind its peers: FanDuel, Fanatics and PrizePicks have adopted third-party risk-scoring tools. DraftKings relies on rule-based triggers and on gamblers excluding themselves, and its language-model monitoring only catches customers who contact the company.

Legal and regulatory risk: the whistleblower testimony and internal memos give material to the lawyers already suing over addictive practices and to state regulators. Political sentiment is turning too: the Ohio governor calls legalising sports betting his biggest regret.

Investment angle: DraftKings told investors that data science improved its margins on promotion-driven sports bets by 13% in 2025. That gain depends on promotional targeting, so any restriction on it would directly affect the company's economics.

DraftKings denies that it targets customers based on their losses.

Data science helps determine who receives betting incentives, but the company has resisted using similar technology to protect gamblers at risk of addiction.

About a year into his job as a data analyst at DraftKings, Jayden Butts received a new assignment.

The online gambling giant was spending hundreds of millions of dollars every year on promotional incentives: “Free” betting money advertised through emails and phone alerts. But the company knew little about their effectiveness.

So in 2023, DraftKings took customer betting records and built a machine learning model, a form of artificial intelligence that seeks patterns in data, to answer the question: Who was more likely to respond to promotions by gambling — and losing — more?

Mr. Butts’s task was to test that model, prioritizing free bets and bonuses for those likely losers. Soon, a question began to gnaw at him: Aren’t many of these same people prone to addiction? “We are looking for traits and features that we can target that indicate a good investment,” he said. By strict financial logic, “the best investment would be a problem gambler.”

Mr. Butts had reason to be concerned. DraftKings makes money when gamblers lose money. And the model sought to identify those it could get to lose the most. It scored each customer based on their habits: The higher the score, the more money a gambler was likely to lose for each promotion offered.

Since Mr. Butts ran those tests, DraftKings has continued to hone its methods, using data science, to target losing gamblers with promotions that encourage more betting, according to six former employees who worked on them. At the same time, four other former employees said, DraftKings has stalled or squashed efforts to use similar technology to predict who might develop a gambling problem based on their betting activity.

Silicon Valley firms spent years analyzing every digital interaction to predict what will keep users clicking on advertisements. Now, as companies like DraftKings have made gambling accessible to millions on smartphones, they too have collected an extraordinary wealth of data.

An investigation by The New York Times shows what DraftKings has chosen to do — and not do — with that power.

The Times interviewed more than 40 former DraftKings employees, and obtained internal research memos, presentations and Slack messages as well as betting records from experiments conducted on customers.

The documents show how the model Mr. Butts worked on analyzed dozens of data points for each gambler, including how frequently they played, their daily account balances and how much they typically lost compared with how much they bet. It also incorporated another model that calculated how likely a user was to stop gambling.

This betting data may also contain signs that a person is headed for trouble. Yet when employees developed a machine learning model that would have assigned users “risk scores,” the company sidelined it, according to two former employees who worked on that project.

In late 2024, DraftKings fired Mr. Butts for performance reasons, he said, amid a short blip in business that led some in the company to believe its promotional experiments weren’t working as intended. The company briefly paused some of its data science work — before revving back up again with a flurry of new machine learning projects.

Mr. Butts and five other former DraftKings employees who worked on promotional targeting told The Times they regretted building technology they now viewed as dangerous.

“It is as predatory as it sounds,” said a former DraftKings analyst who, like many interviewed for this article, requested anonymity because he feared retribution. “If you lose more, we give you more, so you keep playing more.” He quit in 2024.

In a statement, DraftKings said it “rejects any implication that its marketing practices are unfair or improperly targets customers.” The company disputed how some former employees characterized its use of promotions, saying they are “directed toward customers who demonstrate sustained, engaged use of our platform, not toward customers based on their losses.” It also said it disagreed with Mr. Butts’s account of his firing, but did not elaborate.

Lori Kalani, who as DraftKings’s chief responsible gaming officer leads the company’s efforts to prevent problem gambling, said in an interview that its business depended on “customers who are betting within their means, are betting for entertainment and betting for fun.”

Ms. Kalani said DraftKings does monitor customers for “potentially risky behaviors.” But she acknowledged that the company has declined to use risk prediction technology, saying there wasn’t evidence that it was helpful.

In 2018, when the Supreme Court ruled that states could legalize online sports gambling, it ushered in a new era in which betting has moved beyond casinos and racetracks. Professional sports games are now saturated with celebrity advertisements, encouraging people to wager on their phones.

DraftKings and its rival FanDuel dominate this new industry, which has expanded into online casino games and, more recently, prediction markets. DraftKings says it has 11 million customers, compared with five million in 2022.

Health experts have long recognized gambling as addictive, but many critics see this modern version, where people can bet from their couch on the outcome of a single baseball pitch, as especially dangerous. A study published last year in JAMA Internal Medicine cited a rise in Google searches like “Am I a gambling addict?” Calls about sports betting to Ohio’s problem gambling help line have more than quadrupled since the state legalized it in 2023. The state’s outgoing governor, Mike DeWine, told The Times that signing that law was his biggest regret.

Promotions, which take on forms like a free bet, a “profit boost” or a deposit bonus, play a vital role in DraftKings’s business: The company brought in around $8.7 billion in gross revenue from sports and casino gamblers last year, and gave out about $3 billion in promotions, according to research by Citizens Bank.

DraftKings and some competitors, including FanDuel, have boasted publicly about their use of customer data for promotions — without disclosing what those efforts entail. A DraftKings executive recently told investors that data science and analytics helped it improve its margins on promotion-driven sports bets by 13 percent in 2025 and that it used A.I. to personalize hundreds of millions of promotional dollars.

One former DraftKings data scientist who worked on promotions, Jacob Shulkin, said that they were effective because they take advantage of gamblers’ psychology. “I feel I’m getting free money,” he said, “but really it’s dragging me back in.”

Several gamblers told The Times that promotions fueled their addictions. Bryan Biehl lost nearly $70,000 gambling online, more than half of it at DraftKings. Mr. Biehl recalled how in late 2024, when he started therapy for his addiction, his email inbox began to feel like a relapse risk.

“I would get flooded with bonuses and deposits,” Mr. Biehl said. “If you are in addiction, you are not going to say no.”

In the first two weeks of December 2024, Mr. Biehl received 40 promotions from DraftKings, emails show. He succumbed to temptation one last time on Christmas Day before putting himself on self-exclusion lists, which blocked him from gambling apps.

DraftKings declined to comment on Mr. Biehl’s account.

Asked whether promotions contribute to problem gambling, Ms. Kalani said they are “a marketing tool that every company out there uses,” comparing DraftKings to businesses like Amazon. Other industries face similar issues, she said. “Shopping can be problematic for people.”

‘Open the floodgates’

Jayden Butts grew up watching his grandfather’s gambling addiction play out — three trips a week up I-95 to Oxford Casino in Maine.

Fresh out of college and eager for a high-paying tech job, he joined DraftKings’s casino division in May 2022 as a data analyst. He initially didn’t think much about customers like his grandfather. Then he had his own string of losses playing online slots through an offshore website. He later quit gambling with a new appreciation for people who might be struggling.

DraftKings is famous for sports betting, but its online casino games, including slots and blackjack, bring in nearly one-third of the company’s revenue, even though it offers them in only a handful of jurisdictions.

The online casino is where, in mid-2023, DraftKings set out to build a model for predicting how promotions would translate into a user’s eventual wins or losses.

The core question was, “Is this person going to give us more than we’re giving them?” Mr. Butts said. “And if the answer is yes, open the floodgates.”

DraftKings already had a system that weighed factors like a gambler’s skill, how much they bet and tax rates on gambling revenue in the state where they lived.

But it was relatively crude. According to one internal memo, it offered “no information or insight on expected user-level profitability of reinvestment dollars” — in other words, DraftKings did not know how effective its promotions were at inducing gamblers to lose.

Figuring this out required machine learning. Unlike traditional data analytics, where researchers decide which patterns to look for, machine learning models can sift through hundreds of variables on their own to find combinations that help predict particular behaviors.

Data scientists had trained the new casino model on historical data. It was Mr. Butts’s job to test it on real customers. Each week, the model vacuumed up information about a user’s recent activity. The score it calculated was known internally as “elasticity,” a term borrowed from economics.

Users with below-average scores were deemed “inelastic” and marked for fewer incentives. The “elastic” bettors remained.

In September 2023, Mr. Butts tested using the elasticity model to influence promotions for about 5,000 casino players. He later expanded the tests to a larger population.

He initially thought DraftKings aimed to save money by avoiding people who were unlikely to be profitable. But he said his supervisors told him that the company did not want to reduce its promotional spending but rather to “redeploy” it. He understood this to mean the goal was to direct more promotions toward the biggest losers.

Mr. Butts said he also worried that his experiments might lead DraftKings to send more promotions to players who played more addictive games, including his own former vice: online slots, widely regarded by public health experts as among the most addictive forms of gambling.

It’s not clear the extent to which DraftKings has targeted slots players more than others. But in a 2023 internal memo, researchers reported that slots revenue was “more elastic” than earnings from other casino games, meaning that promotions were particularly effective at driving users to those games. A Times analysis of internal DraftKings casino betting data from early 2024 also found that bettors with high elasticity scores gambled more on slots, on average, than those with low scores.

DraftKings said that it could not provide a “definitive response” to Mr. Butts’s tests, the 2023 memo or the Times analysis because it had not “seen or verified” the material. But it said Mr. Butts’s test “appears preliminary and inconclusive,” and that his views do not “reflect DraftKings’ approach to promotional investment.”

Around the same time that Mr. Butts ran his tests, DraftKings began building similar models for sports betting promotions, according to eight former employees. It has continued to develop techniques for targeting sports and casino bettors as recently as this year.

One former employee said he had worked on a system that looked for people at risk of leaving the platform and tried to coax them back. Another said he helped develop a program that ramped up promotions for people gambling more aggressively than usual.

Two other former analysts who worked on targeting projects told The Times that they independently raised concerns with their superiors that these models would identify vulnerable gamblers as promotional targets, and asked to put protections in place.

Both received the same response: no. That would be handled by another part of the company, they said they were told.

Ms. Kalani, DraftKings’s responsible gaming head, said she was not familiar with those requests.

‘At Odds With the Rest of the Company’

The job of limiting problem gambling at DraftKings largely falls to its responsible gaming division, a group of around 50 employees at the 5,000-person company.

DraftKings offers a variety of tools for gamblers who need them. Its advertisements feature phone numbers for 24/7 gambling help lines. “Cool-off periods” let people turn off access to the app for up to a year, and those with a longer-term problem can put themselves on self-exclusion lists for years — or indefinitely.

Gamblers with a high degree of self-awareness may find these tools helpful. But they put the onus on the gambler. “When someone is struggling with an addiction, a rational suggestion that this is not in your best interest is falling on deaf ears,” said Mark Gottlieb, a lawyer who has sued DraftKings and other internet gambling companies, accusing them of practices that lead to addiction.

Although many at DraftKings feel proud of their work to protect problem gamblers, their efforts have created friction with the wider business, according to six former employees who worked on responsible gaming projects. One described the responsible gaming group as “at odds with the rest of the company,” because it aims to slow gamblers down, which in turn makes them less profitable for DraftKings.

DraftKings said there was “no tension” between its business goals and its responsible gaming efforts.

But Hassel Velasco, a former member of DraftKings’s customer service team, told The Times that on about a dozen occasions he heard complaints from problem gamblers who continued to receive promotions.

“It pushes people to almost chase their losses,” Mr. Velasco said. “They’re going, ‘Oh, I’m getting a bonus so I can make up whatever I lost.’” Troubled by these conversations, Mr. Velasco struggled to sleep. He quit in 2024 after five months on the job.

DraftKings said its representatives were required to report problem gambling concerns to the company. Ms. Kalani said the company did not send promotions to bettors who have been flagged or who have taken themselves off the platform.

The company does monitor for vulnerable customers, even if they don’t reach out for help. DraftKings follows guidelines from New Jersey regulators, who have instructed operators to set automatic triggers for specific indicators of potentially reckless betting, such as a customer depositing more than a certain amount during a set time period or a notable spike in time spent gambling.

DraftKings said that it does this nationwide, watching for more than two dozen such indicators. The company declined to share the thresholds it uses to prompt a response — how much someone would have to deposit, for instance — “because doing so could enable customers to circumvent our systems.”

When a customer trips one of these triggers, DraftKings can take three escalating steps. It first sends a message about responsible gaming, then an educational video and finally a questionnaire about gambling habits. Sometimes, DraftKings will close a gambler’s account.

But there are limitations. Intervention is based on customers demonstrating a specific behavior, and even if that happens, they can deny that they have a problem.

DraftKings described the system as “advanced technology” and said that it allowed the company to reach out to gamblers who have not yet asked for help. The company declined to share how many accounts it had suspended using this system.

A Collision Course

Inside DraftKings, some employees believed the company could go much further.

One was a data scientist named Nestor Hernandez, who in mid-2024 began building a system that would help the responsible gaming division identify gamblers in trouble.

Mr. Hernandez, a computer science Ph.D., had spent years using algorithms to detect unusual patterns in large amounts of data.

He reviewed academic research into problem gambling, then developed a machine learning model to analyze the betting records — the same used for promotional targeting — of customers the company had already flagged for risky behavior.

His model scanned, among other things, deposits and withdrawals, attempts to chase losses and even age and gender, for patterns that might anticipate a gambler’s impending crisis. The risk score it assigned each user could theoretically help the company step in early with warnings or an outright ban.

“The idea of this model is to be more proactive instead of being reactive,” Mr. Hernandez said. “You will basically predict that a user will be in trouble, let’s say, a few days or a few weeks in advance. And you can act accordingly.”

Mr. Hernandez left the company that November for personal reasons, his model still unfinished. A new team of data scientists continued the work. Just a few months later, he received news from two former colleagues: The project had been shut down.

One member of that team was Jake Shannin. “Our conclusion was that it is possible even with simple rules to get a better-than-guessing sense” of whether a customer would end up needing an intervention, Mr. Shannin said.

In early 2025, Mr. Shannin said, the team prepared to share the new model with company officials, including Ms. Kalani. But the day of the presentation, the meeting was canceled. Two other attempts by DraftKings employees to build similar algorithms have also been shelved, according to two former employees.

Ms. Kalani said that company leaders made a “collective decision” not to use predictive technology for problem gambling. “We evaluated that it wasn’t evidence-based,” she said. The company decided that its existing system was a “better methodology.”

Several third-party firms offer their own versions of risk scoring. Other gambling companies say they have signed up for this, including two of DraftKings’s largest rivals, FanDuel and Fanatics.

Phil Sherwood, senior director of responsible gaming at PrizePicks, another competitor, said his company had a “moral obligation” to use these tools. “Frankly, without technology like this, I can’t look you in the eye and say, ‘We’re doing our best,’” he said.

DraftKings does not use any of these tools. “We’re always considering our options,” Ms. Kalani said. The company said its “primary commitment is to approaches that demonstrably help customers, not simply to adopting technology for its own sake.”

DraftKings shared one example of its using A.I. for responsible gaming: It deploys large-language models, the technology behind chatbots like ChatGPT, to monitor communications from gamblers to company representatives for signs of distress.

But the technology cannot flag customers who say nothing.

Film-goers are attending less often but spending more, splashing out on plush seats, elaborate cocktails and premium screens

After years of closures, collapses and predictions of terminal decline, cinemas have flipped the script. AMC shares are up more than two-thirds this year, and European operator Vue is even considering tapping the public markets at a mooted £1.5bn valuation.

A series of blockbusters such as The Odyssey help. But the business has changed too, as cinemas have expanded into plush seats, elaborate cocktails and premium screens. Film-goers these days attend less often but spend more. Attendance is still a fifth below where it was a decade ago, according to Euromonitor. Yet AMC’s revenue this year is expected to be almost double what it was back then.

The new bougie experience does, though, take cinemas into direct competition with other kinds of £50 nights out, such as restaurants, bars and live concerts, at a time when consumers are not flush with cash.

In investment terms, that suggests a premium should accrue to those parts of the cinematic experience that can’t be replicated at home. Anyone can rustle up a serving of cocktail sausages, but supersized screens can charge durably high prices. Shares in high-resolution movie-screen maker Imax, for example, are up about 60 per cent over the past year.

Imax’s fans are already relatively price-insensitive, paying up to two-fifths more than ordinary cinema-goers, Macquarie estimates. Its 1,800 screens are roughly 1 per cent of the global total, but took almost 6 per cent of box office revenue this summer. Imax’s revenue is expected to grow almost three times as fast as AMC’s over the next three years, according to analysts polled by Visible Alpha. 

The business is also much more profitable. Imax licenses, sells and installs its giant screens and sound equipment to theatres and gets a cut of the ticket revenue, rather than paying the rent, utilities and staffing bills shouldered by cinemas. That at least leaves Imax better shielded for when the film slate is weak, and helps it earn an operating margin that is 2.5 times that of Cinemark and Vue, and 3.5 times that of AMC. Luxury operator Everyman kept less than 1 per cent of its sales in operating profit last year.

Imax’s thrills are reflected in its premium valuation, almost twice as high as that of Vue, on Lex estimates, and Cinemark. But, in an age of AI-generated entertainment, the appeal of an “Imax movie” — sometimes shot partly or wholly on film — will only grow. A gigantic screen and thunderous sound are the better way to play the premium cinema experience.

AI influx puts Singapore office rents under pressure

Anthropic and OpenAI taking more space in city’s already squeezed prime property market

AI heavyweights including Anthropic and OpenAI are putting pressure on office rents in Singapore as they embark on ambitious expansion plans in response to government overtures.

Several of the world’s fastest-growing tech companies have established Singaporean outposts in the past year as the city-state’s leaders try to make it a global AI hub.

Some groups are in talks to expand their presence in Singapore by taking more office space. That is putting pressure on the already squeezed property market, with predictions that city-centre rents could rise by as much as 10 per cent over the next year.

“This is creating a happy problem for landlords,” said Lawrence Tan, associate director at property agency Brilliance Capital. “There is a real crunch coming in the next 12 to 18 months.”

The government has prioritised attracting high-growth tech companies as part of a national strategy to put AI at the centre of Singapore’s economy. The push comes amid a dearth of available city-centre property developments.

OpenAI has made one of the biggest commitments to Singapore, setting up its first applied AI lab outside the US and announcing an investment of more than S$300mn (US$237mn). The ChatGPT creator has said it will hire more than 200 staff in Singapore in the coming years, many in engineering roles.

The company is in talks to lease 100,000 sq ft of office space, occupying five floors in a newly renovated central tower, according to people with knowledge of plans first reported by the Business Times. OpenAI did not respond to a request for comment.

OpenAI recently poached Meta executive Sandhya Devanathan to run its south-east Asian and Australian operations from Singapore.

Rival lab Anthropic, which has received significant investment from Singapore sovereign wealth fund GIC, plans to open an office in the city centre in October. Its recruitment page features several Singapore-based finance roles that oversee the Asia-Pacific region.

Google DeepMind has set up a research lab in Singapore, while transcription tool Plaud and French start-up Mistral have said they will each have at least 100 staff in the city-state by the end of the year.

AI data company Databricks is planning to quadruple its Singapore office footprint by the end of the year when it takes up 32,000 sq ft of space. The group employs more than 250 people in Singapore — including its general manager for Asia-Pacific and Japan — and plans to increase headcount by half in the next year.

These companies are competing for an increasingly shrinking pool of top-end office units that meet their requirements of having strong network connections and high levels of security, and being centrally located. 

Vacancy levels for the most desired units are at a 13-year low of just 3.1 per cent, according to real estate company Savills. This is mainly due to the lack of supply of new developments, with the next wave of new office blocks not scheduled to open until early 2028.

Alan Cheong, of Savills Singapore, said many AI companies were taking far more space than they need now due to rapid expansion: “They are flush with cash and they are throwing money around.”

With 100,000 sq ft of office space, OpenAI would be able to house as many as 800 staff, property analysts said.

Although Hong Kong office rents tend to be higher, the Chinese territory has more capacity than Singapore and the cost difference between the two Asian hubs is narrowing.

US tech companies are unlikely to favour Hong Kong, however, because of geopolitical tensions between Washington and Beijing.

Singapore has put AI at the heart of its economic strategy and launched a special National AI Council this year, chaired by Prime Minister Lawrence Wong. Its open access approach has made it a popular destination for international expansion for both US and Chinese AI companies.

Single bet on electric trucks would be ‘super dangerous’ for Europe, Volvo says

Leading truckmaker CEO defends focus on hydrogen lorries at a time when battery-run trucks from Tesla and Chinese rivals hit continent

Volvo Group has defended its push into hydrogen-powered trucks, arguing it would be “super dangerous” to only bet on electric lorries even as Tesla and Chinese rivals flood the continent with more affordable products.

This week, Volvo, Daimler Truck, Scania and Iveco all deepened their partnerships with Japan’s Toyota to expand the rollout of hydrogen trucks in Europe with backing from governments such as Germany. 

 “I think it’s super dangerous to pick a winner at this point in time,” Volvo’s chief executive Martin Lundstedt told the FT at the IAA Transportation exhibition in Hanover, adding that technology options also differed according to country.

However, some analysts have questioned European groups’ continuing investment in hydrogen fuel-cell-powered trucks at a time when electric lorries made by China’s Sany, SuperPanther and state-owned Sinotruk are all pushing heavily into European markets.

BYD also unveiled its electric heavy-duty truck that can charge from 20 per cent to 80 per cent in 20 minutes, while Tesla’s long-awaited Semi Truck with an estimated range of 550km made its European debut at the IAA.

Transport & Environment, an environmental NGO, warned that European truckmakers risk losing a quarter of the electric truck market to new entrants from China and the US by the end of the decade if they do not accelerate their electric transition.

Stef Cornelis, T&E’s director of freight and fleets, said trucks by Chinese brands and Tesla were “good products, reliable and much cheaper to operate”. 

“The trucking business is very cost-focused. If a transport company can buy a good truck at a lower price, they will switch,” Cornelis added, cautioning that relying on customer loyalty and service networks to maintain market share would be “a high-risk strategy”.

Seven western manufacturers still dominate heavy-duty truck sales in Europe accounting for about 97 per cent of the market, according to auto data and research firm Mobility Global.

But the industry remains deeply divided about the path to decarbonisation, with Volvo and others developing both electric and hydrogen-powered trucks as well as internal combustion engines using biofuel.

Proponents of hydrogen trucks claim fuel cells where hydrogen is converted into electricity are more suited for long-haul lorries with heavier payloads and offer faster refuelling. Electric truckmakers counter that hydrogen refuelling stations are too costly and batteries now cover longer distances.   

Franziska Cusumano, the new chief executive at Mitsubishi Fuso Truck and Bus, said: “For the world to decarbonise, you will always need both (electric and hydrogen).”

The electric transition has been particularly challenging for European truckmakers due to the lack of charging infrastructure and lagging investments in the electricity grids as well as the cost difference with diesel trucks. 

Despite the rise in diesel prices caused by the Middle East conflict, electric trucks accounted for only 4.8 per cent of new EU registrations in the first half of this year, compared with 92 per cent for diesel trucks, according to the European Automobile Manufacturers’ Association.

At the IAA, European carmakers called on Brussels for a three-year delay in EU regulations requiring truck manufacturers to cut emissions by 45 per cent by 2030, compared with 2019 levels. The industry needs electric trucks to have 35 per cent of the market to hit the target. 

“For us, it’s absolutely existential,” said Daimler chief executive Karin Rådström, who warned that the heavy fines would wipe out a year’s worth of its profits if it missed the target by 10 per cent.

A major risk for European groups is that China will replicate the success of its carmakers with electric lorries. Beijing has laid out ambitions for 40 per cent of the country’s new truck sales to be electric by 2030, compared with about 25 per cent last year and 37 per cent more recently as a result of the Iran war.

China’s biggest electric-truck maker Sany, for example, will aim to offer electric trucks at 20 per cent below the prices of European manufacturers. The group, which already offers two models in Europe, plans to launch two more trucks in Germany, Austria and Switzerland by the end of next year.

“We see ourselves as an enabler to make this transformation more affordable,” said Kevin Eichele, head of product and business development of Sany eTrucks at Putzmeister Holding, which distributes the Chinese group’s products in Europe.

However, Achim Puchert, CEO of Mercedes-Benz Trucks, said he was not scared of competition. “Competition drives innovation,” he claimed.

Novo investors call for dealmaking and new drugs

Ozempic maker is under pressure to diversify as it prepares to face shareholders on Monday

Novo shareholders have called on the Danish drugmaker to develop new medicines and pursue acquisitions to reduce its reliance on blockbuster weight-loss treatments, ahead of its investor day on Monday. 

The Ozempic maker is preparing for its first capital markets day under chief executive Mike Doustdar, who is under pressure to show that the company can claw back ground lost to main rival Eli Lilly in the obesity drug market and diversify into new therapeutic areas. 

Shareholders told the FT that the pharmaceutical group — Europe’s most valuable listed company as recently as last year — must grow its portfolio, including through deals. Eugen Uretzki, an investment analyst at top 15 shareholder Flossbach, said there were “two jobs for a chief executive: you have to develop the assets and commercialise them”.

He said the “development of assets is still to be proven”, adding this was “urgent given the competition from Lilly”, whose Zepbound jabs now dominate the market for obesity injectables.

Since taking over last year, Doustdar has slashed more than 9,000 jobs. This week the company unveiled a rebrand — ditching Nordisk from its name — and promised a cultural reset dubbed “The Novo Way”. At a town-hall meeting in Copenhagen on Tuesday Doustdar told employees this meant being more consumer focused.

But investors are looking for evidence that the group can grow its pipeline to ensure it is protected from a loss of revenue when its semaglutide-based drugs lose exclusivity. Unlike Lilly, whose portfolio also includes cancer and neuroscience medicines, Novo generates more than 90 per cent of its sales from diabetes and obesity treatments, including semaglutide-based Ozempic and Wegovy.

Julia Angeles, investment manager at shareholder Baillie Gifford, said Novo needed to “lay out what the transition from Ozempic looks like”, including by pursuing partnerships that would allow it to explore experimental treatments before fully committing to them.

“I would like to see Novo put their tentacles in as many novel approaches as possible,” she said, adding that investors needed to see a plan in relation to dealmaking. “You cannot do M&A without a clear strategy.”

However, Angeles added that Novo should also focus on creating a pipeline of drugs capable of meeting the needs of a broader group of patients. This should include developing new obesity treatments that could be better tolerated and reduce muscle loss.

Novo’s market cap soared above $600bn in 2024 after riding a surge of popularity for its pioneering weight-loss jabs. But its stock tumbled after Lilly, which makes Zepbound and Mounjaro, gained market share and overtook it in the crucial US market.

Novo was also first to bring out a weight-loss pill, and still leads the market for oral obesity drugs, with its Wegovy pill exceeding 161,065 weekly prescriptions on September 11, according to data provider IQVIA, more than three times the level of Lilly’s. It is expected to launch a new weight-loss treatment, CagriSema, next year after submitting it for approval last December.

But it has suffered a number of setbacks in its wider portfolio, including the recent late-stage trial failure of a drug aimed at reducing the risk of heart attacks.

Meanwhile it faces losing exclusivity on semaglutide patents in Europe and the US starting in the 2030s. It has already lost exclusivity this year in India, Brazil, Canada and Turkey, enabling generic competitors to launch much cheaper alternatives. Sales are due to fall by up to 6 per cent this year.

“Novo is in trouble,” said one previously long-term investor who recently sold their fund’s stake in the Danish group. “They need something to replace semaglutide just to stand still.

“They should have been doing M&A long ago . . . A year ago you could buy things cheaply, now biotech is very expensive.”

“I’m a little surprised we haven’t seen anything [on deals] yet,” said Michael Leuchten, an analyst at Jefferies. “They should be doing business development and thinking of adding assets to the portfolio.” However, he added: “This is a company that hasn’t been particularly successful with BD and I’m not entirely sure how brave this management team is at this point in time.”

Novo declined to comment.

Initial bids for Legend Holdings’ 90% stake in Banque Internationale à Luxembourg are due around the month-end

The Chinese investment group that owns Luxembourg’s oldest private bank has launched a sale of the lender nearly a decade after its purchase.

Legend Holdings, which is also the major backer of computer group Lenovo, is working with Goldman Sachs to sell its 90 per cent stake in Banque Internationale à Luxembourg.

Initial bids are due around the end of this month and could value the group at roughly €2.5bn or more, according to people familiar with the matter.

The group is receiving preliminary interest for the bank — known as BIL — from European and Middle East institutions, the people said, cautioning that discussions were at early stages. Some bidders may only be interested in parts of BIL, and there is no certainty of a deal, the people said.

Legend Holdings, which is listed in Hong Kong, acquired the bank from its Qatari owners in 2017 in a deal that valued the group at €1.6bn. BIL had been owned by the investment firm Precision Capital, which represented members of the Qatari royal family.

Founded in 1856, BIL provides services ranging from wealth management to corporate banking. The Luxembourg government holds a 10 per cent stake in the group.

BIL’s assets under management totalled about €50bn at the end of 2025, up 7 per cent from a year before, while the bank reported net profits of €210mn, rising 24 per cent. Reuters reported last March that Legend had hired bankers to explore options for BIL.

Some Chinese investors have sold out of European financial institutions, such as Fosun, which disposed of its stake in Belgian insurer Ageas in 2024, and Geely, which sold its stake in Denmark’s Saxo Bank to J Safra Sarasin last year.

BIL could be attractive for banks looking to bulk up in areas such as wealth management. European banks have stepped up dealmaking in recent years, boosted by stronger profits and balance sheets that have encouraged lenders to seek greater scale.

Italy has been at the forefront of the push, with a flurry of domestic deals, while UniCredit’s swoop on Germany’s Commerzbank has emerged as a test of whether large cross-border transactions can overcome political and regulatory hurdles.

Europe’s banking sector has long been fragmented, with a large number of lenders and relatively little cross-border consolidation compared with the US, in part because of political resistance to foreign takeovers.

BIL and Goldman Sachs declined to comment. Legend was not immediately available for comment.

Europe can attract more stock trading with fewer, better markets

A bigger European exchange could better woo US investors seeking to diversify from the tech-centricity of their own markets

Europe’s stock markets have a problem. Shares in the region’s companies change hands about half as much as comparable US groups. Fewer buyers and sellers mean slower trades, fewer traders judging what something is worth, and less competition for market makers to offer the best price, widening the gap between bids and asks. That makes investors less keen to participate, and companies less likely to list in Europe in the first place. There is, thankfully, a way to make things run better.

A good start is to have fewer exchanges: European companies can list on 35 bourses and can be traded on more than 40. Professional traders can access them all via one screen, but fragmentation still brings costs and complexity. There is a strong case for merging European stock exchanges, an idea raised again this week by Euronext chief Stéphane Boujnah, who said he would be open to a “big bang” deal with rival Deutsche Börse.

Merging two bourses — say, Paris and Amsterdam — doesn’t create liquidity on day one. It simply lumps together all the trading that was already happening before. But it does broaden the horizons of analysts and investors used to focusing on their home market. That, in turn, could encourage more investment, more listings and so on. There is plenty of scope for that: US households invest more than 2.5 times as much of their wealth in the stock market as Europe’s.

Second, bigger exchanges can invest in better technology, which would help them to compete more effectively with alternative trading venues such as Cboe Europe, or even private trades between banks and their clients. In Europe, these alternatives, which can offer lower fees and spreads and facilitate easier big block trades, now account for 70 per cent of all stock trading. In the US, they account for 45 per cent, Oliver Wyman estimates.

Third, a bigger European exchange could better woo US investors seeking to diversify from the tech-centricity of their own markets. The so-called Magnificent 7 now make up about a third of the S&P 500 index. Combine two or more local bourses and a US investor would only need to acquaint themselves with one new set of trading rules and conventions to get access to lots of companies.

For this to work, stock trading needs to be truly seamless across the merged bourses. That means mashing together not just the trading, but also the clearing and settlement systems that ensure that stocks and money actually change hands. Currently, there are almost as many as there are trading venues, and a German investor pays more for clearing when they buy an Italian stock than a domestic one. European post-trade costs can be up to twice as high as in the US, think-tank New Financial finds.

The loftier dream of “capital markets union” — where European companies and investors enjoy a single bloc-wide standard for issuing and trading securities — remains a pipe dream for now. Europe will remain a hodgepodge of national trading rules, tax regimes, opening hours and languages, of course. But even a handful of mergers would give the continent a better chance of building liquidity. Fewer is definitely more.

CEO Shayne Coplan brushed off concerns about scheme involving stolen debit cards; now the prediction market is bolstering executive ranks as it eyes IPO

Polymarket US faced a major fraud attack in February where thieves linked stolen debit cards to accounts and tried to steal at least $10 million.

CEO Shayne Coplan reportedly brushed off employee concerns about the fraud, telling compliance staff to keep growing and pay any regulatory fines.

The company is facing investigations by the CFTC and the New York City Council, alongside lawsuits challenging its business practices.

In February, a company processing debit-card transactions for Polymarket’s U.S. betting platform delivered some alarming news: Fraudsters were flooding the app.

Users were linking stolen debit cards to Polymarket US accounts, then trying to use them to make wagers and withdraw the money into clean cards or accounts they controlled. Thieves tried to make off with at least $10 million.

At one point, the processor rejected as fraudulent more than 80% of the deposits it was handling, a rate that far exceeded industry standards of roughly 1%. Polymarket employees quickly raised their concerns with Chief Executive Shayne Coplan, according to people familiar with the events.

The compliance team, those people recalled, was floored by Coplan’s response: Just keep growing and pay a fine if regulators ever find out.

Current and former employees said Coplan’s reaction, which hasn’t previously been reported, was characteristic of his plan for Polymarket—growth at all costs.

Polymarket is doing everything in its power to woo new users and investors. In the process, said current and former employees and investors interviewed by The Wall Street Journal, the highflying company has struggled with compliance failures, legal challenges and software blunders.

Rates of fraud remained elevated for months after the February attack, people familiar with the matter said, though they didn’t again reach 80%. In the wake of the incident, executives left and an internal investigation began.

Former regulators from the CFTC, Justice Department and Internal Revenue Service said the level of attempted fraud and Polymarket’s response was atypical for the commodities and gambling industries. Unlike traditional commodities exchanges, Polymarket accepts funds directly from retail traders, making it more vulnerable to fraud attacks.

“In the regulated space, this kind of thing does not happen,” said former CFTC enforcement lawyer Joe Konizeski. “You have adults who handle customer funds and make sure they’re sourced appropriately and handled appropriately.”

A Polymarket spokesman said the company is committed to maintaining accurate, fair and transparent markets and working with regulators and law enforcement. “Our market integrity framework includes processes to detect, review and respond to suspicious activity,” the spokesman said.

Polymarket’s legal challenges are mounting on several fronts. The Commodity Futures Trading Commission is investigating it, and employees have been told to retain records related to the fraud attack and other topics, according to people familiar with the matter. The New York City Council is probing the advertising practices of Polymarket and other prediction markets, and Polymarket has been accused in lawsuits of deceptive business practices by almost two dozen traders.

At the same time, more than a dozen state lawsuits are focusing on whether Polymarket and its prediction market competitors such as Kalshi and Coinbase are unlicensed gambling platforms. The outcome of those cases could reshape the industry.

As legal risks pile up, Coplan is in the process of raising $1 billion, in a fundraising round that would value the company at around $21 billion. Donald Trump Jr.’s investment fund 1789 Capital is investing roughly $300 million in the round, in addition to the roughly $200 million it has previously invested.

Polymarket, which has a data partnership with Dow Jones, the publisher of The Wall Street Journal, has been working to reposition itself to investors and the general public as a more mature company focused on responsible growth. Since May, it has added experienced risk-management staffers, including a former FBI agent. The company has improved its compliance protocols and improved product testing, according to a person familiar with operations.

In late June, Coplan visited the Hamptons home of 1789 Capital co-founder Omeed Malik to strategize about how to professionalize Polymarket’s operations before a potential initial public offering in the next year, according to people familiar with the meeting. Malik advised Coplan to hire more experienced executives. Polymarket recently hired its first chief financial officer, Warren Jenson, who was Amazon’s CFO in the early 2000s.

Following a Journal investigation into a deceptive social-media campaign, Polymarket restructured its marketing team, including hiring the founder of electric-scooter company Bird as chief of growth. Other marketing employees involved in the social-media campaign have left the company or had their roles shrink.

“Polymarket is rapidly growing and getting better every day,” a spokeswoman for the company said. “We are proud of our key leadership hires and continuous infrastructure upgrades and we have quickly scaled and remain focused on growing responsibly at the frontier of finance, tech, and culture.”

The 28-year-old Coplan has a reputation for being unfiltered and intense. He has berated employees in the office. Former staffers said employees worked late nights and that Adderall use was widespread. Coplan has pressed engineers to push out a shifting list of new features, some former employees said.

Last July, during a discussion about how to resolve disputes over the outcome of bets, Coplan shot back, “Bro, it’s just retarded! And the way you guys bitch about this s— is so stupid,” according to a recording reviewed by the Journal.

Polymarket has been barred from offering its international platform to American users since a 2022 settlement with federal regulators. In 2024, as Polymarket’s profile grew, two federal agencies investigated whether the company was violating that settlement by allowing U.S. traders on its platform.

Around that time, an office prankster briefly erected a life-size cardboard cutout of imprisoned crypto fraudster Sam Bankman-Fried—a joke partly about how similar Coplan, a fellow crypto billionaire, is in appearance.

Coplan told employees to prepare for a U.S. homecoming. Polymarket laid the groundwork for an American app and negotiated with regulators to end the investigations. Last summer, it paid $112 million for a licensed exchange that they converted into Polymarket US.

Polymarket US opened to early users in December. Traders flocked to the platform and deposited over a half-billion dollars into their accounts, according to a person familiar with the matter.

As one part of its protection against money-laundering attacks, Polymarket US employed a rule commonly used by financial exchanges: Funds deposited from one payment source were required to be withdrawn to that same source. Without such a rule, a thief could deposit money using stolen debit cards, trade with it, then withdraw winnings to a clean card.

Federal regulations don’t require prediction markets to follow that rule. Other brokerages and betting apps, including DraftKings and FanDuel, do so. Polymarket’s chief competitor, Kalshi, doesn’t, though that company inspects funds withdrawn to different payment mechanisms and freezes suspicious payments, a person familiar with that company’s protocols said.

Fraud warning

By January of this year, Polymarket’s US app was handling only a fraction of the volume of its mammoth international exchange: less than $300 million in betting activity compared with more than $7.6 billion on the international platform.

Coplan wanted any potential friction for users gone, even though the app was still in beta testing and had launched to only a limited number of users.

Near the top of his list: Making sure users got their money quickly. By February, a Discord chat for Polymarket users had filled with complaints about how long it took to withdraw funds. Employees reassured users that their money was in transit, but that compliance checks could hold it up for days or weeks. Engineering glitches on the U.S. app added to the pain.

In February, the swindlers attacked Polymarket, linking stolen debit cards to thousands of new accounts, the payment processor Checkout.com told Polymarket. Most of the attempted deposits failed, said one person familiar with the matter, who attributed the majority of the attack to seven users, one of whom attempted about 4,000 deposits. Checkout.com, which continues to work with Polymarket, declined to comment on the incident or its relationship with Polymarket.

The attack overwhelmed the compliance staff, backing up withdrawals further. To get money back to customers faster, company leadership decided to scrap the rule requiring same-source withdrawals, even though some employees warned that it could open the door to money laundering, according to people familiar with the discussions. Executives maintained that other protocols in place were sufficient.

Failure to adequately police money laundering could violate federal laws about money laundering, illicit transmission and possibly bank fraud, former federal prosecutors said. The CFTC and Justice Department have prosecuted firms—including crypto exchanges BitMEX and Binance—for violating such laws, and some fines have extended into the hundreds of millions of dollars. Polymarket is subject to less stringent anti-money-laundering regulations.

Polymarket US’s chief compliance officer, Andrew Clifford, resigned in April after sending a lengthy report with an overview of some of the fraud issues to company executives, according to people familiar with the report. Both Clifford and Polymarket declined to comment about his departure.

Around that time, Polymarket closed a $1 billion investment round that valued the company at nearly $15 billion. Investors included Trump Jr.’s 1789 Capital.

Soon after, Polymarket fired the U.S. division’s CEO, Justin Hertzberg, and its heads of U.S. regulation and anti-money-laundering left. Hertzberg didn’t respond to requests for comment. An investigation by the law firm Sullivan & Cromwell concluded the company had complied with regulations, according to people familiar with the findings.

By May, Polymarket had brought fraud rates back to the industry norm, a person familiar with the matter said, in part by limiting the number of debit cards users could link to their accounts. The company also retained a new antifraud contractor, Riskified.

Provocative new markets

Polymarket also has been trying to fix other problems stemming from the minimal testing it had done before rolling out new features. The company had often pushed untested updates to users, according to former employees. When engineers objected, saying they should focus on fixing existing platform issues, Coplan sometimes told them to build them with AI instead, former employees said.

A New York man said he found $950 was missing from his account after the app crashed in July. A California woman said she hasn’t been able to withdraw $1,500 from her account. A 22-year-old in Massachusetts reported having his account locked and not hearing back after dozens of attempts to reach Polymarket employees. Weeks went by without them hearing from the company.

Polymarket has reimbursed some customers who suffered losses, while others have worked with their banks to reverse unauthorized charges, said a person familiar with the matter. Recently, it has improved its code-review practices and hired more engineers.

Coplan has pushed employees to create provocative new markets. In text messages reviewed by the Journal, he suggested markets on “How many times does kanye say Jew on X this week” and “Elon calls someone new a retard.” (Those markets were never listed.) In June, the company filed a trademark application for “create your own market,” a step toward what former employees say is one of Coplan’s long-desired growth plays—to let people list markets on whatever interests them.

Letting users create their own markets could introduce new opportunities for market manipulation, said Rajiv Sethi, a Barnard College economics professor who has studied prediction markets.

Coplan’s push to make Polymarket a household name led to expensive deals with A-list celebrities and sports stars, including LeBron James and a $300 million deal with Major League Baseball.

James’s team told a prediction-market competitor that Polymarket had offered him $20 million a year, plus $50 million in equity, according to a person familiar with the talks. The final terms of the deal with Polymarket couldn’t be learned. James doesn’t currently have an equity stake in Polymarket, a person familiar with the matter said.

Last fall, Polymarket was in talks with the musician Drake about an agreement in the tens of millions of dollars, according to people familiar with the talks.

Spokespeople for Polymarket and Drake said the parties didn’t sign a deal. The musician subsequently name-dropped both Polymarket and Coplan in his album “Iceman.” Coplan attended Drake’s private album-release party at a castlelike mansion in Toronto.

In late April, Polymarket opened a market on whether Drake would say “Polymarket” on the album, one of many markets it launched related to that album. A single trader, whose account was created shortly before the album dropped and bet only on album-related markets, cashed out $7,800 in bets that he would. Hours before the album release, Drake’s team played it for Polymarket employees, who heard the mention of the company and deleted the market out of concern that it presented an insider-trading risk, according to data reviewed by the Journal and a person familiar with the matter.

While brand partnerships can be hard to precisely value, Coplan seemed uninterested in analyzing whether the deals would pay off, said a person involved with the deals, focusing instead on locking up partnerships. When employees questioned whether Polymarket had paid too much for a deal, the person recalled Coplan responding, “I don’t give a f—.”

Some senior employees at Intercontinental Exchange, Polymarket’s largest investor, said in interviews they are worried that the prediction company has made strategic errors. The Journal’s reporting in June that Polymarket was paying influencers to promote videos of fake trades—and target U.S. users with advertisements of its offshore platform—raised alarm bells at ICE and other investors concerned about federal advertising laws barring deceptive marketing and Polymarket’s agreement with the CFTC not to offer its offshore platform to U.S. traders, according to people familiar with the matter.

At the end of July, ICE disclosed in its quarterly financial report that its $1.6 billion stake in Polymarket amounted to 22% of shares outstanding of the company.

Another attack

In late July, nearly 500 Polymarket users were victims of another fraud attack that appeared to exploit an engineering flaw. If a malicious actor attempted to create a new account using an existing trader’s personal information, such a stolen Social Security number, the hacker would immediately gain access to the trader’s existing Polymarket account—and any of their linked bank accounts and debit cards—without needing to know a password or username, according to a person familiar with the matter, who said the amount of money stolen was small.

A Polymarket spokeswoman said that the company would cover any lost funds.

In interviews with the Journal and posts on the messaging app Discord, users described losing thousands of dollars. They said weeks of messages to Polymarket customer support went unanswered, though a Polymarket employee wrote on Discord in July that the engineering team was working on fixes to user issues.

Dane Collins, 26, said he started using Polymarket US in May to bet on the World Cup, after rival Kalshi was blocked by a court order from offering sports markets in Michigan, where he lives. In July, he logged in to see that his bets had been sold and $5,783.51 in gains withdrawn to a debit card he didn’t possess.

Without explanation, Polymarket credited his account $25. Collins said he has filed reports to his local police, the FBI and the CFTC. “Polymarket US was silent for weeks and weeks,” he said. Polymarket US’s support has since placed Collins’s account on hold after he submitted verification information twice. They have not mentioned the missing funds.

# Midterm elections

## A slim chance

### How House Republicans might fend off defeat

IN THE AGE of Donald Trump, beware of sure things. Democrats are favourites to take back the House of Representatives on November 3rd. Opposition parties have historically done well in midterms, and Mr Trump’s unpopularity, persistent inflation and the Iran war have created a particularly poisonous environment for Republicans. *The Economist’s* election forecast model rates Democrats’ chances at 92%, and prediction markets are nearly as confident.

Yet events predicted to occur only one time out of ten do nonetheless occur, and Mr Trump and his MAGA faithful have outperformed polls often enough since 2016 to give pause. By what path could Republicans defy the odds and hold the House?

All 435 districts are up for re-election, with Democrats needing a net gain of just three seats to win the chamber. But a burst of gerrymandering has made that harder. Conventionally, states redraw their districts once a decade, after a census, but Mr Trump urged Republican-led states to gerrymander ahead of the midterms.

Despite Democratic countermoves, the president’s push has succeeded, with redistricting adding around eight seats to the Republicans’ total, according to our model. (They would have secured nine, if the Supreme Court had not blocked their proposal for a new map in Missouri on September 10th.) Without this gambit, protecting the House would look nigh-on impossible. “If we hold the House it’s going to be because of the mid-decade redistricting,” says Jason Roe, a strategist working for Tom Barrett, a Republican congressman in a tight race in Michigan. “I didn’t agree with it, but it created a result.”

This rush of redistricting—after decades of gerrymandering and Americans’ habit of moving near like-minded voters—means that just 5-10% of House seats are competitive. A few factors may swing in Republicans’ favour. The first is polling error. When pollsters ask voters which party’s candidate they would support, if the election were held today, Democrats lead by an average of 6.7 points. If a margin that big materialises on election day, Democrats will take the House comfortably. But even assuming no big shift in those numbers by November, a polling error similar to the one in 2020, when the congressional vote for Democrats came in about five points lower than in late generic polls, would make Republicans heavy favourites to win the House.

Factors that are always important—turnout, the quality of candidates and a surge in negative advertising—would then figure even more significantly. Consider the toss-up races in Pennsylvania, a battleground state that broke Democrats’ hearts in 2024. In the swingy 8th House district, in the north-east of the state, Mr Trump won the presidential vote by 8.5 points in 2024. Rob Bresnahan, the Republican who flipped the House seat that year, won by just 1.5 points. Two years earlier, Josh Shapiro, the state’s moderate Democratic governor, won the district by ten points.

What explains this particular electorate’s swings? “I think people vote more for the person than the party,” says Paige Cognetti, the mayor of Scranton, the district’s largest city, who is running to take back Mr Bresnahan’s seat. Ms Cognetti entered politics as an anti-corruption campaigner. On the stump, she points out that Mr Bresnahan made more than 600 stock trades in 2025 and may have profited from inside information. Mr Bresnahan denies wrongdoing. Ms Cognetti sees a link between her message and Mr Trump’s original pitch to “drain the swamp”. She understands “why they have wanted to send somebody to Washington to clean things up”.

At minus 25 points, Mr Trump’s net approval rating is so low, and his insistence on being the election’s main character so loud, that he exerts a heavy drag on vulnerable incumbents like Mr Bresnahan. In Pennsylvania’s closely fought 10th district, Scott Perry, the Republican office-holder, is a member of the right-wing House Freedom Caucus who “can’t hide” from Mr Trump, says Christopher Borick, a political scientist at Lehigh University. “I don’t know that he even wants to hide.” With no alternative, Republicans have bet on mobilising Mr Trump’s still-enthusiastic base, painting Democrats as extremists. It would help if Mr Trump’s broader popularity improves. This is conceivable if, for instance, the war with Iran ends.

A Democratic campaign strategist in Pennsylvania, J.J. Abbott, recalls watching with dismay in 2024 as Mr Trump’s polling in battleground states ticked up steadily as the election neared. “That’s one lesson for Democrats: they should not assume his numbers can’t move in a positive direction,” he says. Republican chances to hold the chamber are at 10% and not 1% for plausible reasons. And Americans have seen Mr Trump’s Houdini act before.

# South Africa

## How to avoid becoming a mobster state

### The mafias that threaten South Africa can be beaten, given political will

ORGANISED CRIME is “the most immediate threat” to South Africa’s democracy, society and economy, says Cyril Ramaphosa, the president. Business leaders say it worries them more than any other issue, even power cuts. Over the past year, a public inquiry has revealed staggering collusion between gangs, officials and senior police (see Middle East & Africa section). By one estimate, South Africa is the seventh-most vulnerable country in the world to mafia predation. Only Congo, Myanmar and a few Latin American states do worse.

South Africa has long had a reputation for violent crime. It has also been a hub for trafficking drugs, people and endangered wildlife. But a number of trends have made a grim situation grimmer. One is the growth of illicit forms of business that are normally legal. Most cigarettes sold in South Africa are bootlegged, as are huge volumes of booze and petrol; and illegal mining knocked 0.8% off recorded GDP in 2024. Another is the rise of extortion mafias, which demand cash for not sabotaging building projects, setting fire to buses or murdering teachers. A third trend is that gangs have infiltrated the state, like the bloodsucking ticks that give bush hikers a fever.

The good news is that South Africa is fighting back. It has independent courts, a lively civil society, punchy media and voters who are utterly sick of crime. Mr Ramaphosa, who came to power promising to clean up after a gangster-coddling predecessor, Jacob Zuma, wants to leave a decent legacy. So the country has a chance to avoid mafia-state status.

Evidence from elsewhere suggests that it pays to attack criminal structures from the top. That means sacking tainted prosecutors and senior cops, while targeting criminal kingpins. In the past year or so the police minister, the head and deputy head of the police and the bosses of two elite units that supposedly tackle organised crime have all been removed. That purge should gather pace. Officials who still have their jobs must disclose their finances to show they have no links to gangs, or resign. Cities with a record of clean governance, such as Cape Town, should be allowed more policing powers. Reformers should study Nuevo León, a Mexican state that built a new police force from scratch, replacing one infiltrated by drug gangs; and “Hidden Carbon”, a Brazilian operation to bust money-laundering networks (see Americas section).

Prosecutors should focus on putting the worst bosses away. They can build on past successes. South Africa’s once-sick tax authority has recovered under Mr Ramaphosa. In the 2000s an elite crime-busting unit known as “the Scorpions” collared syndicate bosses and helped convict senior officials over an iffy arms deal. Prosecutors should draw on financial and technical help from the private sector.

## A sting in the tale

South Africa could also do with an independent gangbusting agency. It would need protection from political interference to avoid the fate of the Scorpions, who were disbanded after investigating Mr Zuma and his friends, or of CICIG, a popular UN-backed body that probed organised crime in Guatemala but was shut down by President Jimmy Morales. One option would be to give such an agency constitutional protection, so that only a parliamentary supermajority could abolish it.

The biggest obstacle to beating South Africa’s gangsters is that too many politicians are in cahoots with them, steering dodgy public contracts their way, pocketing kickbacks and borrowing their muscle to settle political disputes. Mr Ramaphosa must find ways to take on influential but dirty actors inside his own party, the ruling African National Congress. Since he rarely acts decisively unless he must, CEOs and the leaders of other parties in the coalition government should press him to do so before he gives up the party leadership.

If he fails, calamity beckons. Nearly 75% of South Africans say they would favour a strongman leader who could provide jobs and cut crime. They may be tempted to elect someone like Nayib Bukele, the gangbusting autocrat of El Salvador, who has locked up tens of thousands of suspects without proper trials. South Africa needs something better: the rule of law.