A Prediction Market Trader Profited $Nearly Half a Million from Wagers Predicting Venezuela's Political Shift.
A bettor made nearly half a million dollars on the ouster of the Venezuelan leader just before it was officially announced, sparking debate about the possibility of profiting from non-public details of the US operation.
Market Movement in Wagers
Bets placed on the crypto-platform, a blockchain-based service, that Nicolás Maduro would be no longer in control by the end of January rose in the period preceding Donald Trump announced on January 3rd that the president had been taken into custody.
A single trader, which registered on the site in December and took four positions, all on the Venezuelan situation, profited a total of $436,000 from a modest bet of over $32,000.
It remains unclear. This unidentified trader had only a cryptographic address for identification.
Odds Fluctuate Before Public Statement
Platform data shows that traders put the odds of a political change at just a low 6.5 percent in the midday period of the Friday before the event.
Yet the market's assessment had climbed to 11% by late Friday night and skyrocketed in the morning of the next day, indicating a sharp shift in positions immediately prior to the official statement was made.
"This particular bet has all the characteristics of a bet based on inside information," commented Dennis Kelleher.
A small number of other traders also made significant sums from similar wagers.
Political Attention Grows
Politicians are starting to take note.
Proposed legislation introduced on recently seeks to ban public officials from placing bets on forecasting platforms if they have "material nonpublic information" related to a bet.
The Prediction Market Landscape
Prediction markets have become increasingly popular in the United States, with traders able to wager on everything from sports outcomes to political events.
Prediction markets encountered regulatory challenges under the last presidential term. Yet it has found a more favorable environment during the present political climate.
Insider trading is illegal in the traditional financial markets, but there are fewer regulations in the event betting arena.
A company executive for another major platform said their site "explicitly prohibits such activities of any form."
