A Prediction Market Trader Earned $436,000 from Bets on Venezuela's Political Shift.
A trader profited close to $500,000 by predicting the removal of NicolĂĄs Maduro shortly prior to it was officially announced, leading to inquiries about whether someone profited from non-public details of the event.
Sudden Shift in Forecasts
Wagers on Polymarket, an online prediction market, that the leader would be no longer in control by the end of January increased in the hours before Donald Trump announced on the weekend that Maduro had been taken into custody.
A particular user, which became a member recently and took four positions, all on Venezuela, made more than $nearly half a million from a starting bet of $32.5K.
The identity is unknown. The user had only a string of letters and numbers for identification.
Market Signals Before News Break
Platform data shows that traders put the odds of the president's removal at just 6.5% in the afternoon of the Friday before the event.
But the odds had jumped to over 10% by late Friday night and spiked dramatically in the early hours of the next day, indicating a sudden change in betting activity just before the official statement was made.
"This particular bet has all the characteristics of a transaction based on confidential knowledge," commented Dennis Kelleher.
A small number of other traders also earned significant sums from bets on the same outcome.
Regulatory Scrutiny Emerges
Politicians are growing concerned.
Proposed legislation put forward on the start of the week would prevent government employees from placing bets on prediction markets if they have "material nonpublic information" related to a market.
The Prediction Market Landscape
Forecasting platforms have grown significantly in the past few years, with traders able to predict everything from elections to politics.
The industry faced scrutiny under the Biden administration. But it has received a warmer welcome during the Trump presidency.
Insider trading is a crime in the securities markets, but there are more ambiguous rules in the event betting industry.
A company executive for a competing service said their site "has clear rules against trading on insider information of any form."
