An Prediction Market User Earned $436,000 from Wagers Predicting Venezuela's Political Shift.
A bettor profited close to $500,000 on the ouster of the Venezuelan leader just before it was made public, sparking debate about the possibility of profiting from non-public details of the event.
Market Movement in Wagers
Predictions made on the forecasting site, a crypto-powered platform, that the leader would be no longer in control by the close of the month surged in the hours before President Donald Trump declared on the weekend that the Venezuelan leader had been seized.
One account, which joined the platform in December and made four bets, all on Venezuela, made more than $436K from a modest bet of $32,537.
The identity is unknown. The user had only a string of letters and numbers for identification.
Market Signals Before News Break
Trading information shows that participants assessed the probability of Maduro's exit at just under 7% in the late afternoon of the Friday before the event.
However the market's assessment had climbed to 11% by late Friday night and surged in the morning of January 3rd, indicating a rapid movement in positions right before the official statement was made.
"That trade has all the signs of a transaction based on non-public details," stated Dennis Kelleher.
A handful of other traders also made significant sums from bets on the same outcome.
Legal Questions Emerges
Elected officials are beginning to pay attention.
A bill presented on Monday aims to prohibit public officials from making trades on prediction markets if they have "material nonpublic information" related to a bet.
The Prediction Market Landscape
Forecasting platforms have become increasingly popular in recent years, with users able to predict everything from elections to politics.
Prediction markets were examined under the previous administration. But it has found a more favorable environment during the current presidency.
Insider trading is against the law in the stock market, but there are fewer regulations in the forecasting industry.
A company executive for a competing service said their site "has clear rules against insider trading of any form."
