A Prediction Market Participant Profited $436,000 from Bets Predicting Venezuela's Political Shift.
A trader earned a substantial sum from wagers on the downfall of the Venezuelan leader just before it was publicly declared, leading to inquiries about whether someone profited from confidential information of the event.
Changing Odds in Predictions
Predictions made on the forecasting site, an online prediction market, that the leader would be no longer in control by the month's conclusion rose in the time leading up to President Donald Trump announced on January 3rd that the Venezuelan leader had been taken into custody.
A particular user, which became a member recently and placed four wagers, all on political events in Venezuela, made more than $nearly half a million from a starting bet of $32.5K.
Who placed the bet is a mystery. The user had only a cryptographic address for identification.
Odds Fluctuate Before Announcement
Trading information shows that users assessed the probability of a political change at just 6.5% in the midday period of Friday, January 2nd.
Yet the market's assessment had climbed to 11% by late Friday night and skyrocketed in the first hours of January 3rd, suggesting a sudden change in positions immediately prior to the social media post was made.
"That trade has all the characteristics of a transaction based on inside information," commented a financial reform advocate.
A small number of other individuals also profited large payouts from predicting the capture.
Political Attention Grows
Elected officials are growing concerned.
Proposed legislation put forward on Monday seeks to ban public officials from placing bets on forecasting platforms if they have "confidential government knowledge" related to a bet.
The Prediction Market Landscape
Prediction markets have surged in popularity in the United States, with users able to bet on everything from sports outcomes to politics.
The industry faced scrutiny under the previous administration. But it has received a warmer welcome during the present political climate.
Trading on insider information is against the law in the stock market, but there are less oversight in the event betting space.
A spokesperson for a competing service said their site "explicitly prohibits trading on insider information of any form."
