A Prediction Market Participant Earned $436K on Wagers Predicting Maduro's Downfall.
A trader made nearly half a million dollars by predicting the removal of Venezuela's president immediately preceding it was officially announced, leading to inquiries about the possibility of profiting from inside knowledge of the event.
Changing Odds in Forecasts
Bets placed on the crypto-platform, a blockchain-based service, that Nicolás Maduro would be no longer in control by the close of the month increased in the period preceding former President Trump announced on Saturday that Maduro had been apprehended.
A particular user, which registered on the site in December and made four bets, all on Venezuela, profited a total of $436K from a initial bet of $32.5K.
Who placed the bet is a mystery. This unidentified trader had only a blockchain identifier for identification.
Odds Fluctuate Before News Break
Trading information shows that traders put the odds of a political change at just a low 6.5 percent in the afternoon of the Friday before the event.
But these probabilities had increased to 11% by shortly before midnight and surged in the early hours of the next day, pointing to a sharp shift in market sentiment just before the public announcement was made.
"This particular bet has all the hallmarks of a trade based on inside information," commented Dennis Kelleher.
A handful of other traders also profited significant sums from bets on the same outcome.
Legal Questions Emerges
Politicians are starting to take note.
A bill put forward on the start of the week would prevent federal workers from making trades on prediction markets if they have "insider details" related to a bet.
Market Background
Event-driven betting sites have become increasingly popular in the past few years, with participants able to bet on everything from elections to political events.
This sector faced scrutiny under the last presidential term. Yet it has experienced less resistance during the Trump presidency.
Trading on insider information is against the law in the stock market, but there are less oversight in the forecasting industry.
An official representative for a competing service said their site "has clear rules against insider trading of any form."
