An Prediction Market Participant Made $436,000 on Wagers Predicting Venezuela's Political Shift.
An individual made nearly half a million dollars from wagers on the downfall of the Venezuelan leader immediately preceding it was made public, raising questions about the possibility of profiting from inside knowledge of the US operation.
Changing Odds in Predictions
Bets placed on the crypto-platform, a blockchain-based service, that Nicolás Maduro would be removed from office by the month's conclusion surged in the period preceding President Donald Trump declared on Saturday that the Venezuelan leader had been apprehended.
One account, which registered on the site recently and took four positions, all on the Venezuelan situation, profited a total of $436,000 from a initial bet of $32,537.
Who placed the bet is a mystery. The user had only a string of letters and numbers for identification.
Market Signals Before Public Statement
Market statistics shows that traders estimated the likelihood of a political change at just 6.5% in the midday period of the Friday before the event.
But the odds had climbed to over 10% by shortly before midnight and spiked dramatically in the early hours of Saturday, pointing to a sharp shift in market sentiment immediately prior to the public announcement was made.
"This particular bet has all the signs of a trade based on non-public details," said an industry expert.
A handful of other traders also made large payouts from similar wagers.
Regulatory Scrutiny Emerges
Some lawmakers are growing concerned.
A bill presented on the start of the week would prevent federal workers from participating on prediction markets if they have "material nonpublic information" related to a wager.
Market Background
Event-driven betting sites have grown significantly in the United States, with users able to bet on everything from elections to politics.
The industry faced scrutiny under the last presidential term. However it has experienced less resistance during the Trump presidency.
Using confidential knowledge is a crime in the securities markets, but there are fewer regulations in the prediction market arena.
An official representative for another major platform said their site "has clear rules against trading on insider information of any form."
