A Prediction Market User Profited $436,000 on Wagers on Venezuela's Political Shift.
A bettor made nearly half a million dollars from wagers on the downfall of Nicolás Maduro shortly prior to it was made public, raising questions about the possibility of profiting from non-public details of American actions.
Sudden Shift in Wagers
Predictions made on the forecasting site, an online prediction market, that the Venezuelan president would be out of power by the end of January surged in the time leading up to former President Trump announced on January 3rd that the president had been seized.
One account, which registered on the site recently and placed four wagers, all on the Venezuelan situation, earned over $436K from a initial bet of $32.5K.
Who placed the bet is a mystery. This unidentified trader had only a string of letters and numbers for identification.
Probability Spikes Before Announcement
Trading information shows that participants assessed the probability of a political change at just under 7% in the afternoon of Friday, January 2nd.
However the odds had jumped to 11% by shortly before midnight and surged in the first hours of January 3rd, pointing to a sharp shift in betting activity right before the public announcement was made.
"That trade has all the characteristics of a transaction based on confidential knowledge," said Dennis Kelleher.
A small number of other individuals also made significant sums from bets on the same outcome.
Political Attention Grows
Some lawmakers are beginning to pay attention.
A bill introduced on the start of the week seeks to ban public officials from participating on prediction markets if they have "material nonpublic information" related to a market.
Industry Context
Forecasting platforms have grown significantly in the United States, with participants able to wager on everything from sports to politics.
The industry faced scrutiny under the previous administration. But it has experienced less resistance during the present political climate.
Trading on insider information is against the law in the traditional financial markets, but there are more ambiguous rules in the event betting industry.
An official representative for another major platform said their site "strictly forbids such activities of any form."
