An Prediction Market User Earned $436,000 from Wagers Predicting Venezuela's Political Shift.
A bettor made nearly half a million dollars by predicting the removal of the Venezuelan leader just before it was made public, raising questions 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 end of January increased in the period preceding Donald Trump announced on Saturday that the president had been seized.
A particular user, which registered on the site in December and placed four wagers, all on political events in Venezuela, profited a total of $436K from a initial bet of $32.5K.
The identity is unknown. This unidentified trader had only a blockchain identifier for identification.
Market Signals Before News Break
Platform data shows that participants put the odds of a political change at just under 7% in the afternoon of the Friday before the event.
Yet the market's assessment had increased to over 10% by late Friday night and spiked dramatically in the early hours of the next day, pointing to a sharp shift in betting activity just before the official statement was made.
"This specific wager has all the hallmarks of a trade based on non-public details," commented Dennis Kelleher.
A small number of other platform users also profited tens of thousands of dollars from similar wagers.
Legal Questions Grows
Some lawmakers are growing concerned.
A new rule 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 market.
Market Background
Event-driven betting sites have grown significantly in the United States, with users able to bet on everything from sports to political events.
This sector encountered regulatory challenges under the previous administration. But it has found a more favorable environment during the present political climate.
Trading on insider information is a crime in the stock market, but there are fewer regulations in the event betting industry.
A spokesperson for a competing service said their site "explicitly prohibits insider trading of any form."
