A Prediction Market Participant Profited $Nearly Half a Million from Bets Predicting Venezuela's Political Shift.
A trader earned a substantial sum by predicting the removal of Venezuela's president just before it was officially announced, raising questions about potential gains made from non-public details of American actions.
Changing Odds in Forecasts
Predictions made on the forecasting site, an online prediction market, that the Venezuelan president would be no longer in control by the end of January increased in the period preceding former President Trump announced on January 3rd that the president had been taken into custody.
A single trader, which registered on the site recently and made four bets, all on Venezuela, profited a total of $nearly half a million from a starting bet of over $32,000.
Who placed the bet is a mystery. The anonymous account had only a string of letters and numbers for identification.
Odds Fluctuate Before Announcement
Trading information shows that traders assessed the probability of Maduro's exit at just under 7% in the midday period of Friday, January 2nd.
But the odds had climbed to over 10% by the end of the day and skyrocketed in the early hours of January 3rd, indicating a sharp shift in positions right before the official statement was made.
"That trade has all the signs of a transaction based on inside information," stated an industry expert.
A small number of other individuals also earned tens of thousands of dollars from similar wagers.
Regulatory Scrutiny Intensifies
Politicians are growing concerned.
Proposed legislation introduced on recently seeks to ban public officials from participating on prediction markets if they have "material nonpublic information" related to a market.
Industry Context
Event-driven betting sites have grown significantly in the past few years, with participants able to wager on everything from sports outcomes to current affairs.
The industry were examined under the previous administration. However it has found a more favorable environment during the present political climate.
Insider trading is against the law in the securities markets, but there are more ambiguous rules in the event betting arena.
A company executive for a competing service said their site "explicitly prohibits trading on insider information of any form."
