An Prediction Market Participant Made $436K from Wagers on the Ouster of Maduro.
A trader earned a substantial sum from wagers on the downfall of the Venezuelan leader just before it was officially announced, sparking debate about whether someone profited from confidential information of the US operation.
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 rose in the hours before former President Trump announced on Saturday that the president had been seized.
A particular user, which registered on the site in December and made four bets, all on political events in Venezuela, earned over $436K from a modest bet of $32.5K.
Who placed the bet is a mystery. The user had only a string of letters and numbers for identification.
Probability Spikes Before News Break
Market statistics shows that traders put the odds of a political change at just under 7% in the late afternoon of Friday, January 2nd.
However the odds had jumped to 11% by the end of the day and surged in the morning of Saturday, indicating a rapid movement in betting activity just before the official statement was made.
"That trade has all the characteristics of a transaction based on non-public details," commented Dennis Kelleher.
Several of other individuals also profited tens of thousands of dollars from similar wagers.
Regulatory Scrutiny Grows
Some lawmakers are beginning to pay attention.
A new rule presented on the start of the week would prevent government employees from participating on prediction markets if they have "material nonpublic information" related to a market.
Industry Context
Forecasting platforms have become increasingly popular in the past few years, with participants able to wager on everything from sports to politics.
This sector were examined under the last presidential term. However it has received a warmer welcome during the current presidency.
Using confidential knowledge is against the law in the securities markets, but there are less oversight in the prediction market space.
A company executive for another major platform said their site "explicitly prohibits such activities of any form."
