An Prediction Market User Profited $Nearly Half a Million from Wagers on Maduro's Downfall.
A bettor profited close to $500,000 on the ouster of the Venezuelan leader just before it was officially announced, raising questions about the possibility of profiting from non-public details of American actions.
Changing Odds in Forecasts
Predictions made on the forecasting site, an online prediction market, that the leader would be no longer in control by the close of the month rose in the hours before President Donald Trump announced on January 3rd that Maduro had been apprehended.
A particular user, which registered on the site last month and took four positions, all on political events in Venezuela, profited a total of $436K from a modest bet of $32.5K.
Who placed the bet is a mystery. The anonymous account had only a cryptographic address for identification.
Odds Fluctuate Before Public Statement
Trading information shows that users estimated the likelihood of Maduro's exit at just 6.5% in the midday period of Friday, January 2nd.
However these probabilities had jumped to over 10% by shortly before midnight and skyrocketed in the early hours of the next day, indicating a sudden change in betting activity immediately prior to the public announcement was made.
"That trade has all the hallmarks of a trade based on confidential knowledge," said a financial reform advocate.
Several of other individuals also earned tens of thousands of dollars from predicting the capture.
Regulatory Scrutiny Emerges
Elected officials are beginning to pay attention.
A bill presented on the start of the week aims to prohibit public officials from participating on prediction markets if they have "confidential government knowledge" related to a market.
Market Background
Prediction markets have become increasingly popular in recent years, with participants able to predict everything from sports to politics.
This sector encountered regulatory challenges under the last presidential term. Yet it has found a more favorable environment during the present political climate.
Insider trading is against the law in the traditional financial markets, but there are fewer regulations in the forecasting industry.
A spokesperson for a competing service said their site "explicitly prohibits trading on insider information of any form."
