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A prediction market user made $436k betting on Maduro's downfall

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Re: A prediction market user made $436k betting on Maduro's downfall

#61

Post by tptacek »

giarc wrote: post #60
tptacek wrote: post #53

Earlier quoted context omitted.

The idea is that people have all sorts of fragmentary information about future events that they can't directly reveal, due to confidentiality or trade obligations (among other things), and that a prediction market effectively liberates the directional content of that information by converting it into prices. Robin Hanson can credibly claim to have invented prediction markets as we understand them today.

"that a prediction market effectively liberates the directional content of that information by converting it into prices." I can see this, and I guess maybe my issue is with the phrasing of "aggregating" insider information. Because you aren't just aggregating insider info, you are also aggregating non-insider information, but no one (but the insider) knows what is right. Is there different types of prediction market…

I would argue that a "market" in whether it will rain on Saturday isn't really a prediction market, or even a market, at all. It's just a bookmaking operation. The core function of any market, in anything, is price discovery.

What's the difference between a "Monday it will rain" market and a NCAAF prop bet on a team's rushing yards? I could argue that DraftKings prop bets are actually more like prediction markets than these "will it rain" bets. People actually do have directional information to contribute to sports propositions!

(I think online sports betting is evil.)

Re: A prediction market user made $436k betting on Maduro's downfall

#62

Post by paxys »

mothballed wrote: post #56
paxys wrote: post #43

Earlier quoted context omitted.

Let's not forget > Donald Trump Jr, the president's son, serves in advisory roles at Kalshi and Polymarket.

Absolutely possible but if you were the presidents son I do think you'd be more likely to slowly buy in over 1+ weeks. If you were media related you'd want to do a giant bet before anybody else as you know lots of other people know and it's only a matter of time when someone else exploits it, and you only know slightly ahead of time. When you have insider information it's typically most profitable or at the very leas…

1. The odds are better the closer it gets to the bet's expiry. "Maduro will be ousted sometime in the next few weeks" has a relatively high probability, so a low payout. "Maduro will be ousted in the next few hours" is a jackpot.

2. Operations like these aren't set in stone weeks in advance. There may be general planning, but the exact hour is only decided at the last moment.

Re: A prediction market user made $436k betting on Maduro's downfall

#63

Post by bulbar »

paxys wrote: post #43
mothballed wrote: post #36

Earlier quoted context omitted.

It's my understanding a couple news agencies knew before everyone else but held off publishing. Seems like a good opportunity for nephew of someone in the media if not directly one of an official. https://www.thewrap.com/media-platforms/journalism/nyt-wapo-...

Let's not forget > Donald Trump Jr, the president's son, serves in advisory roles at Kalshi and Polymarket.

I believe there are way better opportunities than making 400k with a bet on an app. Could have been for fun though.

Re: A prediction market user made $436k betting on Maduro's downfall

#64

Post by bulbar »

elil17 wrote: post #14

How long before the government intentionally does something stupid so that a Prediction Market pays off? Probably won't happen actually, since they can just do blatant insider trading on the stock market instead.

Additionally, they can leverage crypto which is much less regulated and has already been publicly exploited for personal benefit by Musk and Trump.

But you don't become a Billionaire by having a risk averse "well, that's enough" mindset.

I would think the biggest question is if it's worth exploiting poly market. Getting 400k out of such an event sounds as peanuts and I am not so sure that scales to 4m+.

Re: A prediction market user made $436k betting on Maduro's downfall

#65

Post by paxys »

tptacek wrote: post #23
giarc wrote: post #19

Earlier quoted context omitted.

How? Then why would non-insiders bet? The classic prediction market is guessing the weight of an elephant (or some animal) at a circus. The average guess of the crowd will actually get very close. But if someone knows the actual weight, no one would play.

The entire idea of a prediction market is to aggregate insider information. If you don't have insiders, you're not doing predictions, you're just doing gambling. Granted: that's what almost every Polymarket user is actually doing. But that's a bad thing . The insider whales are the only ones actually using it for its intended purpose.

No, the entire point is gambling. Yes there is insider trading mixed in as well, but the vast majority of events these markets are pushing and people are betting on don't have "insiders" at all. Sports, election winners, Bitcoin/stock/commodity prices, weather forecasts, movie box office receipts. None of this is about insider information, just pure gambling.

Re: A prediction market user made $436k betting on Maduro's downfall

#66

Post by bulbar »

exogeny wrote: post #11

Insider trading is a feature, not a bug, say Shayne and Tarek, stupidly. You can't have this amount of obvious manipulation and expect the average retail consumer to join. Same reason why there hasn't been mass consumer adoption of crypto. People just don't feel safe.

There has been virtually no adoption at all regarding crypto, except for being a financial product and in that regard it has already been adopted by people.

The average consumer is easily manipulated so there's not really a contradiction.

Re: A prediction market user made $436k betting on Maduro's downfall

#67

Post by tptacek »

paxys wrote: post #65
tptacek wrote: post #23

Earlier quoted context omitted.

The entire idea of a prediction market is to aggregate insider information. If you don't have insiders, you're not doing predictions, you're just doing gambling. Granted: that's what almost every Polymarket user is actually doing. But that's a bad thing . The insider whales are the only ones actually using it for its intended purpose.

No, the entire point is gambling. Yes there is insider trading mixed in as well, but the vast majority of events these markets are pushing and people are betting on don't have "insiders" at all. Sports, election winners, Bitcoin/stock/commodity prices, weather forecasts, movie box office receipts. None of this is about insider information, just pure gambling.

The real point of Polymarket is gambling, we agree. I'd extend that argument to every prediction market that is open to all comers in which people can meaningfully gamble. But that's not the original concept of a prediction market. I'm not here to defend Kalshi and Polymarket, both of which I think are pretty evil.

Re: A prediction market user made $436k betting on Maduro's downfall

#68

Post by dpkirchner »

mothballed wrote: post #36
paxys wrote: post #34

Just a casual $32,537 bet a few hours before the secret operation. Nothing to see here.

It's my understanding a couple news agencies knew before everyone else but held off publishing. Seems like a good opportunity for nephew of someone in the media if not directly one of an official. https://www.thewrap.com/media-platforms/journalism/nyt-wapo-...

Trump himself said that he informed oil companies beforehand, so it really could be just about anyone.

https://www.newsweek.com/donald-trump-oil-companies-venezuel...

However his mind is so far gone it's hard to be sure he actually knows what he's saying.

Re: A prediction market user made $436k betting on Maduro's downfall

#69

Post by bulbar »

tshaddox wrote: post #7
colesantiago wrote: post #2

Insider trading is legal. Crime is legal. You shouldn't be surprised though, name any market, all markets are full of manipulation and insiders.

To be fair, insider trading for a prediction market doesn’t really seem like a bad thing. It’s arguably the entire point (to incentivize the aggregation of all relevant information on the topic) and, unlike securities markets, there’s no equivalent of “but it’s unfair to normal traders using the markets as investments.”

Does happen any other aggregation than taking the average though? The whole point of this is that the average believe is not an accurate representation of reality.

Re: A prediction market user made $436k betting on Maduro's downfall

#70

Post by ordinaryradical »

tshaddox wrote: post #7
colesantiago wrote: post #2

Insider trading is legal. Crime is legal. You shouldn't be surprised though, name any market, all markets are full of manipulation and insiders.

To be fair, insider trading for a prediction market doesn’t really seem like a bad thing. It’s arguably the entire point (to incentivize the aggregation of all relevant information on the topic) and, unlike securities markets, there’s no equivalent of “but it’s unfair to normal traders using the markets as investments.”

The problem with prediction markets is not purely insiders but that they interface with the real world, so they encourage bettors not just to predict an outcome but to bring it into being.

You are a poorly paid Russian commander. You open an account on polymarket or Kalshi and place a bet about specific Russian troop movements, perhaps ones that would be disastrous to your war effort even, to up the leverage. When you’ve accumulated a sufficient position, you order the troops to be moved, perhaps even out of accord with orders from above. Your front collapses, your soldiers are routed, and you get rich.

These markets are dangerous. We will learn this lesson eventually.

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