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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

#191

Post by scoofy »

sparky_z wrote: post #186
scoofy wrote: post #178

Earlier quoted context omitted.

> The result was not, and could never have been, known a priori. This is a level of solipsism not worth discussing. Yes, Superman could be a real person and we all had our minds altered to think he’s a superhero. Yes, when someone pulls the trigger of a gun pointed at someone’s head, it could misfire and explode in their hand. The point is that someone influencing prediction markets can push this probability to very,…

Which makes their information much more valuable than most people's.

>more valuable than most people's

Literally everyone can burn their neighbor's house down! Everyone has access to "valuable predictive information" when that information is being created by the person making the bet.

Get the last word in if you must. We're going in circles.

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

#192

Post by tshaddox »

ordinaryradical wrote: post #70
tshaddox wrote: post #7

Earlier quoted context omitted.

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 yo…

I'm aware of the assassination market concept, but there's nothing particularly unique about prediction markets. Nearly any conceivable market can be influenced by someone willing to commit violent crime. That obviously includes many normal securities markets.

Legal systems certainly should restrict markets where the incentivize is sufficiently direct (e.g. actual date of death prediction markets). There's a blurry line between what constitutes a sufficiently direct incentive, sure, but there are lots of blurry lines when it comes to legal systems.

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

#194

Post by sadeshmukh »

ralph84 wrote: post #88
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.

Even without insider trading it's a negative-sum game. Every dollar won is a dollar lost, and the platform takes a cut. Like all negative-sum games you should only participate if it's purely for entertainment or you have a clearly definable edge over the other players. If you can't spot the sucker, you are the sucker.

To be clear, Polymarket has no fees on markets, only 15-minute crypto markets. That's probably temporary, but makes it a zero sum game at present.

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

#195

Post by sparky_z »

scoofy wrote: post #191
sparky_z wrote: post #186

Earlier quoted context omitted.

Which makes their information much more valuable than most people's.

>more valuable than most people's Literally everyone can burn their neighbor's house down! Everyone has access to "valuable predictive information" when that information is being created by the person making the bet. Get the last word in if you must. We're going in circles.

OK, I see now that you're specifically referring to the case where someone places a bet and then actively goes out and causes the event to happen themselves. I was specifically replying to the people who were saying it was unfair for insiders to profit on the information they already possess.

I agree, I can see how that's a potential edge case, though I don't think it's as likely to happen in practice as you do. Certainly, anybody who commits a crime to cause a payout should be barred from receiving that payout, though you can tell a plausible story where someone manages to conceal it. I also really really doubt that that's what happened in this particular case.

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

#196

Post by bjackman »

thaumasiotes wrote: post #112
tlb wrote: post #104

Earlier quoted context omitted.

Given that inside information makes prediction markets more accurate, why do you believe it doesn't make stock markets more accurate? If, say, Enron insiders could've shorted their own stock, that would have improved accuracy and thereby diverted more funding to more productive enterprises. I guess there could be second-order effects when insiders can actually change the outcome, which is why athletes aren't allowed…

> Given that inside information makes prediction markets more accurate, why do you believe it doesn't make stock markets more accurate? He didn't say that it doesn't. It obviously does make stock markets more accurate. But it tends to drive down the total amount of money available to be invested in stocks, which is compatible with the claim that it makes the market worse at funding productive enterprises.

Yeah exactly. Allowing insider trading makes adverse selection too high.

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

#197

Post by watwut »

JasonADrury wrote: post #182
watwut wrote: post #103

Earlier quoted context omitted.

I think it genuinely does not matter whether it is legal or not. No one will prosecute them. Legal system was berarely capable of prosecuting rich people crimes and generally unwilling to do so. And the capable parts were dismantled last year. It would take years to rebuild them. And even if they do by some miracle, next republican president will issue pardons like Trump did. This sort of activity is illegal only in…

At least in the US, you are highly likely to be prosecuted if you engage in any profitable insider trading. Those patterns get automatically flagged and you will be investigated.

Insider trading was notoriously difficult to prosecute even when the law trying. It involves a lot of grey areas and is not something you can just easily automatically flag. We kind of know it is going on, because people in positions to have insider information are disproportionally "winning" those bets, but that all that goes about it.

And current administration removed people and groups capable to handle difficult convoluted white collar cases, so the best bet is that law enforcement will ignore these and will go only after simple low level frauds - because that is all they are competent to do now.

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

#198

Post by JasonADrury »

watwut wrote: post #197
JasonADrury wrote: post #182

Earlier quoted context omitted.

At least in the US, you are highly likely to be prosecuted if you engage in any profitable insider trading. Those patterns get automatically flagged and you will be investigated.

Insider trading was notoriously difficult to prosecute even when the law trying. It involves a lot of grey areas and is not something you can just easily automatically flag. We kind of know it is going on, because people in positions to have insider information are disproportionally "winning" those bets, but that all that goes about it. And current administration removed people and groups capable to handle difficult…

I don't think this is true. A lot of crime happens, most criminals don't get caught.

> It involves a lot of grey areas and is not something you can just easily automatically flag.

Successful, high confidence trades by traders who do not make them frequently are trivial to detect statistically. There exist automated systems which detect this. It's extremely difficult to make highly profitable trades based on insider information without making abnormally confident trades.

I suppose a big fund that frequently makes high confidence bets based on legitimate, deep, research could theoretically hide such activity, but I don't see that as a ver realistic option.

>so the best bet is that law enforcement will ignore these and will go only after simple low level frauds - because that is all they are competent to do now.

Insider trading is often one of the simplest white collar crimes to pursue, and it's just good PR because the public always likes it when the feds are going after rich corporate types.

The reason it's so simple is because you can automatically get a very high-confidence list of targets who are likely engaged in insider trading, it's also feasible to link many of the traders to insiders in an automated manner using tools like accurint. Even doing this manually makes your life really easy, you start by doing things like checking who each of these individuals follows on social media.

A very sophisticated operation could hide this better, but any highly lucrative trades will fundamentally stand out. Any particularly profitable insider trading will be detected and eventually investigated.

>We kind of know it is going on, because people in positions to have insider information are disproportionally "winning" those bets, but that all that goes about it.

This sentence kind of suggests to me that you might be thinking of some atypical case of insider trading, perhaps involving politicians rather than corporate insiders?

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

#199

Post by kurtis_reed »

stingraycharles wrote: post #79
kurtis_reed wrote: post #48

Earlier quoted context omitted.

No, markets are evaluated on accuracy, not calibration

Noob question from me: what’s the difference between accuracy and calibration? A well calibrated market would be more accurate and vice versa, not? Edit: just found the answer myself: “accuracy measures the percentage of correct predictions out of total predictions, while calibration assesses whether a prediction market's assigned probabilities align with the actual observed frequency of those outcomes”

Suppose there are 1000 events and 500 will have outcome A and 500 will have outcome B. If you predict a 50% chance of A for every event you'll be perfectly calibrated. On the other hand, if you predict a 90% chance of a certain outcome and you're right for 800 events, you're not perfectly calibrated but you have a lower Brier score (lower is better).

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

#200

Post by watwut »

JasonADrury wrote: post #198
watwut wrote: post #197

Earlier quoted context omitted.

Insider trading was notoriously difficult to prosecute even when the law trying. It involves a lot of grey areas and is not something you can just easily automatically flag. We kind of know it is going on, because people in positions to have insider information are disproportionally "winning" those bets, but that all that goes about it. And current administration removed people and groups capable to handle difficult…

I don't think this is true. A lot of crime happens, most criminals don't get caught. > It involves a lot of grey areas and is not something you can just easily automatically flag. Successful, high confidence trades by traders who do not make them frequently are trivial to detect statistically. There exist automated systems which detect this. It's extremely difficult to make highly profitable trades based on insider i…

What you are saying is that it is possible to catch the most blatant and frequent inside traders. Insider information does not have to be "frequent" to be profitable "insider information" situation.

Which is specifically unlikely to cover senate people or even most people having access to inside information in this or that special circumstances.

> This sentence kind of suggests to me that you might be thinking of some atypical case of insider trading, perhaps involving politicians rather than corporate insiders?

The OP specified "members of the US Congress" as his group of interest. However, I think that yours "it is atypical to be engaged in insider trading that does not involve high frequency of trades" is just incorrect.

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