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Kalshi CEO expects US DOJ to prosecute insider trading cases

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Re: Kalshi CEO expects US DOJ to prosecute insider trading cases

#71

Post by Karrot_Kream »

tyre wrote: post #58
Traster wrote: post #49

Earlier quoted context omitted.

Even if you buy the idea that Kalshi is a prediction market whose mechanism is gambling but whose product is accurate predictions, you don't have to buy the idea that insider trading is a good thing. Yes, in the rare occasion there exists someone with (a) insider information (b) confidence their actions won't impact their insider position and (c) access to capital - then you get extremely accurate predictions. In eve…

> Since those who are predicting have to now construct their bets such that they know they can always get run over by an insider. The average person does not do this. People trade individual stocks all the time, despite every other market participant (banks, hedge funds, etc.) having better information and technology. It's why institutions like Citadel pay for retail order flow. They know that retail traders don't ha…

No but sophisticated traders will also get stomped by this. Just because you're a sharp oil trading shop doesn't mean you can combat an insider who knows when Brent is about to spike in price due to insider knowledge.

Re: Kalshi CEO expects US DOJ to prosecute insider trading cases

#72

Post by JohnMakin »

cortesoft wrote: post #57
jazzpush2 wrote: post #23

Zero chance. This country has become an absolute joke of corruption, especially anything related to insider trading.

I agree the country has rampant corruption, but I disagree that the US DOJ should be pursuing insider trading on these markets. Why should my tax dollars be spent on helping a bookie run their gambling business? Insider trading laws and prosecution in the financial markets makes sense, because the fair and impartial enforcement helps all of our economy, and allows capital to do its job investing in productive venture…

> Why should my tax dollars be spent on helping a bookie run their gambling business?

I mean, current laws do exactly this. The FBI has done investigations for major sports betting sites related to players throwing or fixing games, etc. If you commit fraud on a sportsbook you absolutely can go to jail.

Re: Kalshi CEO expects US DOJ to prosecute insider trading cases

#73

Post by ryandrake »

idle_zealot wrote: post #59
hackingonempty wrote: post #55

Earlier quoted context omitted.

> one could be forgiven for assuming federal crimes committed by this administration will not be prosecuted while this administration is in power. Nobody in this administration is going to be prosecuted no matter who is in power. https://archive.is/TpLqO

A reasonable opposition party would declare the pardons invalid. Is that a valid interpretation of pardon power, does that undermine the legitimacy of our laws? Maybe, but not nearly as much as not punishing obvious and proud criminals does. That's the point of the rule of law, remember? It creates legitimacy, and therefore stability.

The current USA opposition party doesn't really do anything when they actually obtain power. They bark a lot when they're out of power, but as soon as they are back in power, they just go limp, forgive and forget, for the sake of unity or something.

Re: Kalshi CEO expects US DOJ to prosecute insider trading cases

#74

Post by Karrot_Kream »

Traster wrote: post #49
tptacek wrote: post #36

This issue reveals the gap between the prediction market premise and what these things actually are, which is: unregulated prop gambling venues. If things like Kalshi and Polymarket are prediction markets, then, at least as far as the intrinsic concerns of the market itself are concerned, insider trading is a good thing; literally part of the point. If they are instead how they function today, then insider trading is…

Even if you buy the idea that Kalshi is a prediction market whose mechanism is gambling but whose product is accurate predictions, you don't have to buy the idea that insider trading is a good thing. Yes, in the rare occasion there exists someone with (a) insider information (b) confidence their actions won't impact their insider position and (c) access to capital - then you get extremely accurate predictions. In eve…

If an insider with large amounts of capital makes a big trade, they also end up discouraging other trades. Once you see a huge position taken, LPs are going to scale back their liquidity in other positions to manage risk that the insider is going to stomp them. Any trader monitoring position sizes is going to probably scale back their trading. All of this contributes to less trading and less commission on these markets.

Sports betting is so profitable for prediction markets because they're mostly unsophisticated retail flow making lots and lots of trades, giving the platforms commission. If an insider just pushes market prices in their direction the platforms are going to lose on volume.

Re: Kalshi CEO expects US DOJ to prosecute insider trading cases

#76

Post by ryandrake »

hackingonempty wrote: post #70
idle_zealot wrote: post #59

Earlier quoted context omitted.

A reasonable opposition party would declare the pardons invalid. Is that a valid interpretation of pardon power, does that undermine the legitimacy of our laws? Maybe, but not nearly as much as not punishing obvious and proud criminals does. That's the point of the rule of law, remember? It creates legitimacy, and therefore stability.

> A reasonable opposition party would declare the pardons invalid. Is that a valid interpretation of pardon power, does that undermine the legitimacy of our laws? No, in the USA the pardon power belongs to the President. Only a constitutional amendment could invalidate pardons.

As we are finding out in real time, the President has the power to try to do a million things, legal or illegal, constitutional or unconstitutional, and then whichever ones don't get pushback defacto become actual powers. Throw something at the wall, if it sticks, then it's a Presidential Power. If it doesn't, there's no consequences. Just shrug and throw something else at the wall.

Re: Kalshi CEO expects US DOJ to prosecute insider trading cases

#78

Post by c7b »

kasey_junk wrote: post #68
c7b wrote: post #61

Earlier quoted context omitted.

Where do you see a difference? Like you said, there is a libertarian argument that can be made for why insider trading is desirable. If the bet is easily manipulable, like how many times someone will visit a place, then the rational response is for others not to bet on that market. The same argument still holds. You can disagree with the libertarian argument, but I don't see how you can say that Polymarket et al. are…

It’s not a libertarian argument for prediction markets that they should have insider trading, it’s the point of the exercise. The way they work is to incentivize people with knowledge to externalize the knowledge to the market. The concept of fairness doesn’t even make sense in that context. So if a market is trying to maintain a veneer of fairness it’s just using a prediction market as cover and is something else.

So the difference between a theoretically pure prediction market and Kalshi is ... this interview? The CEO saying that he thinks others, who do not answer to him in any way, will be doing something to enforce some notion of fairness.

If you're being that puritan about the definition, then having a "real" prediction market is completely impossible. Because actors like the DOJ do not wait for a statement by the Kalshi CEO to bring charges. And rational actors will know and anticipate that, and hence preemptively comply. So you never get the unfettered version of a prediction market.

I don't think it makes sense to be that puritan about a definition that the thing it's trying to define becomes an impossibility. Polymarket, Kalshi et al are clearly prediction markets in the messy reality that we live in, and we're figuring out as we go what the legal reality of a real-world prediction market is and should be.

Re: Kalshi CEO expects US DOJ to prosecute insider trading cases

#79

Post by cyanydeez »

tptacek wrote: post #36

This issue reveals the gap between the prediction market premise and what these things actually are, which is: unregulated prop gambling venues. If things like Kalshi and Polymarket are prediction markets, then, at least as far as the intrinsic concerns of the market itself are concerned, insider trading is a good thing; literally part of the point. If they are instead how they function today, then insider trading is…

Your surmise cuts both ways though; much of the stockmarket is fundamentally doing the same thing. It's just the prop bet is a normalized white collar activity.

I'd like regulations to cut into that too, so the market isn't just a weird "Did trump tweet something deranged today?"

Re: Kalshi CEO expects US DOJ to prosecute insider trading cases

#80

Post by michaelt »

Traster wrote: post #49
tptacek wrote: post #36

This issue reveals the gap between the prediction market premise and what these things actually are, which is: unregulated prop gambling venues. If things like Kalshi and Polymarket are prediction markets, then, at least as far as the intrinsic concerns of the market itself are concerned, insider trading is a good thing; literally part of the point. If they are instead how they function today, then insider trading is…

Even if you buy the idea that Kalshi is a prediction market whose mechanism is gambling but whose product is accurate predictions, you don't have to buy the idea that insider trading is a good thing. Yes, in the rare occasion there exists someone with (a) insider information (b) confidence their actions won't impact their insider position and (c) access to capital - then you get extremely accurate predictions. In eve…

If people with more information profit at the expense of people with less information, isn't that exactly how things are supposed to work?

If you're approaching a market with hard facts, detailed comparisons and solid evidence; while I'm trading in the same market based on vibes and intuition, surely it's expected that your returns would be better, and mine worse?

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