OpenAI fires an employee for prediction market insider trading • Hacker News Board

Re: OpenAI fires an employee for prediction market insider trading

#111

Post by mlsu » Sat, Feb 28, 2026, 6:56 PM UTC

crazygringo wrote: post #26

cjonas wrote: post #5

Insider trading is so trivial on the prediction markets. I'd guess that it's actually the "feature" that results in the outcomes being so accurate.

Yup. There are good reasons why it's a problem in financial markets but NOT usually a problem in prediction markets: https://www.economist.com/leaders/2026/02/18/why-insider-tra... > In prediction markets, informed trading is not a crime or an injustice—it is a valuable service. A big exception, however, is using prediction markets to make predictions on events regarding publicly traded companies.

Prediction markets have only events whose outcome is eventually publically resolved, by design. With insider trading, the trader is incentivized to release the information as late as possible, as close as possible to the events.

Why are these big insider bets being placed within hours of the event actually occurring? The insiders are doing the equivalent of bid sniping — waiting until the last possible moment to exercise.

This is how inside info works in trading markets in general. And again this is inevitable and by design.

It also makes them largely useless, because the timeline for which useful position is shared is compressed to the point where nothing useful can be gleaned from the information.

The thing is a “lie incentiviser” — a market entirely for suckers. That’s why 95% of volume is sports betting.

That’s setting aside insider positions having an influence on the outcome of events which is a whole separate problem.

Re: OpenAI fires an employee for prediction market insider trading

#112

Post by djohnston » Sat, Feb 28, 2026, 7:00 PM UTC

that's right prole! only Congress has that privilege!

Re: OpenAI fires an employee for prediction market insider trading

#113

Post by blindriver » Sat, Feb 28, 2026, 7:04 PM UTC

I find it absurd that someone can create an unregulated market like Kalshi, and then all of us need to be beholden to it, even though the idea is stupid. How is it possible that someone can create a product that none of us agree on, and now everyone else has to conform to the rules around it because of the problems that it creates. I would rather Kalshi get shut down than the precedent of allowing this to control employees or people.

Re: OpenAI fires an employee for prediction market insider trading

#114

Post by dilyevsky » Sat, Feb 28, 2026, 7:05 PM UTC

tjwebbnorfolk wrote: post #104

ThePowerOfDirge wrote: post #80

Earlier quoted context omitted.

Gambling = investing. Buying stocks is also gambling. Share buybacks, dividends, fancy words for forking money from workers to some joe schmoe that bought a lottery ticket, i.e., a stock.

A stock is ownership in a business, same as ownership in a house. It is an asset that you own. When you bet on blackjack or the superbowl, you own nothing and are simply wagering on the outcome of an event. Gambling and equity ownership are not the same.

There's more to stock trading than just "buy and hold". Not all investing has gambling motivations but it is absolutely used as gambling tool by many

Re: OpenAI fires an employee for prediction market insider trading

#115

Post by twoodfin » Sat, Feb 28, 2026, 7:06 PM UTC

tstenner wrote: post #103

twoodfin wrote: post #66

Earlier quoted context omitted.

I’m struggling to understand the moral character of taxi service regulatory capture and monopolization.

Your taxi crashes because the driver skipped brake maintenance and his insurance doesn't reimburse you for your hospital costs because commercial transportation isn't covered. Sure would be nice to have some minimum requirements for taxis.

If maintenance schedules and insurance regulations are “moral” issues, what isn’t?

Re: OpenAI fires an employee for prediction market insider trading

#116

Post by crazygringo » Sat, Feb 28, 2026, 7:14 PM UTC

mlsu wrote: post #111

crazygringo wrote: post #26

Earlier quoted context omitted.

Yup. There are good reasons why it's a problem in financial markets but NOT usually a problem in prediction markets: https://www.economist.com/leaders/2026/02/18/why-insider-tra... > In prediction markets, informed trading is not a crime or an injustice—it is a valuable service. A big exception, however, is using prediction markets to make predictions on events regarding publicly traded companies.

Prediction markets have only events whose outcome is eventually publically resolved, by design. With insider trading, the trader is incentivized to release the information as late as possible, as close as possible to the events. Why are these big insider bets being placed within hours of the event actually occurring? The insiders are doing the equivalent of bid sniping — waiting until the last possible moment to exer…

> Why are these big insider bets being placed within hours of the event actually occurring?... It also makes them largely useless

They're not, usually. The more the outcome seems unlikely at first, the more you're incentivized to place your big bet earlier, when the odds seem worse, because you'll make a ton more money.

When these bets are placed only a few hours beforehand, that's often because the actual decision hasn't actually been made until then.

And there are plenty of areas where having notice of an hour or two is still hugely vulnerable.

Re: OpenAI fires an employee for prediction market insider trading

#117

Post by crazygringo » Sat, Feb 28, 2026, 7:15 PM UTC

rfv6723 wrote: post #40

crazygringo wrote: post #26

Earlier quoted context omitted.

Yup. There are good reasons why it's a problem in financial markets but NOT usually a problem in prediction markets: https://www.economist.com/leaders/2026/02/18/why-insider-tra... > In prediction markets, informed trading is not a crime or an injustice—it is a valuable service. A big exception, however, is using prediction markets to make predictions on events regarding publicly traded companies.

The concept of a valuable service falls apart if players can influence the actual event. Without equal footing and basic honesty, you aren't measuring reality so much as you are subsidizing those with the power to manipulate it.

Yup. That is the other big exception described in the article.

Re: OpenAI fires an employee for prediction market insider trading

#118

Post by Rexxar » Sat, Feb 28, 2026, 7:21 PM UTC

raincole wrote: post #102

7777777phil wrote: post #19

77 suspicious positions across 60 wallets, 13 brand-new accounts appearing 40 hours before the browser launch. First confirmed case of a major tech company firing over prediction market trades. I wrote about why prediction markets have a structural insider trading problem that nobody's solved yet: https://philippdubach.com/posts/the-absolute-insider-mess-of...

It's interesting that the both replies under this comment are saying exact same thing, with the exact same term ("raison d'etre"... how often do you hear two random people think of this phrase at the same time?). It might be nothing, but it'd be funny if karma farming bots are doing some 'reply frontrunning' over the internet.

I don't think that two 13 and 14 years old accounts with not that many comment per week are bots.

Re: OpenAI fires an employee for prediction market insider trading

#119

Post by parpfish » Sat, Feb 28, 2026, 7:26 PM UTC

tgsovlerkhgsel wrote: post #99

gtowey wrote: post #67

Earlier quoted context omitted.

The thing is you're still thinking of these insiders as someone who just got a juicy stock tip from a relative. The much more serious problem is when these insiders actually have their hands on the levers which decide the outcome. It's really no different than a mobster who bets a bunch on money on an unlikely outcome then threatens one side to throw the match. What possible economic benefit is there to society to al…

This is the entire idea behind the concept of "assassination markets" - "prediction" markets on assassinations that are just thinly veiled ways to crowdsource murders by taking bets that you expect to lose against an "insider" (the killer).

It doesn’t need to be as high stakes as assassination. Any public figure could have a free-money loophole with all the stupid bets on things like whether a certain word would appear in a speech.

If I were famous I could start a pool betting on whether I would post a picture of a my lunch this week. I could stake whichever side has the biggest payout and then just make it happen

Re: OpenAI fires an employee for prediction market insider trading

#120

Post by cortesoft » Sat, Feb 28, 2026, 7:28 PM UTC

j16sdiz wrote: post #96

tyre wrote: post #86

Earlier quoted context omitted.

Okay, then imagine you overhear at a bar. Yes “anyone could have” theoretically, but not actually. In either case, you have material non-public information that your counterparty in the market does not.

you got that piece of non public information was not because you are an insider. As long as the bar is not exclusive to insider, i don't see any difference

Isn't it exclusive to people who live in the area of the bar?

What if the bar has a cover charge, so only those who pay get in?

What if the cover charge is $10,000 and the bar is advertised as "the place where public company execs love to come talk to each other about private deals"?