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Google employee charged with $1M Polymarket insider trading bet on search term

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Re: Google employee charged with $1M Polymarket insider trading bet on search term

#81

Post by lordnacho »

55555 wrote: post #40
nostrademons wrote: post #11

Earlier quoted context omitted.

That's sort of the point of prediction markets: they surface insider information by allowing people to profit off of it. The benefit is to people watching the prices , who can then use that information to make better decisions ahead of the answer being revealed to the public. It's not necessarily to market participants, who need to be aware of who else is trading the market and have a credible reason to believe they…

It barely makes sense, though? The idea is that it will surface insider information to the public. That happens only because the insider is financially incentivized to place a bet. But they will only bet if they can win money, and they can only win money if someone is taking the other side of their bet, which necessarily means someone without their insider information. In other words, prediction markets require sucke…

And the natural end point of this logic is called the lemon problem.

It's been written about extensively and is in every undergraduate economics course.

How have dots not been connected?

Re: Google employee charged with $1M Polymarket insider trading bet on search term

#82

Post by efitz »

I’m completely failing to get outraged here.

I think that the person misused Google internal information and deserves termination or other discipline, but I’m struggling to otherwise see the harm in what they did. Is insider trading a crime on prediction markets? Doesn’t it contribute to the accuracy of the pricing of prediction contracts, and therefore is good for the prediction market?

Re: Google employee charged with $1M Polymarket insider trading bet on search term

#83

Post by rcxdude »

hellojesus wrote: post #35
mikeyouse wrote: post #16

Earlier quoted context omitted.

That’s the academic theory behind these markets, but there’s no actual value to knowing who the most searched celebrity will be or any of this other garbage. It’s just an unregulated casino with guesses about the popularity of Google searches instead of guessing black or red.

If it's unregulated, how are people getting charged with insider trading?

It's not being regulated as a casino (which would limit what the casino could do). It is being regulated, to a limited extent, like a commodity market (which does limit what the participants can do).

Re: Google employee charged with $1M Polymarket insider trading bet on search term

#84

Post by epolanski »

efitz wrote: post #82

I’m completely failing to get outraged here. I think that the person misused Google internal information and deserves termination or other discipline, but I’m struggling to otherwise see the harm in what they did. Is insider trading a crime on prediction markets? Doesn’t it contribute to the accuracy of the pricing of prediction contracts, and therefore is good for the prediction market?

  I’m completely failing to get outraged here.

  I think that the person that a/b/c deserves prison or other discipline, but I’m struggling to otherwise see the harm in what they did. Is insider trading a crime on prediction markets? Doesn’t it contribute to the accuracy of the pricing of prediction contracts, and therefore is good for the prediction market?
a. started fires in California

b. lobbied the president to attack Iran

c. neglected critical aid spreading Ebola

By the way there are reasons why we ban sport people from betting or insiders to disclose their (and relatives) trades to the sec: incentives.

It seems like the prediction market crowd cannot understand the economics of incentives and their harmful consequences.

Even though we already see the harm in the real world with journalists receiving death threats for reporting news or randoms tampering with meteorological equipment to win bets.

And that's only what we know.

Re: Google employee charged with $1M Polymarket insider trading bet on search term

#85

Post by valleyer »

chii wrote: post #64
55555 wrote: post #40

Earlier quoted context omitted.

It barely makes sense, though? The idea is that it will surface insider information to the public. That happens only because the insider is financially incentivized to place a bet. But they will only bet if they can win money, and they can only win money if someone is taking the other side of their bet, which necessarily means someone without their insider information. In other words, prediction markets require sucke…

> Is this good? it is good if the losers are voluntarily participating. They are not coerced (stupidity is not coercion) into it, and therefore, it is reasonable that they expected to win the bet. The only problem i have with polymarket (and others like it) are that insiders can often remain anonymous. It should not, and if an insider earns, but their win requires they remain anonymous or face some social/reputationa…

In most modern societies, we regulate all sorts of things that people would otherwise willingly do to their own detriment. We ban drugs; we have labor laws; we have usury laws; we require seatbelts; we have securities regulations; etc. (Notably, until very recently, this included most forms of gambling.)

So the mere fact that losers are voluntary does not, IMO, make the situation good.

Re: Google employee charged with $1M Polymarket insider trading bet on search term

#86

Post by il-b »

mortsnort wrote: post #37

Why are we wasting government money cracking down on Polymarket betting? The most offensive thing in this article is the government pretending Polymarket bets are securities. Prediction markets provide no benefit to society and don't need to exist.

> (…) provide no benefit to society and don't need to exist.

The sounds extremely fascist.

Re: Google employee charged with $1M Polymarket insider trading bet on search term

#87

Post by tsimionescu »

nostrademons wrote: post #33
Domenic_S wrote: post #22

Earlier quoted context omitted.

Hmm, not following. The insider trade in this case was small enough to not change the lines meaningfully, no? D4vd's chances of being #1 went from 99% nearly overnight, was a huge upset. Polymarket might be different, but conventional Vegas-style lines change with the amount of $$ bet, if the pool is $50M and an insider bets $10k on the long shot, the line isn't moving -- I don't see how insider information can be su…

Because these markets aren't all that efficient yet (possibly because other potential market participants are scared off by insider trading charges). You don't have multiple people that all have insider information betting against each other, you have one person with insider information that cleans out everybody else. If this repeats enough, all the people without insider information will get cleaned out and exit the…

> And yes, the whole purpose of prediction markets is to turn insider info into public info.

You realize that betting on an event you have insider info on is against their terms and conditions, right? So while it may be your personal goal, it's certainly not Polymarket's or Kalshi's.

Re: Google employee charged with $1M Polymarket insider trading bet on search term

#88

Post by tsimionescu »

scheme271 wrote: post #59
burnhamup wrote: post #39

I was curious how a man in Switzerland gets charged in the US for a placing bets on a site that doesn't allow the US to participate. The short answer seems to be that he stole private information from a US company and used that information to enrich himself. And then got that charge enhanced with things like wire fraud and transacting on systems involving US currency. And another commentor suggests that punishing ins…

The interesting part is that he got charged with insider trading. A few attorneys on bluesky have pointed out that this is a novel use of this law since previously the trading occurred on regulated markets (e.g. SEC or CFTC regulated markets like stock markets and commodities/futures exchanges).

These markets are regulated by the CFTC, currently, so what exactly is novel here?

Re: Google employee charged with $1M Polymarket insider trading bet on search term

#89

Post by tsimionescu »

efitz wrote: post #82

I’m completely failing to get outraged here. I think that the person misused Google internal information and deserves termination or other discipline, but I’m struggling to otherwise see the harm in what they did. Is insider trading a crime on prediction markets? Doesn’t it contribute to the accuracy of the pricing of prediction contracts, and therefore is good for the prediction market?

> Is insider trading a crime on prediction markets?

Yes, it is both against the CFTC's regulations and against the companies' T&Cs.

> Doesn’t it contribute to the accuracy of the pricing of prediction contracts, and therefore is good for the prediction market?

That's irrelevant, the purpose of these markets is to provide fair bets for entertainment, not information.

Re: Google employee charged with $1M Polymarket insider trading bet on search term

#90

Post by tsimionescu »

anonu wrote: post #44
mortsnort wrote: post #37

Why are we wasting government money cracking down on Polymarket betting? The most offensive thing in this article is the government pretending Polymarket bets are securities. Prediction markets provide no benefit to society and don't need to exist.

Isn't that stock market a prediction market?

No, as the name sort of suggests, it's a stock market. As in, it's a place for people to buy stakes in companies, and occasionally a place for companies to raise money by selling stakes in themselves.
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