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Uncovering insiders and alpha on Polymarket with AI

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Re: Uncovering insiders and alpha on Polymarket with AI

#91

Post by ttul »

Trading on non-public information in prediction markets is illegal (in the United States) if the information was obtained through fraud, deception, a breach of trust—such as compromising a position of privilege—or from a confidential government source. For example, if you work at Google and know that Gemini 3 will be released on a certain date, trading on that insight is illegal because you are legally misappropriating your employer’s proprietary information. Furthermore, even if you did not personally breach a position of privilege to get the information, executing the trade can still be prosecuted as federal wire fraud if doing so violates the prediction platform's terms of service.

However, if you trade on prediction markets using insider information that was gained WITHOUT fraud, deception, or a breach of trust, then so long as the market's terms of service allow it, you can go ahead and trade on that information. Polymarket is a prime example of this: unlike traditional financial exchanges, its Terms of Service do not explicitly forbid everyday users from trading on inside information. Instead, the platform relies on a catch-all rule prohibiting activity that violates "applicable laws." This means that as long as you acquired the inside information legally—without hacking, stealing, or breaching a duty of confidentiality—Polymarket permits you to capitalize on it, treating your informational advantage as a feature that ultimately makes the market's odds more accurate.

Re: Uncovering insiders and alpha on Polymarket with AI

#92

Post by testaccount28 »

coldtea wrote: post #41
testaccount28 wrote: post #38

Earlier quoted context omitted.

yes, they allow you to pay people who have information about the future for that information, in a distributed manner. this is great if, like many people, you want information about the future.

Information about the future without power to do anything about it (except bet on it), like is the case for most information and most people, is useless.

surely this criticism applies as well to... any information.

Re: Uncovering insiders and alpha on Polymarket with AI

#93

Post by testaccount28 »

tester756 wrote: post #47
testaccount28 wrote: post #38

Earlier quoted context omitted.

yes, they allow you to pay people who have information about the future for that information, in a distributed manner. this is great if, like many people, you want information about the future.

That sounds cool and fancy in theory, but how do you find that information among the noise? like if 50 ppl vote A, 45 people vote B and 1 person who actually knows their shit votes B? How do you find it? By amount?

what do you think you're asking?

like any signal, you reflect on it, integrate it into your belief, think through the consequences, etc.

we all want mr. delphi to tell us exactly what will happen. but without such a friend, we reason under uncertainty. markets are one tool we've found to coordinate such signals.

would you ask the same of hiring a private investigator, or paying for the new york times? there is no authority with your interests but yourself; you must choose who to trust.

Re: Uncovering insiders and alpha on Polymarket with AI

#94

Post by doomslayer999 »

c22 wrote: post #80
doomslayer999 wrote: post #12

Earlier quoted context omitted.

Because taking high variance slightly negative EV shots is not a terrible strategy when you have a long time horizon.

I feel like the longer your time horizon the worse -ev games are for you? I bought one lottery ticket, I don't think my odds are gonna get any better than that.

To be clear, I meant the opposite. I meant that if you take a high variance swing and you lose, you have capped downside, so you can rebuild and recover hard long term. Conversely if you win you have a huge head start and can deploy the capital quickly.

Of course you DONT want to repeatedly take -EV bets. That would reduce variance and converge you to the mean which is negative by the central limit theorem.

Re: Uncovering insiders and alpha on Polymarket with AI

#95

Post by bertil »

yunohn wrote: post #90

> it's clear prediction markets like Polymarket incentivize sharing information I severely dislike these euphemisms used by prediction market enthusiasts. What exactly is the value of information like “most searched person on Google in year N”? Creating 10s of options to answer this question via gambling on Polymarket/Kalshi does not help anyone except their fellow degenerates. Heck, even events like “by N date the U…

I'm very tempted to agree that those markets are not providing a positive force, given the focus on questions for which a small group of people know the answer ahead of time. They are not sharing that information because it is not in their interest, and insiders likely won’t have a great time for long.

However, there is large value for some people in knowing when a country will be invaded: if you live there, you know when to leave; if you are an airline, when to stop scheduling flights there, or, if a lot of people are in the first group, up until when to schedule many more flights to get them out. But I’m positive the invading army would prefer some kid in a basement didn’t make one Lieutenant General on the committee obscenely rich overnight.

I wished the focused on markets where many people are part of the decision, like elections. There, the wisdom of the crowds would add some value.

Re: Uncovering insiders and alpha on Polymarket with AI

#96

Post by doomslayer999 »

tyre wrote: post #25
doomslayer999 wrote: post #12

Earlier quoted context omitted.

Because taking high variance slightly negative EV shots is not a terrible strategy when you have a long time horizon.

this is the "lose money on every sale but make it up on scale" version for gamblers and I love that for you.

Definitely not. It’s more like either winning a 1B B2B contract or going bankrupt. Like I said above you don’t want to scale up taking high variance shots because it will reduce variance and converge towards the mean

Re: Uncovering insiders and alpha on Polymarket with AI

#97

Post by testaccount28 »

skybrian wrote: post #65
testaccount28 wrote: post #38

Earlier quoted context omitted.

yes, they allow you to pay people who have information about the future for that information, in a distributed manner. this is great if, like many people, you want information about the future.

The prediction market itself is a ouija board. You're given a number. You don't know who's moving the needle or why. You don't know what you're paying for. Maybe you're paying for information from people who are breaking someone's trust by giving it to you? Or maybe you're paying them to make it happen? Although, sometimes a market provides incentive to publish information that's associated with the market being infl…

but like, here in the real world, farmers use weather derivatives. so the technology works, has a use case, is proven.

if your point is that one should not treat the market's number as some oracular probability, then... of course i agree! there is no such thing. the market provides a signal, like any other.

Re: Uncovering insiders and alpha on Polymarket with AI

#98

Post by yunohn »

bertil wrote: post #95
yunohn wrote: post #90

> it's clear prediction markets like Polymarket incentivize sharing information I severely dislike these euphemisms used by prediction market enthusiasts. What exactly is the value of information like “most searched person on Google in year N”? Creating 10s of options to answer this question via gambling on Polymarket/Kalshi does not help anyone except their fellow degenerates. Heck, even events like “by N date the U…

I'm very tempted to agree that those markets are not providing a positive force, given the focus on questions for which a small group of people know the answer ahead of time. They are not sharing that information because it is not in their interest, and insiders likely won’t have a great time for long. However, there is large value for some people in knowing when a country will be invaded: if you live there, you know…

> there is large value for some people in knowing when a country will be invaded

Are there any examples of people/companies trusting degenerate gamblers on prediction markets and making real life-changing decisions?

All the examples I’ve seen are exactly what I started in my original post - the insider circle opening a massive position on the right invasion date mere minutes/hours before they actually do it. This is useful to precisely nobody! And it happens because they are insiders, who want to avoid risk of exposure. Not to share their godly wisdom with the world for others benefit.

Re: Uncovering insiders and alpha on Polymarket with AI

#99

Post by skybrian »

testaccount28 wrote: post #97
skybrian wrote: post #65

Earlier quoted context omitted.

The prediction market itself is a ouija board. You're given a number. You don't know who's moving the needle or why. You don't know what you're paying for. Maybe you're paying for information from people who are breaking someone's trust by giving it to you? Or maybe you're paying them to make it happen? Although, sometimes a market provides incentive to publish information that's associated with the market being infl…

but like, here in the real world, farmers use weather derivatives. so the technology works, has a use case, is proven. if your point is that one should not treat the market's number as some oracular probability, then... of course i agree! there is no such thing. the market provides a signal, like any other.

Not a farmer, but I believe they use weather derivatives to hedge and weather forecasts for predictions? Going through markets for weather forecasts is adding a level of indirection that generates a noisier signal.

The idea when hedging isn't to win on expected value. It's to reduce risk. You're paying the market to provide insurance.

As a side effect, insurance does sometimes generate interesting data. The insurance industry generates good data about life expectancy. But it doesn't tell you when you're going to die.

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