Of course he should be punished but the best lesson here is for bettors. Those who wager on "prediction markets": you are betting against people who have access to more information or can influence the outcome of the wager. Don't waste your money.
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 have better information.
The unfortunate thing is that, while their academic position sounds plausible on paper, just like with most crypto things it's just a money grab.
How many crypto people (with legitimate backgrounds just like the founders of Polymarket and Kalshi) stood up and said big things about freedom and the unbanked etc., turns out they were literally just scamming people- there are so many examples besides FTX.
Letting people bet on any random thing is not at all related to this "price everything" theory. If that was their real goal they wouldn't behave so much like a normal sports betting company. I have yet to actually hear anyone defend their actual actions in a plausible way.
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 suckers to lose money to insiders in order for the public to learn new information. In this case, people lost over a million dollars to an insider so the public could learn that "d4vd" was searched a lot.
The other side could be someone with natural exposure to the question that wants to hedge, for example people traveling to/from the middle east were exposed to the Iran war question(s) and could get insurance against airspace closure through prediction markets.
This argument doesn't work for 90+% of the volume on PM/Kalshi but I think most of the questions there are just gambling.
Disclaimer: I have not read any literature on the economics of prediction markets, and I know nothing about the mechanics of Polymarket/Kalshi.
I would imagine that in theory, everyone thinks they have the best information at the time, something like:
House: "Odds that X happens? We'll put $1 on both sides to get it started. 50/50."
Someone comes along: "Oh dang, I'm definitely more than 50% confident that X is happening. Let me put $1 in." Now it's 67:33.
Someone else comes along: "Oh I'm more than 67% confident X is happening, let me put $1 in." Now it's 75:25.
And of course, you get people going: "I'm more than 25% confident that X is _not_ happening, let me put $1 in!" And now it's 60:40.
The murky part, I would imagine, comes when the odds and the payout actually act as something that influences the outcome, but in perfect theory-land, if everything goes as planned, this should move the odds to the most informationally-accurate measurement, which should, in theory, benefit observers by making this measurement public.
Sure but these things are not really "odds" anymore, right? The most searched terms might be a mystery to the general public, but not to the engineers at Google. It gets even murkier when you can influence the outcome. The exact temperature at an airport might be difficult to predict, but if you are able to hold up a hair drier to the sensor for a few minutes you can be pretty sure it won't be cold.
When the other side either has information that makes it not a bet, or if they have means to influence the odds, the best outcome for outsiders is to not play at all.
And of course, the entire conceit relies on the idea that more accurate information to the public is always good and always outweighs the negative externalities. But is it really all that important to the public good what the most searched artist is on Google in a certain year? Or if an announcer will say a certain word during the super bowl?
People with insider information often aren't necessarily aware they even have it. "Superforecasters" are often just "good at predicting" moves within a given vertical, because they have expertise and exposure to the trends of that vertical, and are good at making deductions and extrapolating trends. Those people make money from prediction markets just as often as people with true insider info do.
And the people they're both making money from, are people who think they have enough expertise + exposure to function as superforecasters — and who probably could function as superforecasters, in a market with fewer "sharks" in the pool — but who lose out simply because they were slightly less well-calibrated than whoever they were trading with.
Which is to say: prediction markets can still work and be worthwhile to participate in, even if everyone in them is rational. They don't require suckers.
But, in practice, they certainly do seem to attract them.
> And the people they're both making money from, are people who think they have enough expertise + exposure to function as superforecasters — and who probably could function as superforecasters, in a market with fewer "sharks" in the pool — but who lose out simply because they were slightly less well-calibrated than whoever they were trading with.
This seems like a complicated way to say "suckers". Of course they don't usually self-identify as such and think they act rationally.
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/reputational repercussions, then that should happen.
Therefore, as long as KYC is enforced for these markets, i would have zero issues with their existence.
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.
all of those things you mentioned have damages sustained on third parties that did not have consent. And tbh, my opinion is that the banning of drugs have done more harm than not banning it (but instead, allow it to be sold safely and cheaply).
Gambling to me, is like that. Banning it doesn't stop it, and it has barely any harm other than to the person who over-indulge. Regulating it is a good idea - where regulating means there's oversight on cheating, on the platform's governance etc.
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.
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).
I believe Polymarket wants it to fall under the regulations of cftc as it is implemented like an option/event contract. And cftc says that they don't care about which technology is used. But as far as I now this is the first case it will be tested for real and the views of cftc and a judge may not be the same. I fail to see how it can be classified as insider trading. But, it is till fraud so I'm not sure how much it matters in the end.
It’s not rare nowadays that speculation on some topic will include the Polymarket rates. Google searches: Maybe not. Maybe that’s just gambling for the fun of it.
Sure, but let’s consider the bet the accused took: who is the most searched person in 2025. What benefit is there in knowing this ahead of time? Who is making decisions based on this?
As opposed to the publicly available Google Trends data? As opposed to running legitimate market research? Wouldn't you rather know the most searched person in your vertical, market, etc?
The data in this example was going to be made public anyways. All the examples of prediction markets are predicated on them becoming public. You not only need the info, you need the info before it becomes public.
I think they are open about it. John Oliver did a piece on it last month and I recall an interview where the founder of one of these prediction markets shared this as a beneficial effect of the product.
Cool. So we benefit by prediction markets surfacing insider information about Trump's plans in the Iran conflict, and unknown insiders making hundreds of millions on that information with massive trades minutes before each announcement benefited the people watching prices in the oil market? That doesn't seem right.
Couldn’t that same argument be used to justify stock market insider trading? The problem with insiders is not just that they can surface information, but they can actually manipulate the results. It’s why baseball players can’t bet on the results of their games, even if a prediction market guru might argue “their bets surface valuable information” or something.
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 <1% to >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 surfaced in this scenario except after the fact (and only maybe then).
In other words, if the line changes enough to signal insider info, it's not really insider info anymore.
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 market, all the other people with insider information will enter the market for profit, and prices should converge to true likelihood.
And yes, the whole purpose of prediction markets is to turn insider info into public info.
> 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.
But you just said "The benefit is to people watching the prices" -- but if the odds haven't properly converged what information does watching the prices get you before-the-fact?
Maybe I'm just not getting it, could you lay out a scenario?
> if the odds haven't properly converged what information does watching the prices get you before-the-fact?
How do you know we are "before-the fact"? Because these numbers are bananas?
Somebody just tanked their job, their life, for a million bucks.
Anybody who took that bet, might've individually spent only a few bucks to see that.
Everyone else (the people watching) learned the price of entertainment is a few bucks, and ruining someone's life is a million bucks.
Was that a surprise to you? If not, then the (market) prices may be said to have converged (close to) reality.
But maybe it is, and you think people would ruin their lives for less, or would pay more for human misery. In any event, the distance between whatever you think that probability is, and the return earned on these odds is information, that we all can enjoy (as benefit) before-the-fact.
The point is to make money by letting people gamble on the future. What you said is a second order effect of doing the first thing. They should at least be regulated under gambling laws, doesnt make sense without it
What Polymarket says on the topic (https://integrity.polymarket.com/) is that they do not surface insider information and you mustn't trade if you have any.
Because the prediction market community is filled with liars and fraudsters, of course, it does seem to be common knowledge that this restriction isn't meant to be taken seriously, much like Polymarket's fake rule that Americans aren't allowed to use it.
But once you start from the premise that everything prediction markets say about their rules and practices is a lie, why should we believe they provide any genuine signal for anything?
Also, at least on Polymarket, beware of those who can influence the settlement of the wager, which may settle not in concordance with the actual outcome in reality.
Yup, same with any kind of betting - sport, even draw games. There are obviously stories that someone managed to "game the system", like a man who figured out how to find winning scratch cards (Mohan Srivastava case) or Željko Ranogajec winning in Keno, but the point is that in the first case it was luck + skills, in the second it was overcoming the TOS by creating a lot of fake accounts, that's why the guy had to give his win back (details of the agreement were not revealed).
You bet against skilled people who set the stakes, so, yes, by observing numbers you can win in Keno, but if you comply to the TOS you will not win big money. The only chance to be able to "game the system" is to bet on something that lotteries brokers does not have time to look at, like 3rd Bulgarian bocce league matches.
The problem is that you need to somehow become an expert in 3rd Bulgarian bocce league and the money which are there are generally small.
I was investigating this (again) when AI showed up, as in theory it makes easier some analysis, but the big guys are also using AI.
Most sports betting markets have a degree of unpredictability, and bookmakers will ban sharps (those falling outside the statistical norm or continually hitting lines just before the market moves).
Betting on a final score in most markets is fine.
When betting gets extremely narrow and specific e.g. "Player X will be subbed on for Player Y" it gets morally dubious.
There is a lot of overlap with insurance markets. The incentives have to be aligned (life insurance) with sensible guard rails against abuse (cooling off periods to be covered for suicide)
That's a very naive take of someone who never professionally traded. There are liquidity providing, market making trading strategies that work in absence of insider information.
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 insider traders in a step towards legitimzing and regulating prediction markets in the US.
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).
They are regulated. That's why Connecticut, Arizona, and Illinois are being sued by the government. They tried to regulate these markets and the CFTC says they regulate them, not the states.
You can charge anyone in the world with anything, the trouble is getting a judge to agree with you and getting your hands on the person you're charging.
The first problem doesn't seem to be all that hard in the US (unless the inside traders are part of the US government, of course), the second problem can be as simple as having Google organise an all-expenses-paid team activity to bait the subject into jurisdiction.
If the basis for their charges really is just that he traded in dollars, then this is yet another example why nobody should trust Americans and their currency when it comes to trade. I hope they can come up with something better than that.
> the second problem can be as simple as having Google organise an all-expenses-paid team activity to bait the subject into jurisdiction.
This actually happens. I know that the FBI once organized an all-expenses-paid trip to a "conference in Hawaii" for certain Chinese chemists it wanted to nab.
The corollary is that if you have reason to expect you're wanted by American Feds, never travel outside China, Russia, and certain European states that are extraordinarily hesitant to extradite to the US (e.g. Ireland).
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.
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.
What would happen if some regular Joe, completely unrelated to any other user, watched for bets that could signal insider information and made significant profit themselves, too?
This is a trade that is already done by trading businesses. It doesn’t even need to be this explicit; you could for instance dispose one side of a trade to reduce exposure to insiders.
fair number of people do this, bunch of free tools to filter by this criteria (brand new account, more than $xx,xxx size), vulnerable to spoofing obviously
This guy is the biggest LOSER who betted that Donald J Trump was NOT the most searched name on Google.
Which is obviously false, we all know the FAKE NEWS Google lies about this and they STOLE the designation of the most searched for person on the Internet.
Donald J Trump is the greatest person which ever lived, who ended 11 wars, and to imply that he is not the most searched person in the world is FAKE NEWS from the FAILING google.
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.
Anderson Cooper: But predictive markets do rely on someone having some inside information.
Shayne Coplan: Uh-huh. Yeah. I think that people going and having an edge to the market is a good thing. Obviously, you need to curate them and you need to be really clear and stringent on where the line is drawn and, like, sort of ethics and we spend a lot of time on that. But it's sort of an inevitability that this will happen, and there's a lot of benefits from it. And, you know, people will adapt.
So now the real bet he lost is salary + time for all those years he is going to prision + lower job for decades after prison. This person bet Millions to get $1M basically and lost both, very rare gambling level lost from smart(used to) person. At least normal gambler loses what they have and some debt.
He was Staff-level as well. That's minimum $500k a year or more. And tenure often grows pay disproportionately at Google. That's easily $20 million lost.
If they recognize they are betting companies, they have no right to operate in the majority of the states. So, they found the CFTC willing to pretend that these betting contracts are in fact securities, and that is how they can legally operate.
Wow. WTF does this say about Google algorithmic manipulation if an employee can predict specific search results to such a granular extent... Down to a specific artist. Google is rigged.
Trump's family and their cronies have a free pardon waiting for them the day they get convicted. Better wait until the next regime shift, spending money on trying to prosecute the insiders now is just a waste of everyone's time and money. So far Trump has pardoned the 1/6 insurrectionists without any consequences, pardoning someone for a little white collar crime is barely going to hit the news cycle.
Polymarket US is only able to operate in the USA because it is being regulated by the CFTC as a securities market. Otherwise, they would have been seen as a gambling site and would have been banned virtually everywhere.
Of course he should be punished but the best lesson here is for bettors. Those who wager on "prediction markets": you are betting against people who have access to more information or can influence the outcome of the wager. Don't waste your money.
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 have better information.
The unfortunate thing is that, while their academic position sounds plausible on paper, just like with most crypto things it's just a money grab.
How many crypto people (with legitimate backgrounds just like the founders of Polymarket and Kalshi) stood up and said big things about freedom and the unbanked etc., turns out they were literally just scamming people- there are so many examples besides FTX.
Letting people bet on any random thing is not at all related to this "price everything" theory. If that was their real goal they wouldn't behave so much like a normal sports betting company. I have yet to actually hear anyone defend their actual actions in a plausible way.
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 suckers to lose money to insiders in order for the public to learn new information. In this case, people lost over a million dollars to an insider so the public could learn that "d4vd" was searched a lot.
Is this good?
The other side could be someone with natural exposure to the question that wants to hedge, for example people traveling to/from the middle east were exposed to the Iran war question(s) and could get insurance against airspace closure through prediction markets.
This argument doesn't work for 90+% of the volume on PM/Kalshi but I think most of the questions there are just gambling.
Disclaimer: I have not read any literature on the economics of prediction markets, and I know nothing about the mechanics of Polymarket/Kalshi.
I would imagine that in theory, everyone thinks they have the best information at the time, something like:
House: "Odds that X happens? We'll put $1 on both sides to get it started. 50/50."
Someone comes along: "Oh dang, I'm definitely more than 50% confident that X is happening. Let me put $1 in." Now it's 67:33.
Someone else comes along: "Oh I'm more than 67% confident X is happening, let me put $1 in." Now it's 75:25.
And of course, you get people going: "I'm more than 25% confident that X is _not_ happening, let me put $1 in!" And now it's 60:40.
The murky part, I would imagine, comes when the odds and the payout actually act as something that influences the outcome, but in perfect theory-land, if everything goes as planned, this should move the odds to the most informationally-accurate measurement, which should, in theory, benefit observers by making this measurement public.
Sure but these things are not really "odds" anymore, right? The most searched terms might be a mystery to the general public, but not to the engineers at Google. It gets even murkier when you can influence the outcome. The exact temperature at an airport might be difficult to predict, but if you are able to hold up a hair drier to the sensor for a few minutes you can be pretty sure it won't be cold.
When the other side either has information that makes it not a bet, or if they have means to influence the odds, the best outcome for outsiders is to not play at all.
And of course, the entire conceit relies on the idea that more accurate information to the public is always good and always outweighs the negative externalities. But is it really all that important to the public good what the most searched artist is on Google in a certain year? Or if an announcer will say a certain word during the super bowl?
People with insider information often aren't necessarily aware they even have it. "Superforecasters" are often just "good at predicting" moves within a given vertical, because they have expertise and exposure to the trends of that vertical, and are good at making deductions and extrapolating trends. Those people make money from prediction markets just as often as people with true insider info do.
And the people they're both making money from, are people who think they have enough expertise + exposure to function as superforecasters — and who probably could function as superforecasters, in a market with fewer "sharks" in the pool — but who lose out simply because they were slightly less well-calibrated than whoever they were trading with.
Which is to say: prediction markets can still work and be worthwhile to participate in, even if everyone in them is rational. They don't require suckers.
But, in practice, they certainly do seem to attract them.
> And the people they're both making money from, are people who think they have enough expertise + exposure to function as superforecasters — and who probably could function as superforecasters, in a market with fewer "sharks" in the pool — but who lose out simply because they were slightly less well-calibrated than whoever they were trading with.
This seems like a complicated way to say "suckers". Of course they don't usually self-identify as such and think they act rationally.
> 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/reputational repercussions, then that should happen.
Therefore, as long as KYC is enforced for these markets, i would have zero issues with their existence.
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.
all of those things you mentioned have damages sustained on third parties that did not have consent. And tbh, my opinion is that the banning of drugs have done more harm than not banning it (but instead, allow it to be sold safely and cheaply).
Gambling to me, is like that. Banning it doesn't stop it, and it has barely any harm other than to the person who over-indulge. Regulating it is a good idea - where regulating means there's oversight on cheating, on the platform's governance etc.
> They are not coerced (stupidity is not coercion) into it
They are coerced in the same way as any other gambling: the false allure of easy money in a society built on financial struggle.
Are they voluntarily participating if they’re being lied to about what they’re participating in? What distinguishes the whole thing from fraud?
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?
Yep. It’s basically how Wall Street functioned before regulations showed up to protect the public.
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?
If 0.01% of people engaging in insider trading are caught and prosecuted, it is effectively unregulated.
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).
I believe Polymarket wants it to fall under the regulations of cftc as it is implemented like an option/event contract. And cftc says that they don't care about which technology is used. But as far as I now this is the first case it will be tested for real and the views of cftc and a judge may not be the same. I fail to see how it can be classified as insider trading. But, it is till fraud so I'm not sure how much it matters in the end.
It’s not rare nowadays that speculation on some topic will include the Polymarket rates. Google searches: Maybe not. Maybe that’s just gambling for the fun of it.
Sure, but let’s consider the bet the accused took: who is the most searched person in 2025. What benefit is there in knowing this ahead of time? Who is making decisions based on this?
If you were going to write a article or print a magazine cover , you might want to know this.
You could also take the other side to hedge some risk. It's up to them to define the value, not you for them.
If you run a records company I assume this might be worth some money
As opposed to the publicly available Google Trends data? As opposed to running legitimate market research? Wouldn't you rather know the most searched person in your vertical, market, etc?
The data in this example was going to be made public anyways. All the examples of prediction markets are predicated on them becoming public. You not only need the info, you need the info before it becomes public.
It's not always enough to know what - the why is often important.
For example, d4vd is a famous musician, and search stats may indicate his potential popularity and future record sales.
Or the public may be searching his name to find out more about the body found in his car, and the subsequent murder investigation and arrest.
You are correct, but you say this like the prediction markets are open about this fact. They aren't and if you ask them they will deny this.
I think they are open about it. John Oliver did a piece on it last month and I recall an interview where the founder of one of these prediction markets shared this as a beneficial effect of the product.
I once asked in Kalshi subreddit if insider trading was the entire point and my post was removed by the mods..
That [getting banned] doesn't tell you anything really, they probably just thought you were a troll.
I get banned from subs sometimes by just asking a opposing question.
Nice try to make crimes sound legal.
Cool. So we benefit by prediction markets surfacing insider information about Trump's plans in the Iran conflict, and unknown insiders making hundreds of millions on that information with massive trades minutes before each announcement benefited the people watching prices in the oil market? That doesn't seem right.
Couldn’t that same argument be used to justify stock market insider trading? The problem with insiders is not just that they can surface information, but they can actually manipulate the results. It’s why baseball players can’t bet on the results of their games, even if a prediction market guru might argue “their bets surface valuable information” or something.
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 <1% to >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 surfaced in this scenario except after the fact (and only maybe then).
In other words, if the line changes enough to signal insider info, it's not really insider info anymore.
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 market, all the other people with insider information will enter the market for profit, and prices should converge to true likelihood.
And yes, the whole purpose of prediction markets is to turn insider info into public info.
> 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.
But you just said "The benefit is to people watching the prices" -- but if the odds haven't properly converged what information does watching the prices get you before-the-fact?
Maybe I'm just not getting it, could you lay out a scenario?
> if the odds haven't properly converged what information does watching the prices get you before-the-fact?
How do you know we are "before-the fact"? Because these numbers are bananas?
Somebody just tanked their job, their life, for a million bucks.
Anybody who took that bet, might've individually spent only a few bucks to see that.
Everyone else (the people watching) learned the price of entertainment is a few bucks, and ruining someone's life is a million bucks.
Was that a surprise to you? If not, then the (market) prices may be said to have converged (close to) reality.
But maybe it is, and you think people would ruin their lives for less, or would pay more for human misery. In any event, the distance between whatever you think that probability is, and the return earned on these odds is information, that we all can enjoy (as benefit) before-the-fact.
The point is to make money by letting people gamble on the future. What you said is a second order effect of doing the first thing. They should at least be regulated under gambling laws, doesnt make sense without it
What Polymarket says on the topic (https://integrity.polymarket.com/) is that they do not surface insider information and you mustn't trade if you have any.
Because the prediction market community is filled with liars and fraudsters, of course, it does seem to be common knowledge that this restriction isn't meant to be taken seriously, much like Polymarket's fake rule that Americans aren't allowed to use it.
But once you start from the premise that everything prediction markets say about their rules and practices is a lie, why should we believe they provide any genuine signal for anything?
The odds have shown to be largely correct, thanks to people profitably arbitraging away inaccuracies.
Or figure out which bet is insider info and profit?
Also, at least on Polymarket, beware of those who can influence the settlement of the wager, which may settle not in concordance with the actual outcome in reality.
https://www.reddit.com/r/CryptoCurrency/comments/1jki1lj/pol...
We would be much better off as society if bettors and gamblers actually learned from their lessons. Unfortunately that's not how it works.
The real money is in providing liquidity if you don't have insider knowledge.
Well you either get XKCD 1570 or Jane Street.
https://xkcd.com/1570/
Not much in between. The efficient market hypothesis claims many victims.
Yup, same with any kind of betting - sport, even draw games. There are obviously stories that someone managed to "game the system", like a man who figured out how to find winning scratch cards (Mohan Srivastava case) or Željko Ranogajec winning in Keno, but the point is that in the first case it was luck + skills, in the second it was overcoming the TOS by creating a lot of fake accounts, that's why the guy had to give his win back (details of the agreement were not revealed).
You bet against skilled people who set the stakes, so, yes, by observing numbers you can win in Keno, but if you comply to the TOS you will not win big money. The only chance to be able to "game the system" is to bet on something that lotteries brokers does not have time to look at, like 3rd Bulgarian bocce league matches.
The problem is that you need to somehow become an expert in 3rd Bulgarian bocce league and the money which are there are generally small.
I was investigating this (again) when AI showed up, as in theory it makes easier some analysis, but the big guys are also using AI.
Most sports betting markets have a degree of unpredictability, and bookmakers will ban sharps (those falling outside the statistical norm or continually hitting lines just before the market moves).
Betting on a final score in most markets is fine.
When betting gets extremely narrow and specific e.g. "Player X will be subbed on for Player Y" it gets morally dubious.
There is a lot of overlap with insurance markets. The incentives have to be aligned (life insurance) with sensible guard rails against abuse (cooling off periods to be covered for suicide)
That's a very naive take of someone who never professionally traded. There are liquidity providing, market making trading strategies that work in absence of insider information.
This is true of all markets.
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 insider traders in a step towards legitimzing and regulating prediction markets in the US.
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).
They are regulated. That's why Connecticut, Arizona, and Illinois are being sued by the government. They tried to regulate these markets and the CFTC says they regulate them, not the states.
These markets are regulated by the CFTC, currently, so what exactly is novel here?
Poly market is not a us exchange. Kalshi is.
You can charge anyone in the world with anything, the trouble is getting a judge to agree with you and getting your hands on the person you're charging.
The first problem doesn't seem to be all that hard in the US (unless the inside traders are part of the US government, of course), the second problem can be as simple as having Google organise an all-expenses-paid team activity to bait the subject into jurisdiction.
If the basis for their charges really is just that he traded in dollars, then this is yet another example why nobody should trust Americans and their currency when it comes to trade. I hope they can come up with something better than that.
> the second problem can be as simple as having Google organise an all-expenses-paid team activity to bait the subject into jurisdiction.
This actually happens. I know that the FBI once organized an all-expenses-paid trip to a "conference in Hawaii" for certain Chinese chemists it wanted to nab.
The corollary is that if you have reason to expect you're wanted by American Feds, never travel outside China, Russia, and certain European states that are extraordinarily hesitant to extradite to the US (e.g. Ireland).
US charged and arrested a man in Venezuela so...
Don’t think they will mobilize 40 elite soldiers to invade Switzerland airspace just because of a small sum of a million dollars
He was arrested in New York, so he was in the US
That doesn't mean he has committed a crime in the US though.
That's aweful, only senators should be allowed to do that!
And the progeny of someone whose name rhymes with 'Thwump'.
A UH60 Blackhawk with DEVGRU is heading to your location now </joke>
You can probably just say Trump
Interesting to see that insider trading is considered illegal after all.
When will the white house insiders see the same fate?
Well, you see, the house always wins
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.
> pretending Polymarket bets are securities
No, they are pretending they are _commodities_. Pretending things are securities is disfavoured by the current administration.
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.
> (…) provide no benefit to society and don't need to exist.
The sounds extremely fascist.
TIL fascism is when you let states regulate gambling because of the public interest and lack of public benefit.
Fascism is when seatbelts
What would happen if some regular Joe, completely unrelated to any other user, watched for bets that could signal insider information and made significant profit themselves, too?
This is a trade that is already done by trading businesses. It doesn’t even need to be this explicit; you could for instance dispose one side of a trade to reduce exposure to insiders.
fair number of people do this, bunch of free tools to filter by this criteria (brand new account, more than $xx,xxx size), vulnerable to spoofing obviously
If you're playing a poker game and you look around the table and and can't tell who the sucker is, it's you.
- Paul Newman
If you worked at Google for 12 years, it seems pretty irrational to commit this kind of crime for only $1M.
Maybe there’s a chance he can get pardoned before 2029 lol
> If you worked at Google for 12 years, it seems pretty irrational to commit this kind of crime for only $1M.
Kinda? It's not like people making an order of magnitude less don't get busted for crimes where they're stealing an order of magnitude less.
This guy is the biggest LOSER who betted that Donald J Trump was NOT the most searched name on Google.
Which is obviously false, we all know the FAKE NEWS Google lies about this and they STOLE the designation of the most searched for person on the Internet.
Donald J Trump is the greatest person which ever lived, who ended 11 wars, and to imply that he is not the most searched person in the world is FAKE NEWS from the FAILING google.
Thank you for your attention on this matter
I feel like this pastiche burned through whatever comedy potential it had before mid-2017.
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.
> against the companies' T&Cs
Not a crime, or certainly shouldn't be.
By entertainment I assume you mean money laundering?
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.
Well at least if they were gambling they wouldn't be in danger of arrest.
A few more cases like this and people will go back to gambling
NSA employees must be the final boss of this kind of stuff.
If he had made less money doing it he probably would have gotten away with it.
Anderson Cooper: But predictive markets do rely on someone having some inside information.
Shayne Coplan: Uh-huh. Yeah. I think that people going and having an edge to the market is a good thing. Obviously, you need to curate them and you need to be really clear and stringent on where the line is drawn and, like, sort of ethics and we spend a lot of time on that. But it's sort of an inevitability that this will happen, and there's a lot of benefits from it. And, you know, people will adapt.
[1] https://www.cbsnews.com/news/polymarket-ceo-shayne-coplan-on...
“and, like, sort of ethics”
they spent a lot of time on it!
So are we going to regulate these things or what?
See also: https://www.nytimes.com/2026/05/24/us/how-prediction-markets...
So now the real bet he lost is salary + time for all those years he is going to prision + lower job for decades after prison. This person bet Millions to get $1M basically and lost both, very rare gambling level lost from smart(used to) person. At least normal gambler loses what they have and some debt.
He was Staff-level as well. That's minimum $500k a year or more. And tenure often grows pay disproportionately at Google. That's easily $20 million lost.
You're making a bold assumption that this is the first time they're making money off of these bets.
I am confused. Are bets considered securities? I thought the CFTC and insider dealing laws applied to securities, not betting.
If they recognize they are betting companies, they have no right to operate in the majority of the states. So, they found the CFTC willing to pretend that these betting contracts are in fact securities, and that is how they can legally operate.
Commodities, not securities. The CFTC doesn’t regulate securities.
Wow. WTF does this say about Google algorithmic manipulation if an employee can predict specific search results to such a granular extent... Down to a specific artist. Google is rigged.
polymarket should be illegal, challenge me.
There's manipulation going on, but if you fight that, why do you feel that prediction markets should be illegal?
The stock market should be illegal too. The stock market is just a prediction market at this point. What value does it create?
> The stock market is just a prediction market at this point.
Not really. But I can get your point.
Forbes flagged this account back in December and it still took prosecutors months to charge him.
Yes, what did you expect? That’s amazingly fast for federal prosecutors.
So they hanged a nobody while the person who made even more with white house insider trading announcements by the president goes scotch free?
Trump's family and their cronies have a free pardon waiting for them the day they get convicted. Better wait until the next regime shift, spending money on trying to prosecute the insiders now is just a waste of everyone's time and money. So far Trump has pardoned the 1/6 insurrectionists without any consequences, pardoning someone for a little white collar crime is barely going to hit the news cycle.
I’m curious how he got caught. Polymarket accounts should be untraceable
How could this be insider trading? Polymarket has nothing to do with financial securities. A bet on Polymarket is like trading any other crypto asset.
Polymarket US is only able to operate in the USA because it is being regulated by the CFTC as a securities market. Otherwise, they would have been seen as a gambling site and would have been banned virtually everywhere.
Meanwhile His Royal Highness is free to do as he please. Got even life time immunity deal as well
Anyone could have run the list of candidate names from the bets through google trends right?
There's an end-of-year Google trends wrapped that the employee pulled off an internal system before it was public.
Is that even illegal?
[dupe] https://news.ycombinator.com/item?id=48301808