New Delhi, Jan 06: BBC reported that a crypto-based prediction market wager that netted more than $436,000 ahead of the sudden ouster of Venezuelan President Nicolás Maduro has drawn scrutiny to the opaque world of political betting, an industry increasingly intertwined with political power in Washington.
In the hours before President Donald Trump announced that Maduro had been seized by US forces, betting odds on Polymarket that the Venezuelan leader would be out of power by the end of January surged sharply. One anonymous account, created just last month and focused exclusively on Venezuela-related bets, turned a $32,537 stake into nearly half a million dollars, reports BBC.
While the identity of the bettor remains unknown, the timing of the trades has raised concerns that someone may have profited from advance knowledge of a sensitive US operation. Dennis Kelleher, chief executive of the financial reform group Better Markets, said the trade bore “all the hallmarks of a transaction based on inside information,” reports BBC.
Polymarket data show that as late as Friday afternoon, the odds of Maduro’s exit stood at just 6.5%. They rose modestly by midnight before spiking dramatically in the early hours of Saturday, shortly before Trump posted on Truth Social that Maduro was in US custody, reports BBC.
The episode has intensified scrutiny of prediction markets, which allow users to wager on political outcomes using cryptocurrency and operate under looser regulatory frameworks than traditional financial markets. While insider trading is illegal in equities, prediction markets sit in a grey zone, governed by fewer and less explicit rules.
The controversy is politically sensitive, not least because Donald Trump Jr, the president’s son, serves in advisory roles at both Polymarket and its rival Kalshi, underscoring the industry’s proximity to the current administration, reports BBC. Both platforms have grown rapidly, handling hundreds of millions of dollars in wagers during the 2024 US presidential election cycle.
Lawmakers are beginning to respond. Democratic Congressman Ritchie Torres has introduced legislation that would bar government employees from trading on prediction markets when they possess “material nonpublic information” related to the bet, an attempt to close a regulatory gap exposed by the Maduro episode.
Kalshi has said it explicitly prohibits insider trading, including by government officials, while Polymarket has yet to publicly comment. But the incident highlights a broader challenge: as prediction markets gain legitimacy and political access, questions about fairness, transparency and misuse of confidential information are likely to intensify.