There's a saying in poker that if you sit down at the table and can't immediately find the donkey(1), you are the donkey. At some point, anyone playing around in a prediction without insider info will be the donkey.
The value of that to the public is pretty minimal though, seeing as that private information becomes public 1-4 hours before it would've been publicized in the more traditional way. And the signal itself is extremely noisy.
We get it but what good is it if the insiders come and bet mere hours before the event happens? So we could have known a few hours early? I feel like this is just people trying to justify gambling. In the UK bookies have been doing this forever, it's nothing new. It's just gambling.
The way it's working though is that they don't provide much information, because there's very little time between their public bet and the outcome they bet on.
Now look at Polymarket's advertising. It is 100% presented as a gambling platform, not an information discovery system. There is nothing saying "don't play if you don't have insider information." I do not think that we can reasonably fall back on this defense of these platforms anymore.
I also don't much societal value in these platform's ability to suggest political events a few hours before they happen.
And this wasn't even really the original theoretical claim for these markets. The goal was to financially incentivize research and deep investigation, not to financially incentivize people who have access to hidden information by default. If somebody developed a system for predicting cease fires and used that to win in these markets then we've created a new thing for society. If somebody is just in the room when a cease fire is decided we haven't progressed society at all. All we've done is create a new way for people with power to extract personal wealth.
Yes, I suppose. Remember people are parts of various nations. Your "national security threat" might be a "national security opportunity" for someone else ;)
No, its main function is to extract as much money as possible from those who bet without that private information and without ability to influence bets. They do not actually make the information public.
How does making a wager cause insider info to be public? All it means is an anonymous account placed money on the outcome, how does it make public anything that an insider knows? It doesn’t.
It incentives them to keep the info secret in order to profit or a wager on a related outcome. The insider info remains secret, all people know is some bloke stood up a new account and placed a big bet.
And for these short timespan bets, it seems utterly useless. If the wagers were only allowed on things two weeks out, and not allow bets on short term events then maybe it could show more info.
I'm so tired of hearing this explanation. It completely ignores reality. As everyone has said, what's the point? You get information 2 minutes ahead of time? But how do you know that guy actually has the real info? Because he put a lot of money on it? Okay, then how am I supposed to make use of that information.
I'm so tired of people parroting this line as if it somehow explains everything. These new Prediction Markets are nothing but a new way of gambling. period.
Can someone explain to me how we haven’t regulated the hell out of the clearly illegal sector of betting on shit that can clearly be insider-traded with little to no scrutiny?
People want very smart people to wager on future events to make public the best information possible. Okay, so when these super-predictors get fleece by insiders, then what?
Having any uncertainty market where insider information is not considered cheating is a complete waste of time. The insiders will always win, everyone else will slowly lose even if they are smart as hell.
Just imagine playing poker at a table where one in a thousand people can see all the hole cards. The entire game is for them to wait you to put all your money on the table when they already know the winning move. Even if you can win enough to stay in the game, they can take you for everything in one play when you get something wrong that you were very certain of.
So I follow the oil and gas industry and markets. For anyone that doesn't know, commodity markets mostly operate two different markets: futures and spot. Futures contracts are an agreement to deliver (or take delivery, depending on which side you're on) a certain quantity of a standardized commodity at a given date. Futures markets tend to be a mix of speculators (who are simply betting on price movements of the underlying) and traders who produce or want the underlying. The advantage of a futures contract is it can allow someone to hedge their costs and lock-in prices. All sorts of producers and industries use them for that.
Oil futures are standardized into several standard types (9 I think, I might be off). You will hear terms like West Texas crude and Brent. This refers to two main factors: the relative mix between lighter and heavier hydrocarbons (called the API gravity) in the oil as well as the sulfur content.
One side benefit of all this is discovery. It's a way of measuring sentiment. So if future oil prices rise, it indicates market sentiment is negative about the war and they further disruption is expected. When it looks like hostilities may end, the price drops.
But there's a problem: nobody trusts the market anymore. It's being manipulated as insiders are clearly frontrunning news with massive bets, sometimes minutes before news gets released. This has been happening with other markets too, most notably SPY futures. Markets cease to function once manipulation becomes widespread.
The future price is also called the paper price and another signal that the paper price is meaningless is that the spot or physical price for oil has skyrocketed well beyond any oil prices you might see in the news. For example, a few weeks ago, physical Dubai oil was nearing $180 per barrel. West Texas crude had a future price of $110 yet the physical price was $140+.
An issue here is that the physical price isn't easily discoverable. It's hidden behind subscription services that cost thousands so you only hear about it when it's reported on. But this means talking heads are reporting on $110 oil when it's really $150.
We saw a similar mismatch with the silver market at the end of last year. That market too was clearly being manipulated but rather than insiders, many (including myself) suspect it was the refiners and others who had lost with silver's massive rally and were doing everything to pop the bubble, including changing the exchange's liquidity ratios to force sales.
In previous years, some or all of these people would get investigated and prosecuted by the SEC for insider trading. That agency has been defanged by putting a pro-deregulation loyalist in charge but the bigger problem is that some or all of these people will be buying pardons before the president leaves office. And the president can no longer be prosecuted thanks to the Supreme Court inventing presidential immunity.
One source of American power is the control over the global financial system. All of this insider trading risks dismantling that. It's not hard to find people who are sitting out because they simply don't trust anything anymore. If this spreads to financial institutions and institutional traders, that's going to be a big problem.
So-called "prediction markets" (and crypto) are even less regulated than that. Unless you have insider knowledge or you're betting on something that isn't prone to insider information (and I honestly don't know what that would be), I'd stay away.
And these prediction markets are small fry. SPY futures are a significantly larger market. So is oil and gas. And Treasuries is order of magnitudes bigger than either of those. Yet some of those markets can't be trusted and I suspect this is only going to get worse.
I don't have any hope that anyone will ever be prosecuted for any of this.
It can be said that Trump's "tweets" on that day were strategically engineered to first bring this bet to near zero before ultimately bring it to a hundred. In this way, the maximum winnings could be made by someone with insider knowledge.
Is there really that much liquidity in these bets? Polymarket is just a broker right? So people are putting up tens of millions cumulatively on the other side of these random bets?
This isn't useful information without also knowing how common it is for newly-created accounts to place and lose bets around that size. Polymarket is a large platform with a lot of accounts being created per day. If two accounts made large bets and won and eight accounts made large bets and lost, you haven't discovered anything interesting.
I wonder if this sort of corruption will become a new negotiation tactic.
Give us what we want and we'll delay the announcement long enough for you to make preparations.
I don't know how Polymarket works, so maybe you can enlighten me: can Polymarket be subpoenaed to provide the recipients of the payouts? Is there some insulation to keep them ignorant of their identity?
I've tried to have sympathy for people who lose money gambling but I just can't. Maybe some argument can be made for the fool who loses money on something silly like a sports game, but people certainly not for people trying to make a buck off of death an destruction.
Trump Jr. is invested in Polymarket via 1789 Capital. So the Trump volatility by hourly policy reversals on "Truth" "Social" benefits the gambling industry as a whole as well as insider betting.
Iran correctly figured out that by threatening the OpenAI data center, where the Kushner family has shares, could move Trump to call off the infrastructure strikes. Or it played a role at least. Maybe the strike is postponed until after the OpenAI IPO.
138 comments
1: https://en.wikipedia.org/wiki/Glossary_of_poker_terms#donkey
Now look at Polymarket's advertising. It is 100% presented as a gambling platform, not an information discovery system. There is nothing saying "don't play if you don't have insider information." I do not think that we can reasonably fall back on this defense of these platforms anymore.
I also don't much societal value in these platform's ability to suggest political events a few hours before they happen.
And this wasn't even really the original theoretical claim for these markets. The goal was to financially incentivize research and deep investigation, not to financially incentivize people who have access to hidden information by default. If somebody developed a system for predicting cease fires and used that to win in these markets then we've created a new thing for society. If somebody is just in the room when a cease fire is decided we haven't progressed society at all. All we've done is create a new way for people with power to extract personal wealth.
It incentives them to keep the info secret in order to profit or a wager on a related outcome. The insider info remains secret, all people know is some bloke stood up a new account and placed a big bet.
And for these short timespan bets, it seems utterly useless. If the wagers were only allowed on things two weeks out, and not allow bets on short term events then maybe it could show more info.
I'm so tired of people parroting this line as if it somehow explains everything. These new Prediction Markets are nothing but a new way of gambling. period.
Leaders? Are you awake at the wheel?
>
as records show substantial betsThey're not bets anymore. Now they're swaps.
Having any uncertainty market where insider information is not considered cheating is a complete waste of time. The insiders will always win, everyone else will slowly lose even if they are smart as hell.
Just imagine playing poker at a table where one in a thousand people can see all the hole cards. The entire game is for them to wait you to put all your money on the table when they already know the winning move. Even if you can win enough to stay in the game, they can take you for everything in one play when you get something wrong that you were very certain of.
Oil futures are standardized into several standard types (9 I think, I might be off). You will hear terms like West Texas crude and Brent. This refers to two main factors: the relative mix between lighter and heavier hydrocarbons (called the API gravity) in the oil as well as the sulfur content.
One side benefit of all this is discovery. It's a way of measuring sentiment. So if future oil prices rise, it indicates market sentiment is negative about the war and they further disruption is expected. When it looks like hostilities may end, the price drops.
But there's a problem: nobody trusts the market anymore. It's being manipulated as insiders are clearly frontrunning news with massive bets, sometimes minutes before news gets released. This has been happening with other markets too, most notably SPY futures. Markets cease to function once manipulation becomes widespread.
The future price is also called the paper price and another signal that the paper price is meaningless is that the spot or physical price for oil has skyrocketed well beyond any oil prices you might see in the news. For example, a few weeks ago, physical Dubai oil was nearing $180 per barrel. West Texas crude had a future price of $110 yet the physical price was $140+.
An issue here is that the physical price isn't easily discoverable. It's hidden behind subscription services that cost thousands so you only hear about it when it's reported on. But this means talking heads are reporting on $110 oil when it's really $150.
We saw a similar mismatch with the silver market at the end of last year. That market too was clearly being manipulated but rather than insiders, many (including myself) suspect it was the refiners and others who had lost with silver's massive rally and were doing everything to pop the bubble, including changing the exchange's liquidity ratios to force sales.
In previous years, some or all of these people would get investigated and prosecuted by the SEC for insider trading. That agency has been defanged by putting a pro-deregulation loyalist in charge but the bigger problem is that some or all of these people will be buying pardons before the president leaves office. And the president can no longer be prosecuted thanks to the Supreme Court inventing presidential immunity.
One source of American power is the control over the global financial system. All of this insider trading risks dismantling that. It's not hard to find people who are sitting out because they simply don't trust anything anymore. If this spreads to financial institutions and institutional traders, that's going to be a big problem.
So-called "prediction markets" (and crypto) are even less regulated than that. Unless you have insider knowledge or you're betting on something that isn't prone to insider information (and I honestly don't know what that would be), I'd stay away.
And these prediction markets are small fry. SPY futures are a significantly larger market. So is oil and gas. And Treasuries is order of magnitudes bigger than either of those. Yet some of those markets can't be trusted and I suspect this is only going to get worse.
I don't have any hope that anyone will ever be prosecuted for any of this.
I don't know how Polymarket works, so maybe you can enlighten me: can Polymarket be subpoenaed to provide the recipients of the payouts? Is there some insulation to keep them ignorant of their identity?
Iran correctly figured out that by threatening the OpenAI data center, where the Kushner family has shares, could move Trump to call off the infrastructure strikes. Or it played a role at least. Maybe the strike is postponed until after the OpenAI IPO.