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.
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.
Yes, I suppose. Remember people are parts of various nations. Your "national security threat" might be a "national security opportunity" for someone else ;)
Leaking classified information is a crime, and I don't see why foreign adversaries can't monitor Polymarket to get advanced warning of military actions. A less corrupt US government would ban betting on matters involving national security.
Also I doubt any adversary worth their salt needs to monitor Polymarket.
I remember reading once that when the US was working on the SR-71 Blackbird out in the desert the Soviets could read its cross section by using satellites to pick up the thermal signature its presence on the ground left behind. State level actors aren't doing pedestrian stuff like watching pizza deliveries to guess what the Pentagon is up to.
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.
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.
The price movement is the indicator that there is insider information.
Of course there are lots of problems with this theory - in large markets a single trader has to make large bets to move the market, and with the current leadership the price moves large amounts unpredictably as well based on the latest statements.
But the mechanism itself makes sense.
It's unclear if that's a good thing. Of course some people know secret information before hand. Is disclosing that always good?
Another problem is, people may actually want to bet on random outcomes, because of money laundering or simply because this is how gambling essentially works. That huge account could be an insider or a billionaire with a few hundreds k to burn. Or maybe they want to orient people’s opinions towards a certain outcome.
Claiming that price movement in a prediction market reveals some amount of truth implicitly assumes that:
- people bet on something they believe to be true, and not to sway other people’s opinions or simply to burn money,
- people bet on something they believe to be true because they have specific private information (e.g. I bet on the Red Sox not because I think they’re good but because I know things other don’t about their opponents, their physical conditions and so on).
- their belief is actually correct (eg if I’m in the CIA and I know that the Soviets are about to launch a nuclear missile I can bet on it… but I don’t know that an officer down the line will refuse to do that).
Even if this was true, there is an issue of timing and consequences. Example: imagine it’s 2011 and some CIA or DoD officer makes huge, sudden bets on the fact that Bin Laden will be caught. Some AQ people get wind of this and move Bin Laden somewhere else. Congrats, your price movement signaled non public information to the market!
Another issue is that these bets tend to rely on public sources, news reports and so on. A journalist in Israel was threatened to change his news reports so that certain people didn’t have to lose on a prediction market. This could become more and more common, and with the advent of AI generated pictures who are you going to believe? Are you losing money because you bet on the wrong outcome or simply because someone with enough resources ensured that your outcome was never going to be reported?
> Congrats, your price movement signaled non public information to the market!
so from bin laden's perspective, this would've been a good outcome isnt it?
Can't say what a good outcome is without saying who.
What if enemies of the USA had corrupt generals who also make bets on anti-US actions to profit personally, and inadvertently reveal information to the CIA/NSA, who then prevent such anti-US actions? Would that not have been a good outcome as well?
Information is information - and one cannot say if it's good or not. However, i am a believer that more information generally do good than bad - assuming the consumer of said information is smart.
> Are you losing money because you bet on the wrong outcome ...
It doesnt matter, because you chose to bet. You do not need to bet in order to make use of the information being revealed by those who are betting.
>so from bin laden's perspective, this would've been a good outcome isnt it?
Of course
> Information is information - and one cannot say if it's good or not. However, i am a believer that more information generally do good than bad - assuming the consumer of said information is smart
Smart doesn’t always equal good.
The consumer can be smart and use the information to benefit themselves (and possibly harming others), but this doesn’t necessarily justify releasing information. In fact, even Snowden, who famously released a lot of information, didn’t release everything. He applied his judgment and avoided publishing some stuff. Was his judgment correct? I don’t know. The question is - at some point, is information release always neutral?
> Are you losing money because you bet on the wrong outcome ...
It doesnt matter, because you chose to bet. You do not need to bet in order to make use of the information being revealed by those who are betting.
What I’m saying is, if I bet on event X and X happens, I would expect to be paid. Instead I may not get paid simply because someone else who bet against X has the power to suppress any proof of X happening (via threats, money,…). This doesn’t happen with regular sport bets because sport events inherently have a lot of witnesses (physically present at the place where things are happening), there are referees, the teams themselves advertise the results, there is a professional league keeping scores and so on. If you bet on someone getting killed abroad by some military abroad, or military skirmish happening in a remote place, or other plausible but hard to verify event, faking something with AI or a friendly reporter is easier. And because people use cryptocurrencies in this platform, how can you prove active manipulation vs bona fide in some video some reporter published? “Hey, I just saw this video, who knew it was wrong?”.
The argument that you can lose money simply because it’s a bet, even when you should have won, is not convincing. Ok, I can lose but if I win shouldn’t I get the money?
But that’s not the claim people bandy about on the gambling markets.
They claim it incentives sharing of info, but what you’re saying is it’s only sharing meta info. That the info remains secret and the wagers reveal that it’s possible insider info exists - not what the info is.
Honestly, this has all the same smell as NFT justifications. I’d be suprised if the main touts of prediction markets weren’t previously touting NFTs and “smart” contracts. Actually, it even seems like the markets are inspired by those.
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.
> These new Prediction Markets are nothing but a new way of gambling.
There are two kinds of participants, those with inside information and liquidity providers. The liquidity providers incentivize the insiders to share the information.
Yes sure there are gamblers, but here they're doing something useful – providing liquidity. If they just went to the casino, the money would be lost without any useful output.
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.
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.
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?
Does it need to be regulated? This isn’t pension funds placing bets risking people’s investment money.
People using Polymarket are gambling on pretty random things and must understand the risk
, whether it is on major geopolitical events or someone counting cars going through a junction these events can all be manipulated pretty easily.
People want to gamble on random things? Let them.
If anything is regulate the other side, people in government can’t use sites like polymarket because I don’t want them making stupid decisions so bets fall one side or another.
Polymarket gamblers have pressured at least one journalist regarding reporting of missile strikes. This requires regulation or, as others here have suggested, non-anonymity, maybe other measures too.
It's already illegal to threaten journalists. In America we generally make bad things illegal, not activities that could become motivation for bad things. Someone threatened me on League of Legends last week. Should we ban the game?
>In America we generally make bad things illegal, not activities that could become motivation for bad things.
Not really, even in America. Like, take alcohol regulation. Your model would be "drunken bar fights are already illegal, so just prosecute that, problem solved."
Except that, historically, there's so much of that that it overwhelms the ability of law enforcement to keep up. So we try to remove the driving factors: "Okay, you can drink in public, but only[1] at these licensed places that are heavily incentivized to prevent fights before they start."
I'm not advocating any particular position, I'm just saying that if there's a persistent situation that heavily incentivizes violence, then it's not unreasonable to push back on that mechanism rather than just try to mop up the violence after the fact. Which specific situations merit that is up for debate, but it shouldn't be controversial that some situations should be handled this way.
[1] Yes, I'm simplifying, just focus on the general point here.
What if 100% of the bets you place in a slot machine go to the owner? It's the exact same thing here.
Slot machines are regulated so the game is fair and they're not simply machines where the rich steal from the poor. Such a machine would be scam by definition.
I'm not a polymarket gambler or a gambler at all really, so I have no skin in this game but why does it have to be fair?
I would say casinos and slot machines are already stealing from the poor and giving to the rich and already a scam, people play them (aside from addicts) because there is a chance they will win, they know not everyone wins.
I'm in favour of people being treated fairly I just think regulation isn't what is required here, more education "play this but the odds are tilted away from you".
It would actually be better if slot machines never paid out and 100% of their bets went to the house. Very very few people would use them. They're addictive exactly because they do pay out sometimes.
I would suggest at least having KYC (know your customer) rules which all banks, financial exchanges and traditional online bookmakers are required to implement would be reasonable for these markets?
At least it would somewhat hinder the type of activity we’ve seen (where journalists are threatened by criminals to withdraw or change their stories) without just banning such betting exchanges outright.
Hmm interesting, my gut is that i'm not against it. I think in reality it does happen (take a look at Lucas Paqueta in UK soccer) so may as well accept it - you'll never know who has more to lose (win) a player betting their side will lose or a player on the opponent side betting their side will lose so it should even out.
Gambling is a risk, it isn't just the house's edge but anything can go wrong on the day.
Its potentially much worse: we don't know if the threats and bets are isolated. While diplomacy happens, the threats may very well be exaggerated to create the market opportunity.
I think making the bets not anonymous is sufficient imho.
If a gov't official (including the president) is leaking classified information, there's already laws about that isnt there? (Whether it's effective is another question - i'm assuming it's currently effective).
It's even worse. A federal court just ruled that these markets cannot be meaningfully regulated by states because they are selling financial instruments rather than providing a gambling platform and federal law preempts state regulation on these financial instruments.
I mean... insiders are betting on war crimes. Yes, the insider betting is bad but it doesn't even touch the edges compared to committing war crimes. And if the government is committing war crimes, why would they care about something so inconsequential as betting on them?
I wanted to reply, but I think I just don't understand your comment at all.
Are you saying the "sector of betting on shit that can clearly be insider-traded" is illegal? Does that include like gold and S&P500?
The way I see it, prediction markets' main function is to connect gamblers with insiders posessing useful information. Are you concerned for the gamblers losing? But they were gonna lose anyway, one way or the other. Or are you concerned about the insiders winning? Sucks, but at least the public gets information by way of the prediction market being more accurate.
I’m concerned about people with addictions being exploited by greedy degenerates who don’t care about the negative externalities with which they’re burdening our society, yes.
Do you propose to make all addictive endeavours illegal? Ban porn? It might actually be a good idea in theory, but I doubt it'd work in practice, who knows.
Gambling is particular, specific burden and crime against society that's been recognized as such for thousands of years.
The recent experiments with legalizing it on an industrial scale are simply experiments with legalizing crime. We don't have to touch the stove but I guess simply being told about what happens isn't enough for us.
Sports gambling was illegal in most states just a few years ago. Prediction markets also didn't exist. We have ample evidence to show us that it did work fine to ban these things. We aren't talking about some hypothetical world. We are talking about a world that existed just ten years ago.
Nobody is forcing anybody to place the bets, but if you see credible money flows into eg. Middle East cease fire bets, you can decide to fill up your tank today, or not. We can’t think for you here, if you don’t see anything useful in the price then it’s time to educate yourself until you do. You should consider these bets more trustworthy than any news you read in mainstream media. There might even be a way to fund journalism here, though ethics are quite muddy indeed.
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.
I guess this would be fine if there was no such thing as anonymous betting, right? Some public official weaseling his way onto a bet he has insider knowledge on is fine, as long as everyone knows that he's doing that. Or am I wrong?
Edit: then again, in EU banks regularly force you to fill out a questionnaire where you declare whether or not you're affiliated or closely related to any public officials for precisely corruption prevention (or detection) purposes. Why are people not forced to do that on these platforms?
Then get rid of it. Make it illegal or tax it to death.
My point is that the entire premise of "why it's ackchyually good though" is wrong. The thesis is that the markets let intelligent agents flourish, adding value to the real world. When really, the insiders can be idiots and still win.
We gain no new information because the insider has every incentive to hold off on their move until the very last minute, maximally reducing the effects of theta and vega, to maximize profit. This adds little to no practical information to the market while potentially removing super-predictors from the market.
It just becomes a vehicle for insider-trading, so make that illegal, cancellable, or just get rid of the market altogether.
I think the question was: Who gets the payout?
The bet is: There will be a ceasefire.
There was a ceasefire, but it was allegedly broken almost immediately after. So does that count as ceasefire or not? There are arguments for both sides, so you could also say it's a tie and neither party gets the cut and the bets will be refunded.
You can just read the rules for that particular prediction on Polymarket yourself. In this case according to the rules it just comes down to whether or not there is an official ceasefire by a particular time. It does not say anything about what happens if the ceasefire is broken after that time so in that case it doesn't actually matter that it was broken.
Usually the market have rules that define the bet more concretely than just "there will be a ceasefire", and resolutions can be disputed where they will be arbitrated by the market operator. For this particular market you can see that here (https://polymarket.com/event/us-x-iran-ceasefire-by), but I'll paste the current text too:
This market will resolve to “Yes” if there is an official ceasefire agreement, defined as a publicly announced and mutually agreed halt in direct military engagement, between the United States and Iran by the listed date, 11:59 PM ET.
For the purposes of this market, an “official ceasefire agreement” requires clear public confirmation from both the United States government and the government of Iran that they have agreed to halt military hostilities against one another, or for an official ceasefire agreement to be otherwise confirmed to have been reached by an overwhelming consensus of media reporting.
If the agreement is officially reached before the resolution date, this market will resolve to “Yes,” regardless of whether the ceasefire officially takes effect after the resolution date.
Any form of informal understanding, backchannel communication, de-escalation without an announced agreement, or unilateral pause in hostilities will not be considered an official ceasefire. Humanitarian pauses, limited operational pauses, or temporary tactical stand-downs will not count toward the resolution of this market.
A broader peace deal, normalization agreement, or political framework will qualify only if it includes a publicly announced and mutually agreed halt in military engagement between the United States and Iran, effective on a specified date, or otherwise confirmed by an overwhelming consensus of credible reporting. Agreements that outline future negotiations or de-escalation measures without an explicit, dated commitment to stop fighting will not qualify.
This market’s resolution will be based on official statements from the United States government and the government of Iran. However, an overwhelming consensus of credible media reporting confirming that an official ceasefire agreement has been reached will suffice.
So the real answer is, "whoever the market operator chooses".
This seems to involve there being an agreement in place, but not necessarily in effect or even followed, so the possibility of it having already been violated seems to be irrelevant
They put a lot more thought into the terms than the Trump administration did, that's for sure.
Still: does the combination of a deranged Truth Social posting, an obviously-pasted tweet from the Pakistani government, and a 10-point list of debatable provenance count as "clear public confirmation?"
I guess so, sort of, maybe? Fortunately I don't have a 7-figure wager at stake.
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.
Thank you for the thoughtful analysis. I'd echo that the deregulation and corruption of these markets has two impacts:
1) less "legitimate" (non-corrupt) capital flowing to these markets which may ultimately reduce the liquidity and value of the asstrs.
2) more speculative deployment of capital, which means that capital is used for making bets rather than uses for productive purpose (such as investing in legitimate investments that are productive for the economy.
Why would a insider invest in legitimate, productive investment when they can make outsized gains in betting markets or corrupt futures markets?
And yes, long term this will massively taint the US financial power and make economies like the UK more appealing.
I find it very hard to understand why so many people and institutions are still participating in markets that are obviously full of insider trading. It's basically just giving money away to the insiders. Why do people do this?
It's their job and if they're good at it, they still win / earn money. Someone who's staying eyes glued to the price charts on 12 stacked monitors will be the first to see a trend and buy/sell immediately after the action of the insider trader.
You're a fund manager. What's the alternative? Throw your hands up and tell your customers to take all their money back, you don't want to get paid anymore?
Exactly. Barter is super insanely expensive in comparison with the most manipulated paper markets; thus, if you closed the current markets, the participants would be very highly incentivized to create a new one, which would likely be worse on all accounts.
Institutions do not stake their own money and are somewhat averse to the direction of the market. As for common people, they're generally not known to do the most rational thing.
> 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.
This is not a "bigger problem".
> the president can no longer be prosecuted thanks to the Supreme Court inventing presidential immunity
In 2015, there were a hundred things you could've inserted into "The US cannot ___" or "The POTUS cannot ___", that have happened since. Things "can't" until they can.
> I don't have any hope that anyone will ever be prosecuted for any of this.
Agreed, but this is _solely and entirely_ due to a lack of will to do so, not because of any laws.
I think you misunderstand. His comment about futures markets is equivalent to your comment about twitter. Neither of you are getting your news from NYT.
Imagining that hurricane prediction cone they put on maps, Twitter encompasses the entire cone and then some. Someone on Twitter is gonna be right, but rarely the same person consistently.
You are correct: the CFTC has primary authority over commodities and futures. I'm glad you pointed this out because in looking up who it was I learned that the cFTC (not the SEC) has regulatory authority over prediction markets too. That was new information.
This made me curious: who regulates sports betting? And the answer seems to be... nobody. Well, the states. I guess I should've known that because I know some states ban sports betting.
But that's interesting compared to prediction marekts. Since they're federally regulated, states don't have as much control. And I see that the current CFTC commissioner is suing states to block prediction markets. And prediction markets can and do allow sports betting.
What is a typical price difference between the paper and spot prices? 1% or 10%+ is common? In the past 24 hours, the futures price dropped a huge amount. Is the spot market dynamic enough that prices can get reflected so quickly? Where does it stand in the past few days?
It is also interesting to think about the game theory on how you respond to markets during volatility. If you are a producer or have excessive storage capacity - when do you sell? From my armchair position, it seems like conditions are only going to get worse. Do you hold back some reserves, hoping to cash in on a higher pay day in the future? Then you have to wonder how many might be doing the same.
This is hard to say because physical delivery prices aren't easily discoverable (as mentioned).
Here's one way it matters though. Futures markets are typically in a state of backwardation or contango. Backwardation simply means the spot (or physical) price is higher than the paper or future price. Contango is the opposite. Whichever one it is, says something about the current market and the expectations for the future.
So the silver market was in backwardation where the paper price was $75+/oz but the physical price might've been $100+ but nobody was buying. People with silver delivery obligations were simply borrowing silver from those who had it rather than buying it on the spot market. There's a whole separate market for borrowing commodities and the premiums soared. But people who had shorted silver simply couldn't afford to buy on the spot market without going broke so they didn't. They kicked the can down the street, borrowed and then lobbied for the exchange to pop the bubble (which they did).
The best example of a contango market was in March-April 2020 with the oil market. This was the beginning of the pandemic and oil demand fell off a cliff. So people who already had oil couldn't move the oil they had and thus had no room to take delivery of oil they'd already bought (via futures). Producers only have so much storage room before they have to shut off production. Side note: Gulf producers have had to do this in the last month.
But the net effect was there was all this oil and nowhere for it to go so for a brief period the price went negative. That's right. Producers were paying you to take oil. That was an extreme contango market.
So in the last month I've heard data points like Dubai crude was $120-130 paper and $178 physical. That's a huge margin. I don't know what the normal range is really. In a healthy market you'd expect physical prices to be pretty near to short-term future prices.
In any bullish market, you'll get hoarders. There are limits to what you can store though and those are very real because if you shut off production, you might still be accuring a lot of costs and it can take days to restart production. As such I think you'll find producers generally just want to sell.
But a lot of hedging goes on too. This can make price spikes worse, actually. Now it's pretty common for US oil producers to not drill a well until they've already sold part or most of the oil it's expected to produce on the futures market, for risk purposes. But in times like now, nobody's going to drill a well to sell at a future price of $70 (which the 1 year price might still be) and because there's a lead time on oil production, this can create future shortages.
> or 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+.
Surely if this were true, gas prices would have risen more than they did.
Part of the reason I follow all this is because the whole system is gloriously complex. I have no real reason to follow it and I'm by no means a subject matter expert but I do know enough to see a lot of reporting on all this is just objectively wrong.
There are a lot of components that go into gas prices and it's driven by sevearl supply-demand curves such as the price of crude, the demand for refined petroleum products (also called the "crack spread") and just the demand for gas in general.
But it gets more complicated because even though oil is a global commodity it's not entirely global. There are regional differences where some oil and gas can only go to some areas due to limited pipelines and limited pipeline capacity. So you can still end up with wildly varying regional crude prices.
Plus you have California that really has no pieplines so is largely disconnected from the national oil supply. As such ~75% of California's oil comes from foreign imports. And guess what? ~20% of those come from Iraq and, as such, California is impacted by the closing of the Strait of Hormuz when really no other lower 48 state is.
So we, as a country, both import oil and export oil, which makes a lot of conversations about "energy independence" just wrong.
Anyway, back to gas. Crude is only one component. There are a bunch of additives to create different gas blends used in the US. These are typically divided into winter and summer blends. The additives basically change how much gas (as in, the state of matter, not short for gasoline here) is in your gas tank. Why? Because more gas (state of matter) equals more smog so more additives are added to increase the boiling point in summer.
And on top of that some states, most notably California, have their own blends, which come from Californian refneries, which get their oil from the Gulf (in part).
There are a lot of seemingly unintended consequences in all of this too. So, for example, we're selling a bunch more LNG to Europe because of Ukraine but that's really raising domestic natural gas prices and that's having a huge impact on utility prices. And only going to get worse.
Oh and let's not forget that included in the price of gas are also taxes. Those typically don't scale with price (in the US at least).
I don't see how any of that disproves my reasoning. It just claims that things are complicated, while not establishing that the complicated system can produce the results you claim (you also haven't cited the physical prices in question).
Also: I'm in Toronto, Canada. Please don't say "we, as a country" etc. here. Gas price rises here were also congruent with oil price spikes being not quite as bad as in 2022.
And during 2022 I was paying close attention to both the pumps and the quoted oil prices on the tickers. I also made note of where the pump prices were in April 2020 when the oil futures went negative, and watched the recovery. I therefore have a mental model that accounts for taxes.
Come to think of it, what insider trading in oil even is…? Oil isn’t a company and doesn’t have any capacity for material non-public information. The biggest players are all insiders on this market anyway. Why should Barron be prosecuted and Trafigura not…?
The structural problem is that prediction markets work because they aggregate private information into public prices, but that same mechanism makes them irresistible to insiders who have non-public information about geopolitical events. Stock market insider trading is illegal because it harms other investors, but on Polymarket the insiders are precisely what makes the price discovery function. You cant have one without the other.
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.
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?
On prediction markets there are plenty of inefficiencies; e.g. an MM could take both sides of the bet when odds don’t add up to 1, which apparently happens more often than we all think
Is this really true? What is the evidence that Trump succeeded in money laundering, where is the dirty money coming from in these particular bets, and how do you propose the polymarket betting mechanism is able to clean the money?
> how do you propose the polymarket betting mechanism is able to clean the money?
I would assume that dirty money (from dirty wallets) is placed on the "losing side" of the bet. And clean accounts take the "winning side" of the bets.
A2: I don’t know. It would be great if the Department of Justice or Treasury investigated the matter, since the SEC no longer has the capability. However, since the interim Attorney General is a simp who expresses his love for the president repeatedly, that’s unlikely.
A3: Polymarket could make an effort to prevent activity that undermines the integrity of their platform. All betting platforms work to detect the use of the platforms by people like
Baseball players and their families. Most public employees names are public, so it should not be impossible to do the same.
The fact that obvious behavior like this happens reflects poorly on the platform. It’s pretty incredible that bettors are stupid enough to use a platform that actively undermines their wagers.
Thanks. A1 and A2 didn't answer my questions except that I think you're saying that you are not sure if any it is true or not. I was hoping for something substantive beyond the usual conspiracy theorizing.
On A3, money laundering doesn't mean hiding financial activity from the court of public opinion, it means to take an illegal income and put it through processes that obfuscates its origin and makes it difficult for law enforcement to notice or investigate so it can be used in legal markets. "Gambling" doesn't just clean money. Polymarket is electronic and the source and destination of transactions could be subpoenaed. That misconception probably comes from physical casinos where a person would walk in with cash and walk out with a receipt for chips and claim gambling earnings. Doesn't work when you have a paper trail in and out.
It would be stupid to the point of ridiculous to try to launder money this way, even from Trump, lol. Especially on such visible trades! Much more likely it's just making money from insider bets, because that is seemingly not illegal for prediction markets. If you were going to try to use this thing to launder (which seems ridiculous in the first place but maybe it's possible) you would do it with much more mundane bets surely.
> The fact that obvious behavior like this happens reflects poorly on the platform. It’s pretty incredible that bettors are stupid enough to use a platform that actively undermines their wagers.
Gambling is or can be a terrible mental health problem. Stupidity - arguably yes, but also an addiction. Which makes profiting from it pretty awful too really. Although regulations have struggled with how to deal with it because internet and black market gambling is so lucrative and easy to set up too unfortunately.
You can't answer with certainty, because the authorities aren't doing their job. No credible, informed person would conclude that there wasn't that kind of activity hapening.
Trump is fairly stupid and reckless, but the 2nd administration is blatant in it's corruption and illegality. The assumption is in the waning days of the administration, they will pardon those who remained loyal.
The argument you use re: gambling is incredulous and a false assumption. The existence of black market gambling isn't a justification to what is happening now -- the full power the marketing and advertising machine. Personally, I'm okay with gambling personally as a fun thing - I don't get a big rise out of it. But I think that making every iPhone a betting terminal is creating social problems that will cause alot of needless misery.
We reject the moral turpitude argument to justify gambling, but hold the abusive gambler personally and morally accountable for their misfortune.
Well you can answer with certainty that Americans making electronic transactions on an American betting site is not money laundering, by any definition. For more certainty than the original assertion that it is a money laundering play which just doesn't make any sense.
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?
New York is suing them for access as they have the ability to regulate gambling.
The federal government is fighting this attempts, backing the company’s assertion that a “prediction market” is not gambling, and the Feds have sole regulatory power. Coincidentally, Donald Trump, Jr is an investor in Polymarket and an advisor to Kalshi.
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.
Often people are under such mental pressures that the chance of a better financial outcome is more mentally digestible than the existing scenario they are in. Considering it from that perspective has allowed me to understand and empathise with the gambler. However irrational or unlikely a sliver of hope, it is a chance at hope nonetheless.
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.
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.
Ignoring the gamblers losing money because they lack insider information, the harm is that you changed the incentive for war. It is motivated by money for the gamblers, not military or political objectives. The difference between this and rigged sports gambling is that people die. They die on a whim and they die unnecessarily. I shouldn’t have to explain why people dying is bad.
- we can maybe get some limited information about the likelihood of events through a combination of wisdom of crowds and insider trading
cons:
- gambling addiction ruins lives, beyond a shadow of a doubt. People (often people with financial interest) like to argue this point, but I don't have space to write
- insiders essentially steal money from people betting based on other information. You might argue that those other people should have known. But why bet at all? its irrational. Yet people do it regardless, and they still don't deserve to have their things stolen. Poker where another player can see your cards is a stupid game.
- it clearly, unambiguously signals corruption to all and sundry. Connections let you get rich at the expense of others. Some people might not care as much but I truly think this is the biggest con of them all. Why behave the way we would all wish leaders would, if you have proof other leaders are making it big with no consequences. How would you not feel like a fool, for your morals? We should be making it as easy as possible to do the right thing that benefits all.
- it incentivises terrible behavior. Betting that a war won't happen, or a person won't die, or that there won't be an explosion at a crowded area in downtown x city at y time, is essentially the same as putting a bounty out for somebody to do it. They can bet that it will happen, and then go and make it so, and collect your reward money.
It's a rigged game. If there's a bet that player X will foul player Y, without proper safeguards, player X can bet on himself and then intentionally player player Y. The actual harm is that by the rules of the betting, no one should know the outcome who could also bet on the game, so the losers are being robbed of their money.
In this particular context, it's also possible that there are illicit transfers of money without being immediately noticeable. Bribery could happen at the highest levels with it being very difficult to trace and prosecute.
Like any insider trading you are transferring money from the public to yourself. More interestingly for the prediction market angle: you are leaking secret information by doing that. If you make big trades in anticipation of specific events other market participants can see it. That could be extremely serious if say it endangers a military operation.
If an insider, say a member of the Department of Defense (or War, duh) bets a certain date: they could internally influence the decision to execute on that date rather than possibly a better (earlier?) date that could yield less damage or loss to either side.
If you are not an insider with special info and special access, no matter what you do in the market, you eventually lose to the insiders. So, if you blur the details a bit, you're just giving your money to these people.
The rational move would be to just not participate in a market where insider trading happens. I don't really understand why people aren't avoiding these markets like the plague.
Insiders fleecing dumb people. Then dumb people get pissed their finances are destroyed and they'll never pay off their debt or support a family or attract a mate, and so they go down a rabbit hole of insanity and depression on social media, getting conned by influencers and AI slop and then vote for whatever the rage du jour some grifter politician is selling, or worse they shoot up a school...
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.
1: https://en.wikipedia.org/wiki/Glossary_of_poker_terms#donkey
Yes, and let me add that that's by design. Prediction markets' main function is to incentivize people with private information to make it public.
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.
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.
By this logic, wouldn't prediction markets be a national security threat?
Yes, I suppose. Remember people are parts of various nations. Your "national security threat" might be a "national security opportunity" for someone else ;)
Leaking classified information is a crime, and I don't see why foreign adversaries can't monitor Polymarket to get advanced warning of military actions. A less corrupt US government would ban betting on matters involving national security.
> I don't see why foreign adversaries can't monitor Polymarket to get advanced warning of military actions.
They can and I'm sure they do. If you were about to be hit by the most powerful army in the world, wouldn't you want to have some advance warning?
Also I doubt any adversary worth their salt needs to monitor Polymarket.
I remember reading once that when the US was working on the SR-71 Blackbird out in the desert the Soviets could read its cross section by using satellites to pick up the thermal signature its presence on the ground left behind. State level actors aren't doing pedestrian stuff like watching pizza deliveries to guess what the Pentagon is up to.
Sure, but look at who controls the national security apparatus in the US at the moment.
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.
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.
The price movement is the indicator that there is insider information.
Of course there are lots of problems with this theory - in large markets a single trader has to make large bets to move the market, and with the current leadership the price moves large amounts unpredictably as well based on the latest statements.
But the mechanism itself makes sense.
It's unclear if that's a good thing. Of course some people know secret information before hand. Is disclosing that always good?
Another problem is, people may actually want to bet on random outcomes, because of money laundering or simply because this is how gambling essentially works. That huge account could be an insider or a billionaire with a few hundreds k to burn. Or maybe they want to orient people’s opinions towards a certain outcome.
Claiming that price movement in a prediction market reveals some amount of truth implicitly assumes that:
- people bet on something they believe to be true, and not to sway other people’s opinions or simply to burn money,
- people bet on something they believe to be true because they have specific private information (e.g. I bet on the Red Sox not because I think they’re good but because I know things other don’t about their opponents, their physical conditions and so on).
- their belief is actually correct (eg if I’m in the CIA and I know that the Soviets are about to launch a nuclear missile I can bet on it… but I don’t know that an officer down the line will refuse to do that).
Even if this was true, there is an issue of timing and consequences. Example: imagine it’s 2011 and some CIA or DoD officer makes huge, sudden bets on the fact that Bin Laden will be caught. Some AQ people get wind of this and move Bin Laden somewhere else. Congrats, your price movement signaled non public information to the market!
Another issue is that these bets tend to rely on public sources, news reports and so on. A journalist in Israel was threatened to change his news reports so that certain people didn’t have to lose on a prediction market. This could become more and more common, and with the advent of AI generated pictures who are you going to believe? Are you losing money because you bet on the wrong outcome or simply because someone with enough resources ensured that your outcome was never going to be reported?
> Congrats, your price movement signaled non public information to the market!
so from bin laden's perspective, this would've been a good outcome isnt it?
Can't say what a good outcome is without saying who.
What if enemies of the USA had corrupt generals who also make bets on anti-US actions to profit personally, and inadvertently reveal information to the CIA/NSA, who then prevent such anti-US actions? Would that not have been a good outcome as well?
Information is information - and one cannot say if it's good or not. However, i am a believer that more information generally do good than bad - assuming the consumer of said information is smart.
> Are you losing money because you bet on the wrong outcome ...
It doesnt matter, because you chose to bet. You do not need to bet in order to make use of the information being revealed by those who are betting.
>so from bin laden's perspective, this would've been a good outcome isnt it?
Of course
> Information is information - and one cannot say if it's good or not. However, i am a believer that more information generally do good than bad - assuming the consumer of said information is smart
Smart doesn’t always equal good. The consumer can be smart and use the information to benefit themselves (and possibly harming others), but this doesn’t necessarily justify releasing information. In fact, even Snowden, who famously released a lot of information, didn’t release everything. He applied his judgment and avoided publishing some stuff. Was his judgment correct? I don’t know. The question is - at some point, is information release always neutral?
> Are you losing money because you bet on the wrong outcome ... It doesnt matter, because you chose to bet. You do not need to bet in order to make use of the information being revealed by those who are betting.
What I’m saying is, if I bet on event X and X happens, I would expect to be paid. Instead I may not get paid simply because someone else who bet against X has the power to suppress any proof of X happening (via threats, money,…). This doesn’t happen with regular sport bets because sport events inherently have a lot of witnesses (physically present at the place where things are happening), there are referees, the teams themselves advertise the results, there is a professional league keeping scores and so on. If you bet on someone getting killed abroad by some military abroad, or military skirmish happening in a remote place, or other plausible but hard to verify event, faking something with AI or a friendly reporter is easier. And because people use cryptocurrencies in this platform, how can you prove active manipulation vs bona fide in some video some reporter published? “Hey, I just saw this video, who knew it was wrong?”.
The argument that you can lose money simply because it’s a bet, even when you should have won, is not convincing. Ok, I can lose but if I win shouldn’t I get the money?
“indicator that there is insider information.”
But that’s not the claim people bandy about on the gambling markets.
They claim it incentives sharing of info, but what you’re saying is it’s only sharing meta info. That the info remains secret and the wagers reveal that it’s possible insider info exists - not what the info is.
Honestly, this has all the same smell as NFT justifications. I’d be suprised if the main touts of prediction markets weren’t previously touting NFTs and “smart” contracts. Actually, it even seems like the markets are inspired by those.
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.
> These new Prediction Markets are nothing but a new way of gambling.
There are two kinds of participants, those with inside information and liquidity providers. The liquidity providers incentivize the insiders to share the information.
Yes sure there are gamblers, but here they're doing something useful – providing liquidity. If they just went to the casino, the money would be lost without any useful output.
This is the theoretical claim.
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.
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.
Arguably it’s a very useful property of prediction markets as long as everyone is aware that’s the case.
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?
Leaders? Are you awake at the wheel?
Does it need to be regulated? This isn’t pension funds placing bets risking people’s investment money.
People using Polymarket are gambling on pretty random things and must understand the risk , whether it is on major geopolitical events or someone counting cars going through a junction these events can all be manipulated pretty easily.
People want to gamble on random things? Let them.
If anything is regulate the other side, people in government can’t use sites like polymarket because I don’t want them making stupid decisions so bets fall one side or another.
Polymarket gamblers have pressured at least one journalist regarding reporting of missile strikes. This requires regulation or, as others here have suggested, non-anonymity, maybe other measures too.
https://www.theguardian.com/world/2026/mar/18/polymarket-gam...
It's already illegal to threaten journalists. In America we generally make bad things illegal, not activities that could become motivation for bad things. Someone threatened me on League of Legends last week. Should we ban the game?
> It's already illegal to threaten journalists [in] America
Not necessarily, it depends on the pressure and the intent.
> In America we generally make bad things illegal, not activities that could become motivation for bad things.
I didn't mention making anything illegal. I suggested constraining Polymarket and similar.
> Should we ban [X]
I didn't mention banning anything.
>In America we generally make bad things illegal, not activities that could become motivation for bad things.
Not really, even in America. Like, take alcohol regulation. Your model would be "drunken bar fights are already illegal, so just prosecute that, problem solved."
Except that, historically, there's so much of that that it overwhelms the ability of law enforcement to keep up. So we try to remove the driving factors: "Okay, you can drink in public, but only[1] at these licensed places that are heavily incentivized to prevent fights before they start."
I'm not advocating any particular position, I'm just saying that if there's a persistent situation that heavily incentivizes violence, then it's not unreasonable to push back on that mechanism rather than just try to mop up the violence after the fact. Which specific situations merit that is up for debate, but it shouldn't be controversial that some situations should be handled this way.
[1] Yes, I'm simplifying, just focus on the general point here.
It's not so simple. The game must be fair.
What if 100% of the bets you place in a slot machine go to the owner? It's the exact same thing here.
Slot machines are regulated so the game is fair and they're not simply machines where the rich steal from the poor. Such a machine would be scam by definition.
I'm not a polymarket gambler or a gambler at all really, so I have no skin in this game but why does it have to be fair?
I would say casinos and slot machines are already stealing from the poor and giving to the rich and already a scam, people play them (aside from addicts) because there is a chance they will win, they know not everyone wins.
I'm in favour of people being treated fairly I just think regulation isn't what is required here, more education "play this but the odds are tilted away from you".
It would actually be better if slot machines never paid out and 100% of their bets went to the house. Very very few people would use them. They're addictive exactly because they do pay out sometimes.
I would suggest at least having KYC (know your customer) rules which all banks, financial exchanges and traditional online bookmakers are required to implement would be reasonable for these markets?
At least it would somewhat hinder the type of activity we’ve seen (where journalists are threatened by criminals to withdraw or change their stories) without just banning such betting exchanges outright.
Do you also support sports team members betting that their team will lose the next game?
Hmm interesting, my gut is that i'm not against it. I think in reality it does happen (take a look at Lucas Paqueta in UK soccer) so may as well accept it - you'll never know who has more to lose (win) a player betting their side will lose or a player on the opponent side betting their side will lose so it should even out.
Gambling is a risk, it isn't just the house's edge but anything can go wrong on the day.
>This isn’t pension funds placing bets risking people’s investment
Its potentially much worse: we don't know if the threats and bets are isolated. While diplomacy happens, the threats may very well be exaggerated to create the market opportunity.
I think making the bets not anonymous is sufficient imho.
If a gov't official (including the president) is leaking classified information, there's already laws about that isnt there? (Whether it's effective is another question - i'm assuming it's currently effective).
I think that we are agreeing here, there should be regulation on the government side and laws without regulating what people can bet on.
Who do you think places those bets
The leaders are the ones profiting from it.
Might have something to do with electing a deeply corrupt conman as head of the executive branch and giving his congressional sycophants a majority.
Because they're the ones doing it and they have the power? Sorta inevitable outcome of markets in everything, really.
Quis custodiet ipsos custodes?
It's even worse. A federal court just ruled that these markets cannot be meaningfully regulated by states because they are selling financial instruments rather than providing a gambling platform and federal law preempts state regulation on these financial instruments.
I mean... insiders are betting on war crimes. Yes, the insider betting is bad but it doesn't even touch the edges compared to committing war crimes. And if the government is committing war crimes, why would they care about something so inconsequential as betting on them?
They’re the ones doing it lol
I wanted to reply, but I think I just don't understand your comment at all.
Are you saying the "sector of betting on shit that can clearly be insider-traded" is illegal? Does that include like gold and S&P500?
The way I see it, prediction markets' main function is to connect gamblers with insiders posessing useful information. Are you concerned for the gamblers losing? But they were gonna lose anyway, one way or the other. Or are you concerned about the insiders winning? Sucks, but at least the public gets information by way of the prediction market being more accurate.
> Are you concerned for the gamblers losing?
I’m concerned about people with addictions being exploited by greedy degenerates who don’t care about the negative externalities with which they’re burdening our society, yes.
Do you propose to make all addictive endeavours illegal? Ban porn? It might actually be a good idea in theory, but I doubt it'd work in practice, who knows.
I'm not doing whataboutisms today, sorry.
Gambling is particular, specific burden and crime against society that's been recognized as such for thousands of years.
The recent experiments with legalizing it on an industrial scale are simply experiments with legalizing crime. We don't have to touch the stove but I guess simply being told about what happens isn't enough for us.
Sports gambling was illegal in most states just a few years ago. Prediction markets also didn't exist. We have ample evidence to show us that it did work fine to ban these things. We aren't talking about some hypothetical world. We are talking about a world that existed just ten years ago.
This isn't a "who knows" situation.
Please Explain how a last minute insider info bet helps the public in any way or fashion aside from fleecing fools of their money?
Nobody is forcing anybody to place the bets, but if you see credible money flows into eg. Middle East cease fire bets, you can decide to fill up your tank today, or not. We can’t think for you here, if you don’t see anything useful in the price then it’s time to educate yourself until you do. You should consider these bets more trustworthy than any news you read in mainstream media. There might even be a way to fund journalism here, though ethics are quite muddy indeed.
And what makes you believe that those (basically) peanuts that get bet are the real indicators?
The insiders might as well run a backroom prediction market and just manipulate the public market.
And even with bigger sums: you never know if it isn't just a variant of the shell game. There are no real signals.
It's a fallacy to think all insiders are big players. Small fish want a piece, too, and are not constrained in the same ways the big ones are.
> as records show substantial bets
They're not bets anymore. Now they're swaps.
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.
I guess this would be fine if there was no such thing as anonymous betting, right? Some public official weaseling his way onto a bet he has insider knowledge on is fine, as long as everyone knows that he's doing that. Or am I wrong?
Edit: then again, in EU banks regularly force you to fill out a questionnaire where you declare whether or not you're affiliated or closely related to any public officials for precisely corruption prevention (or detection) purposes. Why are people not forced to do that on these platforms?
Then get rid of it. Make it illegal or tax it to death.
My point is that the entire premise of "why it's ackchyually good though" is wrong. The thesis is that the markets let intelligent agents flourish, adding value to the real world. When really, the insiders can be idiots and still win.
We gain no new information because the insider has every incentive to hold off on their move until the very last minute, maximally reducing the effects of theta and vega, to maximize profit. This adds little to no practical information to the market while potentially removing super-predictors from the market.
It just becomes a vehicle for insider-trading, so make that illegal, cancellable, or just get rid of the market altogether.
Given the accused breaking of ceasefire shortly after agreement, not sure how this bet really gets paid out.
There were people who bet against… if there’s no one on the other side to take the opposite bet, you don’t have a bet. And you won’t get a payout.
I think the question was: Who gets the payout? The bet is: There will be a ceasefire. There was a ceasefire, but it was allegedly broken almost immediately after. So does that count as ceasefire or not? There are arguments for both sides, so you could also say it's a tie and neither party gets the cut and the bets will be refunded.
You can just read the rules for that particular prediction on Polymarket yourself. In this case according to the rules it just comes down to whether or not there is an official ceasefire by a particular time. It does not say anything about what happens if the ceasefire is broken after that time so in that case it doesn't actually matter that it was broken.
Usually the market have rules that define the bet more concretely than just "there will be a ceasefire", and resolutions can be disputed where they will be arbitrated by the market operator. For this particular market you can see that here (https://polymarket.com/event/us-x-iran-ceasefire-by), but I'll paste the current text too:
So the real answer is, "whoever the market operator chooses".This seems to involve there being an agreement in place, but not necessarily in effect or even followed, so the possibility of it having already been violated seems to be irrelevant
They put a lot more thought into the terms than the Trump administration did, that's for sure.
Still: does the combination of a deranged Truth Social posting, an obviously-pasted tweet from the Pakistani government, and a 10-point list of debatable provenance count as "clear public confirmation?"
I guess so, sort of, maybe? Fortunately I don't have a 7-figure wager at stake.
and there are always fool in market.
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.
Thank you for the thoughtful analysis. I'd echo that the deregulation and corruption of these markets has two impacts: 1) less "legitimate" (non-corrupt) capital flowing to these markets which may ultimately reduce the liquidity and value of the asstrs. 2) more speculative deployment of capital, which means that capital is used for making bets rather than uses for productive purpose (such as investing in legitimate investments that are productive for the economy.
Why would a insider invest in legitimate, productive investment when they can make outsized gains in betting markets or corrupt futures markets?
And yes, long term this will massively taint the US financial power and make economies like the UK more appealing.
I find it very hard to understand why so many people and institutions are still participating in markets that are obviously full of insider trading. It's basically just giving money away to the insiders. Why do people do this?
It's their job and if they're good at it, they still win / earn money. Someone who's staying eyes glued to the price charts on 12 stacked monitors will be the first to see a trend and buy/sell immediately after the action of the insider trader.
You're a fund manager. What's the alternative? Throw your hands up and tell your customers to take all their money back, you don't want to get paid anymore?
Exactly. Barter is super insanely expensive in comparison with the most manipulated paper markets; thus, if you closed the current markets, the participants would be very highly incentivized to create a new one, which would likely be worse on all accounts.
Institutions do not stake their own money and are somewhat averse to the direction of the market. As for common people, they're generally not known to do the most rational thing.
There's no alternative
> 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.
This is not a "bigger problem".
> the president can no longer be prosecuted thanks to the Supreme Court inventing presidential immunity
In 2015, there were a hundred things you could've inserted into "The US cannot ___" or "The POTUS cannot ___", that have happened since. Things "can't" until they can.
> I don't have any hope that anyone will ever be prosecuted for any of this.
Agreed, but this is _solely and entirely_ due to a lack of will to do so, not because of any laws.
As a tick jockey myself, reading futures markets are like reading tomorrow’s NYT headline. These markets portend events with uncanny accuracy.
spend more time on twitter. nyt is just twitter 16 hours late
I think you misunderstand. His comment about futures markets is equivalent to your comment about twitter. Neither of you are getting your news from NYT.
Imagining that hurricane prediction cone they put on maps, Twitter encompasses the entire cone and then some. Someone on Twitter is gonna be right, but rarely the same person consistently.
Futures are sometimes informed hours earlier than Twitter was the point
Dumb point, but you said SEC. But they don't have authority over commodities, and aren't the rules different for them anyway?
Other than that, I think a lot of what you said was interesting.
You are correct: the CFTC has primary authority over commodities and futures. I'm glad you pointed this out because in looking up who it was I learned that the cFTC (not the SEC) has regulatory authority over prediction markets too. That was new information.
This made me curious: who regulates sports betting? And the answer seems to be... nobody. Well, the states. I guess I should've known that because I know some states ban sports betting.
But that's interesting compared to prediction marekts. Since they're federally regulated, states don't have as much control. And I see that the current CFTC commissioner is suing states to block prediction markets. And prediction markets can and do allow sports betting.
Another "win" for dual sovereignty.
What is a typical price difference between the paper and spot prices? 1% or 10%+ is common? In the past 24 hours, the futures price dropped a huge amount. Is the spot market dynamic enough that prices can get reflected so quickly? Where does it stand in the past few days?
It is also interesting to think about the game theory on how you respond to markets during volatility. If you are a producer or have excessive storage capacity - when do you sell? From my armchair position, it seems like conditions are only going to get worse. Do you hold back some reserves, hoping to cash in on a higher pay day in the future? Then you have to wonder how many might be doing the same.
This is hard to say because physical delivery prices aren't easily discoverable (as mentioned).
Here's one way it matters though. Futures markets are typically in a state of backwardation or contango. Backwardation simply means the spot (or physical) price is higher than the paper or future price. Contango is the opposite. Whichever one it is, says something about the current market and the expectations for the future.
So the silver market was in backwardation where the paper price was $75+/oz but the physical price might've been $100+ but nobody was buying. People with silver delivery obligations were simply borrowing silver from those who had it rather than buying it on the spot market. There's a whole separate market for borrowing commodities and the premiums soared. But people who had shorted silver simply couldn't afford to buy on the spot market without going broke so they didn't. They kicked the can down the street, borrowed and then lobbied for the exchange to pop the bubble (which they did).
The best example of a contango market was in March-April 2020 with the oil market. This was the beginning of the pandemic and oil demand fell off a cliff. So people who already had oil couldn't move the oil they had and thus had no room to take delivery of oil they'd already bought (via futures). Producers only have so much storage room before they have to shut off production. Side note: Gulf producers have had to do this in the last month.
But the net effect was there was all this oil and nowhere for it to go so for a brief period the price went negative. That's right. Producers were paying you to take oil. That was an extreme contango market.
So in the last month I've heard data points like Dubai crude was $120-130 paper and $178 physical. That's a huge margin. I don't know what the normal range is really. In a healthy market you'd expect physical prices to be pretty near to short-term future prices.
In any bullish market, you'll get hoarders. There are limits to what you can store though and those are very real because if you shut off production, you might still be accuring a lot of costs and it can take days to restart production. As such I think you'll find producers generally just want to sell.
But a lot of hedging goes on too. This can make price spikes worse, actually. Now it's pretty common for US oil producers to not drill a well until they've already sold part or most of the oil it's expected to produce on the futures market, for risk purposes. But in times like now, nobody's going to drill a well to sell at a future price of $70 (which the 1 year price might still be) and because there's a lead time on oil production, this can create future shortages.
Incredibly interesting. Thanks for your thoughts.
> or 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+.
Surely if this were true, gas prices would have risen more than they did.
Part of the reason I follow all this is because the whole system is gloriously complex. I have no real reason to follow it and I'm by no means a subject matter expert but I do know enough to see a lot of reporting on all this is just objectively wrong.
There are a lot of components that go into gas prices and it's driven by sevearl supply-demand curves such as the price of crude, the demand for refined petroleum products (also called the "crack spread") and just the demand for gas in general.
But it gets more complicated because even though oil is a global commodity it's not entirely global. There are regional differences where some oil and gas can only go to some areas due to limited pipelines and limited pipeline capacity. So you can still end up with wildly varying regional crude prices.
Plus you have California that really has no pieplines so is largely disconnected from the national oil supply. As such ~75% of California's oil comes from foreign imports. And guess what? ~20% of those come from Iraq and, as such, California is impacted by the closing of the Strait of Hormuz when really no other lower 48 state is.
So we, as a country, both import oil and export oil, which makes a lot of conversations about "energy independence" just wrong.
Anyway, back to gas. Crude is only one component. There are a bunch of additives to create different gas blends used in the US. These are typically divided into winter and summer blends. The additives basically change how much gas (as in, the state of matter, not short for gasoline here) is in your gas tank. Why? Because more gas (state of matter) equals more smog so more additives are added to increase the boiling point in summer.
And on top of that some states, most notably California, have their own blends, which come from Californian refneries, which get their oil from the Gulf (in part).
There are a lot of seemingly unintended consequences in all of this too. So, for example, we're selling a bunch more LNG to Europe because of Ukraine but that's really raising domestic natural gas prices and that's having a huge impact on utility prices. And only going to get worse.
Oh and let's not forget that included in the price of gas are also taxes. Those typically don't scale with price (in the US at least).
I don't see how any of that disproves my reasoning. It just claims that things are complicated, while not establishing that the complicated system can produce the results you claim (you also haven't cited the physical prices in question).
Also: I'm in Toronto, Canada. Please don't say "we, as a country" etc. here. Gas price rises here were also congruent with oil price spikes being not quite as bad as in 2022.
And during 2022 I was paying close attention to both the pumps and the quoted oil prices on the tickers. I also made note of where the pump prices were in April 2020 when the oil futures went negative, and watched the recovery. I therefore have a mental model that accounts for taxes.
>But this means talking heads are reporting on $110 oil when it's really $150.
It's pretty normal that futures differ from spot prices.
>In previous years, some or all of these people would get investigated and prosecuted by the SEC for insider trading.
But are there proofs that there is insider trading on oil futures and we know CTFC isn't investigating it?
Come to think of it, what insider trading in oil even is…? Oil isn’t a company and doesn’t have any capacity for material non-public information. The biggest players are all insiders on this market anyway. Why should Barron be prosecuted and Trafigura not…?
The structural problem is that prediction markets work because they aggregate private information into public prices, but that same mechanism makes them irresistible to insiders who have non-public information about geopolitical events. Stock market insider trading is illegal because it harms other investors, but on Polymarket the insiders are precisely what makes the price discovery function. You cant have one without the other.
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.
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?
I wonder the same thing: who is taking the other side of these bets?
Probably not institutions, so it’s just retail gambling against insiders?
On prediction markets there are plenty of inefficiencies; e.g. an MM could take both sides of the bet when odds don’t add up to 1, which apparently happens more often than we all think
The only business at which Trump has ever really succeeded is money laundering. That might be a clue as to what is actually going on.
Is this really true? What is the evidence that Trump succeeded in money laundering, where is the dirty money coming from in these particular bets, and how do you propose the polymarket betting mechanism is able to clean the money?
> how do you propose the polymarket betting mechanism is able to clean the money?
I would assume that dirty money (from dirty wallets) is placed on the "losing side" of the bet. And clean accounts take the "winning side" of the bets.
But you have wallets in and wallets out. It's electronic.
You can't just sell yourself something with full electronic paper trail and call that money laundering!
A1: https://www.theusconstitution.org/litigation/trump-v-deutsch...
A2: I don’t know. It would be great if the Department of Justice or Treasury investigated the matter, since the SEC no longer has the capability. However, since the interim Attorney General is a simp who expresses his love for the president repeatedly, that’s unlikely.
A3: Polymarket could make an effort to prevent activity that undermines the integrity of their platform. All betting platforms work to detect the use of the platforms by people like Baseball players and their families. Most public employees names are public, so it should not be impossible to do the same.
The fact that obvious behavior like this happens reflects poorly on the platform. It’s pretty incredible that bettors are stupid enough to use a platform that actively undermines their wagers.
Thanks. A1 and A2 didn't answer my questions except that I think you're saying that you are not sure if any it is true or not. I was hoping for something substantive beyond the usual conspiracy theorizing.
On A3, money laundering doesn't mean hiding financial activity from the court of public opinion, it means to take an illegal income and put it through processes that obfuscates its origin and makes it difficult for law enforcement to notice or investigate so it can be used in legal markets. "Gambling" doesn't just clean money. Polymarket is electronic and the source and destination of transactions could be subpoenaed. That misconception probably comes from physical casinos where a person would walk in with cash and walk out with a receipt for chips and claim gambling earnings. Doesn't work when you have a paper trail in and out.
It would be stupid to the point of ridiculous to try to launder money this way, even from Trump, lol. Especially on such visible trades! Much more likely it's just making money from insider bets, because that is seemingly not illegal for prediction markets. If you were going to try to use this thing to launder (which seems ridiculous in the first place but maybe it's possible) you would do it with much more mundane bets surely.
> The fact that obvious behavior like this happens reflects poorly on the platform. It’s pretty incredible that bettors are stupid enough to use a platform that actively undermines their wagers.
Gambling is or can be a terrible mental health problem. Stupidity - arguably yes, but also an addiction. Which makes profiting from it pretty awful too really. Although regulations have struggled with how to deal with it because internet and black market gambling is so lucrative and easy to set up too unfortunately.
You can't answer with certainty, because the authorities aren't doing their job. No credible, informed person would conclude that there wasn't that kind of activity hapening.
Trump is fairly stupid and reckless, but the 2nd administration is blatant in it's corruption and illegality. The assumption is in the waning days of the administration, they will pardon those who remained loyal.
The argument you use re: gambling is incredulous and a false assumption. The existence of black market gambling isn't a justification to what is happening now -- the full power the marketing and advertising machine. Personally, I'm okay with gambling personally as a fun thing - I don't get a big rise out of it. But I think that making every iPhone a betting terminal is creating social problems that will cause alot of needless misery.
We reject the moral turpitude argument to justify gambling, but hold the abusive gambler personally and morally accountable for their misfortune.
Well you can answer with certainty that Americans making electronic transactions on an American betting site is not money laundering, by any definition. For more certainty than the original assertion that it is a money laundering play which just doesn't make any sense.
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?
There is a reason they deal in crypto and are not headquartered in the US
New York is suing them for access as they have the ability to regulate gambling.
The federal government is fighting this attempts, backing the company’s assertion that a “prediction market” is not gambling, and the Feds have sole regulatory power. Coincidentally, Donald Trump, Jr is an investor in Polymarket and an advisor to Kalshi.
Trump family is in bed with a ton of shady firms. Soooo much crypto fraud.
Most openly corrupt president of our time.
Just imagine how bad insider trading is on other markets. Stricter laws and crack downs should be implemented globally.
Once upon a time, people went to jail for insider trading on the stock market. Like that was an actual thing that was enforced with rigor.
I guess it makes our betters like Peolosi look bad though.
The insiders are the ones writing the laws though.
They aren't looking to prosecute many people https://www.reuters.com/legal/government/us-sec-says-it-file...
Or just don't gamble on a bet where insider swings can act against you. Simple.
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.
Often people are under such mental pressures that the chance of a better financial outcome is more mentally digestible than the existing scenario they are in. Considering it from that perspective has allowed me to understand and empathise with the gambler. However irrational or unlikely a sliver of hope, it is a chance at hope nonetheless.
everyone is assuming this is americans but what if it iranians or israelis or pakistan people . is not just white house cabinet in these rooms
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.
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.
Can someone articulate what the harm of this is?
Ignoring the gamblers losing money because they lack insider information, the harm is that you changed the incentive for war. It is motivated by money for the gamblers, not military or political objectives. The difference between this and rigged sports gambling is that people die. They die on a whim and they die unnecessarily. I shouldn’t have to explain why people dying is bad.
pros:
- its fun for some people
- we can maybe get some limited information about the likelihood of events through a combination of wisdom of crowds and insider trading
cons:
- gambling addiction ruins lives, beyond a shadow of a doubt. People (often people with financial interest) like to argue this point, but I don't have space to write
- insiders essentially steal money from people betting based on other information. You might argue that those other people should have known. But why bet at all? its irrational. Yet people do it regardless, and they still don't deserve to have their things stolen. Poker where another player can see your cards is a stupid game.
- it clearly, unambiguously signals corruption to all and sundry. Connections let you get rich at the expense of others. Some people might not care as much but I truly think this is the biggest con of them all. Why behave the way we would all wish leaders would, if you have proof other leaders are making it big with no consequences. How would you not feel like a fool, for your morals? We should be making it as easy as possible to do the right thing that benefits all.
- it incentivises terrible behavior. Betting that a war won't happen, or a person won't die, or that there won't be an explosion at a crowded area in downtown x city at y time, is essentially the same as putting a bounty out for somebody to do it. They can bet that it will happen, and then go and make it so, and collect your reward money.
It's a rigged game. If there's a bet that player X will foul player Y, without proper safeguards, player X can bet on himself and then intentionally player player Y. The actual harm is that by the rules of the betting, no one should know the outcome who could also bet on the game, so the losers are being robbed of their money.
In this particular context, it's also possible that there are illicit transfers of money without being immediately noticeable. Bribery could happen at the highest levels with it being very difficult to trace and prosecute.
Like any insider trading you are transferring money from the public to yourself. More interestingly for the prediction market angle: you are leaking secret information by doing that. If you make big trades in anticipation of specific events other market participants can see it. That could be extremely serious if say it endangers a military operation.
If an insider, say a member of the Department of Defense (or War, duh) bets a certain date: they could internally influence the decision to execute on that date rather than possibly a better (earlier?) date that could yield less damage or loss to either side.
Both https://en.wikipedia.org/wiki/Conflict_of_interest and https://en.wikipedia.org/wiki/Insider_trading when people able to influence outcomes are able to bet on those outcomes.
If I were a competent adversary like Iran i would constantly float bets against an US attack and the moment somebody bites, I alarm the air defenses.
It’s more a sign of corrupt and morally bankrupt leadership, which should be alarming enough by itself.
https://paulkrugman.substack.com/p/treason-in-the-futures-ma...
Corruption, especially blatant corruption like this undermines credibility in institutions.
The fact we’re talking about this is a testament to the low standard of integrity and and morality we carry as a whole.
To me it looks like this:
If you are not an insider with special info and special access, no matter what you do in the market, you eventually lose to the insiders. So, if you blur the details a bit, you're just giving your money to these people.
The rational move would be to just not participate in a market where insider trading happens. I don't really understand why people aren't avoiding these markets like the plague.
Insiders fleecing dumb people. Then dumb people get pissed their finances are destroyed and they'll never pay off their debt or support a family or attract a mate, and so they go down a rabbit hole of insanity and depression on social media, getting conned by influencers and AI slop and then vote for whatever the rage du jour some grifter politician is selling, or worse they shoot up a school...
2026, yeah baby!