Can insider betting become a big problem for crypto prediction markets?

[Pandu Geddon]

So I see this as one problem prediction markets could face because of insider information. Normally we bet because it is a prediction game, but what if someone already knows the outcome because of their job or position?

There is indeed a possibility of that happening, but the insider in question must be someone who has a significant influence on decision-making. Even if not, he surely gets information from a circle of powerful people. 
He works for the military, but bets on predictions of certain military situations. He should already know the risk of being traced and facing sanctions. 
If there is no effort to manipulate insiders, maybe the soldier could bet on sports predictions. That would be safer.

[hedgeh0g]

I read this news about a U.S. servicemember who is being investigated after allegedly making more than $1 million on Polymarket. He was betting on military events where he may have information that was not public yet, so basically this looks like an insider job. There is also a KPMG employee being investigated for a similar case.

So I see this as one problem prediction markets could face because of insider information. Normally we bet because it is a prediction game, but what if someone already knows the outcome because of their job or position?

But the funny thing is, everything is on the blockchain. So if there are suspicious betting activities, they can still be traced more easily. In this case, blockchain transparency can actually be very helpful.

source : https://www.wsj.com/finance/regulation/u-s-servicemember-kpmg-employee-are-targets-of-prediction-markets-crackdown-ec7fdd04)

Federal authorities are preparing charges against a U.S. servicemember suspected of placing Polymarket bets on military operations that earned him more than $1 million, part of a coming batch of insider trading cases, according to people familiar with the matter.

The serviceman, who has been under scrutiny since the spring, made successful bets related to military strikes in Iran and Venezuela on the prediction market, the people said. It is one of several investigations that have looked at members of the armed forces who traded war contracts that referenced the timing and outcome of military operations.

Polymarket is the most honest platform for predictions. And that's why they have attracted the attention of the whole world. Before that, there were various similar services, but they were just a pale shadow with a dubious reputation, and of course they had nothing to do with blockchain. As for Polymarket, we all know that they had a strange history with the promotion, which paid bloggers to create a successful reputation. But they did it because the whole world has already heard about Polymarket. And of course, everyone who has insiders is trying to make money there. We will hear many more insider stories.

[swogerino]

I read this news about a U.S. servicemember who is being investigated after allegedly making more than $1 million on Polymarket. He was betting on military events where he may have information that was not public yet, so basically this looks like an insider job. There is also a KPMG employee being investigated for a similar case.

So I see this as one problem prediction markets could face because of insider information. Normally we bet because it is a prediction game, but what if someone already knows the outcome because of their job or position?

But the funny thing is, everything is on the blockchain. So if there are suspicious betting activities, they can still be traced more easily. In this case, blockchain transparency can actually be very helpful.

source : https://www.wsj.com/finance/regulation/u-s-servicemember-kpmg-employee-are-targets-of-prediction-markets-crackdown-ec7fdd04)

Federal authorities are preparing charges against a U.S. servicemember suspected of placing Polymarket bets on military operations that earned him more than $1 million, part of a coming batch of insider trading cases, according to people familiar with the matter.

The serviceman, who has been under scrutiny since the spring, made successful bets related to military strikes in Iran and Venezuela on the prediction market, the people said. It is one of several investigations that have looked at members of the armed forces who traded war contracts that referenced the timing and outcome of military operations.

These prediction markets are full of insider retards and it's not fair to the regular bettor. Hopefully the cheaters get caught and go to prison, but I doubt that happens. The blockchain does tell all though so that could burn them in the end.

I don't know how many people play on these prediction sites or how popular they are, but IMO insiders using info really do need to face harsh prison sentences to deter this type of activity.

Most probably these are isolated cases and not a whole lot of people play in these prediction markets as of yet though we have seen an increase lately (although nothing compared to gambling activity). I strongly agree though that these people being investigated need to be prosecuted and sentenced to the maximum extent of the law and this will probably turn down other wanna be-s especially from military which are in the industry where they know things first regarding wars and attacks on other countries as this is what has been abused in these cases.

Some funny show, old one called Married with Children has a scene where someone says I wanna join the military so I can sell secrets.

[KTChampions]

Can insider betting become a big problem for crypto prediction markets?

  Why would anyone even think that the prediction market could have a problem with insiders?
That's the essence of this market: the transfer of money from the less informed to the more informed. If those informed people break the law, then that's the problem of the jurisdictions and organizations that suffer. Personally, as a market participant, I don't care and don't see a problem with it. It's obvious to me that there are those in the market who know the information better than most, that's the way it should be, it's not a casino.

[Findingnemo]

Blockchain contains the transaction details but it can be tied to nobody if the one placed the bet under someone else so these are hard to investigate and to be honest they will always exists but it will not affect the entire prediction market because the market is so big and the platform also keep increasing their strength to protect themselves from the insider jobs all the time.

Someone will talk, that's the case with prediction market, many people who are expected to be making money from it are seeing their challengers making the same move and they aren't happy about it.

Why are the complains all coming from popular figures? Politicians? And so? I expected politicians and powerful people to be the most secretive, but once that isn't happening it's because they don't want someone as big as they are to make money the same way.

News spread, be it a politician or high level government officer they are gonna leak some information to someone who is not happy to see them making money and that is how these leaks happens, however these are not the entire list just a few among many.

[Karl_3000]

Why would anyone even think that the prediction market could have a problem with insiders?
That's the essence of this market: the transfer of money from the less informed to the more informed. If those informed people break the law, then that's the problem of the jurisdictions and organizations that suffer. Personally, as a market participant, I don't care and don't see a problem with it. It's obvious to me that there are those in the market who know the information better than most, that's the way it should be, it's not a casino.

To me it is a problem. People making money on the prediction market will not be many but those with insider information are the ones making the money. I have stopped betting on events that I know there can be insider betting. What I bet mostly on prediction markets now are not many and are about price prediction and among them, I prefer to be on bitcoin price most of the time.

[Sanitough]

Can insider betting become a big problem for crypto prediction markets?

  Why would anyone even think that the prediction market could have a problem with insiders?
That's the essence of this market: the transfer of money from the less informed to the more informed. If those informed people break the law, then that's the problem of the jurisdictions and organizations that suffer. Personally, as a market participant, I don't care and don't see a problem with it. It's obvious to me that there are those in the market who know the information better than most, that's the way it should be, it's not a casino.

In that case, maybe prediction markets could eventually face much stricter regulation, because if some people are using inside information, it is almost like the game is already rigged in their favor. There is no real prediction for them because they already know the answer.

Since these markets are based on real-world events, insider information will always be a possible problem. Maybe the government should treat this as a serious offense and impose much heavier penalties on people who get caught doing it. Otherwise, it could damage the integrity of prediction markets because regular bettors are trying to analyze an event while insiders may already know the outcome.

[WhoYouCantKill]

To me it is a problem. People making money on the prediction market will not be many but those with insider information are the ones making the money. I have stopped betting on events that I know there can be insider betting. What I bet mostly on prediction markets now are not many and are about price prediction and among them, I prefer to be on bitcoin price most of the time.

Insider information is only detrimental to the guys on the other side of the market and not you making the predictions, because it doesn’t alter your predictions in anyway, if your predictions are correct, with or without insider information, you still win, and if they’re not, you still lose. Even Bitcoin price market that you mentioned isn’t free from information advantages you know, there are still people who can still influence the market in somewhat way and these information can still be used to have some advantage in the market. The thing there is, just make sure you try to understand the market better, rather than trying to avoid it.

[KTChampions]

Why would anyone even think that the prediction market could have a problem with insiders?
That's the essence of this market: the transfer of money from the less informed to the more informed. If those informed people break the law, then that's the problem of the jurisdictions and organizations that suffer. Personally, as a market participant, I don't care and don't see a problem with it. It's obvious to me that there are those in the market who know the information better than most, that's the way it should be, it's not a casino.

To me it is a problem. People making money on the prediction market will not be many but those with insider information are the ones making the money. I have stopped betting on events that I know there can be insider betting. What I bet mostly on prediction markets now are not many and are about price prediction and among them, I prefer to be on bitcoin price most of the time.

Sooooo....? What's the problem for the market? Exactly zero. You can do whatever you want, this is not about you.

In that case, maybe prediction markets could eventually face much stricter regulation, because if some people are using inside information, it is almost like the game is already rigged in their favor. There is no real prediction for them because they already know the answer.

Since these markets are based on real-world events, insider information will always be a possible problem. Maybe the government should treat this as a serious offense and impose much heavier penalties on people who get caught doing it. Otherwise, it could damage the integrity of prediction markets because regular bettors are trying to analyze an event while insiders may already know the outcome.

How does this contradict what I've already said? A leaked piece of information is a violation, regardless of how the perpetrator used it, you understand? And this is a problem for jurisdictions/organizations not for prediction platform, you understand that? If an employee of Company A publishes information, I'll gladly use it, and how Company A sue them doesn't bother me at all. And that's exactly what the prediction market is about.
I don't understand your argument about regulation either - what if some people are smart and some are stupid? That's also an imbalance. Why don't you call on the government to correct this imbalance and turn the prediction platform into a pure casino?

[demonica]

This isn't something new in the prediction market. There will always be some insiders. It's unfair for regular bettors but I guess, that's just how it is. If you have the edge or the information that could help you with the prediction while the public doesn't know, of course, you'd also take the opportunity to make bets on it.

It may not be fair for the regular people but for others, if it's about money, they'd take that opportunity. So it's really hard to get rid of insiders in the prediction market. It's good if the authorities are finding suspicious stuff and investigating them, but people can be so greedy and be tempted to use insiders information to make profit from it.

[Dr.Bitcoin_Strange]

Insider trading is already a problem for prediction markets, this is not just the only case that have been discussed about this matter. What has made this possible is because of the kind of market option that these prediction markets are putting up, that's what is giving individuals the urge to steal non-public information so that they can make profit with it from those market. Assuming that they are not putting up some events that individuals can take advantage of, then the problem of insiders trading will not be many. In this era, a lot of people are looking for every possible means to earn more money probably because their salaries are not enough, so they can sell out confidential information to some person who will then use it to profit from prediction markets.

In my opinion, this problem will continue as long as those prediction markets continue to have events that people can still take advantage of,  most people will be caught and punished but some will still be able to escape. I saw a news about kelshi, Kalshi to make some users reveal job details to tackle insider trading. I do believe that this method can not still stop the problem completely.

[Aanuoluwatofunmi]

I read this news about a U.S. servicemember who is being investigated after allegedly making more than $1 million on Polymarket. He was betting on military events where he may have information that was not public yet, so basically this looks like an insider job. There is also a KPMG employee being investigated for a similar case.

Things like this we always give you the reason needed not to trust everything about prediction market because it is always an insider influenced gambling, there is no reason why you should take a risk on playing uncertainty, that's why we have a number of gamblers that like taking risk to bet, so many of them will not go for prediction market because of things like this they know they can never get through if the risk playing, now government are taking drastic step to kick against prediction market in some countries and also make a tangible difference to show why it is not gambling.

[Zlantann]

This isn't something new in the prediction market. There will always be some insiders. It's unfair for regular bettors but I guess, that's just how it is. If you have the edge or the information that could help you with the prediction while the public doesn't know, of course, you'd also take the opportunity to make bets on it.

It may not be fair for the regular people but for others, if it's about money, they'd take that opportunity. So it's really hard to get rid of insiders in the prediction market. It's good if the authorities are finding suspicious stuff and investigating them, but people can be so greedy and be tempted to use insiders information to make profit from it.

Insider betting is not new; my reservation is that the prediction market has a high number of these unfair practices. The Polymarket team or designated creators create new markets and event contracts. The team or market creators might be involved in these shady deals. 

If it's unfair to regular users, why are these prediction market platforms still growing in revenue and customers? Are they not aware of the shady deals that are going on in these markets? I would have to conclude that these insider betting practices are not affecting users' expectations.

[YOSHIE]

Can insider betting become a big problem for crypto prediction markets?

Involving insiders to place bets, as happens on the Polymarket site, is more dangerous and high risk, especially for the prediction betting site.
Usually every employee who works on a prediction betting site generally has an oath, if they are found to be involved in betting manipulation, the law could result in imprisonment or dismissal and so on.

But even though there are various conditions for prediction betting employees, negative things can be done by employees.

[r_victory]

Someone with insider information can be a problem for any market, not just prediction markets. I think manipulation is easier in prediction markets, and perhaps that's why authorities are cracking down on them and even banning them in certain countries. I think it's important to have clear rules for the health of this market; as long as there aren't any, uncertainty prevails.

[CryptoHeadlineNews]

But the funny thing is, everything is on the blockchain. So if there are suspicious betting activities, they can still be traced more easily. In this case, blockchain transparency can actually be very helpful.

It's true that bets that is been made on prediction market are actually been recorded on the blockchain, but however one thing you need to know is that you can not know who the real person that is handling such account is in real life. As the way the blockchain technology on prediction market works is that whoever could have access to your wallet ID will be able to see the exact game you placed a bet on, the amount, time and almost everything, but can't know who the real person is in real life. So it's technology works just like Bitcoin on a non custodial wallet. So knowing the actual outcome of an event is actually a big problem not only to prediction market, but to the entire gambling ecosystem at large. Because an individual can just take a one billion dollar loan from bank, place a bet, win and the casino goes bankrupt.

[Hispo]

I think thinks a topic which has been already discussed on other threads here on the gambling section of the forum, because we have seen already several cases of government officials and military people within the Trump administration who had indeed taken advantage of their privileged information to pocket hundreds of thousands of dollars in a very questionable manner.

If there is something which has characterized Trump's administration on this topic of prediction markets is how there seems to be hundred of people who are partaking on it and most of them have not been caught yet, only a small minority.

[Floxynice]

Insider information is indeed a very big problem for prediction markets. In some countries, the governments are already putting bans and restrictions on prediction markets. Ofcourse we know that one of the reasons for such restrictions is that some confidential information are being leaked through the prediction markets. Prediction markets like Polymarket and Kalshi have their services restricted in some countries. The prediction markets, if they can, should sort out means to regulate the spread of insider information. If possible, they should  report persons suspected of selling insider information.

[xenomorfo]

Someone with insider information can be a problem for any market, not just prediction markets. I think manipulation is easier in prediction markets, and perhaps that's why authorities are cracking down on them and even banning them in certain countries. I think it's important to have clear rules for the health of this market; as long as there aren't any, uncertainty prevails.

Obviously, you have information that no one else has
this gives you an advantage that no one has and this doesn't seem like a good thing to me
and also not very correct because you know things that others don't know, in my house it's called cheating then i don't know if in your house it's the right thing.

[gracreavix]

Someone with insider information can be a problem for any market, not just prediction markets. I think manipulation is easier in prediction markets, and perhaps that's why authorities are cracking down on them and even banning them in certain countries. I think it's important to have clear rules for the health of this market; as long as there aren't any, uncertainty prevails.

Someone who gets information from his work and uses that information to make money through prediction market is different from someone creating false news deliberately the sabotage peoples decision in the market. There are very two different things. Information determines the information of which is good but a problem if someone has direct access to such information. Making it look like the company has no power over that. Well, they don't. How they are going to solve this problem is something that may not be done.