“If you commit insider trading on Kalshi, that can and will at some point be a federal crime. It is a federal crime, I actually do expect the DOJ to prosecute some of these cases”. I'm guessing that “some point” is sometime after Jan 20th 2029.
mlmonkey 10 minutes ago [-]
You give the Dems too much credit.
bradleybuda 4 minutes ago [-]
There was a downward trend during the Biden years [1] but "both sides same" is not even a little bit true.
Ok, but isn't the idea that prediction markets surface private knowledge a big part of the defense as to why they shouldn't be treated as illegal gambling?
So like, which is it, is insider trading expected, or are these just gambling sites that should be illegal in many jurisdictions?
Karrot_Kream 5 minutes ago [-]
Prediction Markets, unlike many gambling sites, create a marketplace for odds. There's no house taking positions like in certain casinos or on DraftKings. Market makers offer shares in Yes and No while bettors buy and sell these odds to each other or to market makers.
tptacek 15 minutes ago [-]
Yes. This argument doesn't even apprehend insider trading laws on regulated securities markets in the US, where the crime is about theft, not fairness.
fontain 12 minutes ago [-]
Prediction markets don’t need to surface private knowledge, they can surface sophisticated interpretations of public knowledge. They are certainly gambling if you’re an unsophisticated rube (which is most of the users).
curt15 5 minutes ago [-]
How does one "interpret" public knowledge to time bets so accurately right before Trump's announcements?
Karrot_Kream 2 minutes ago [-]
I mean that's why insiders are being investigated right?
But sometimes the answer is more difficult than it seems. Is a mid level military officer an insider? If you overheard a conversation on Capitol Hill are you an insider?
alephnerd 14 minutes ago [-]
> isn't the idea that prediction markets surface private knowledge a big part of the defense as to why they shouldn't be treated as illegal gambling
No. Their defense is that they are gamified futures contracts and hence should fall under CFTC regulation.
The CFTC also cracks down on insider trading, but it took time for them to catch up with prediction markets.
On the Polymarket homepage right now, one of the featured markets is whether or not Bitcoin will be up or down over the next 5 minutes. It's hard to justify that as anything more than illegal gambling.
I find prediction markets to be interesting on two fronts:
1) They like a really good way to determine the probability of something happening, which is interesting for events like elections
2) It provides an avenue for smart bettors to take advantage and sharpen their skill, whereas they get severely limited or banned from traditional sports books
However, it seems like all incentive structures for the markets and consumer behavior will steer these things to degenerate gambling.
Karrot_Kream 1 minutes ago [-]
Polymarket is not CFTC regulated, it's considered illegal in the US. CFTC does not allow netting on securities prices.
mlmonkey 9 minutes ago [-]
I'm guessing it's Trump insiders who are busy making bank on inside info. Some of them just happen to be big investors in Polymarket and Kalshi. There's no way they are getting investigated, let alone prosecuted, by this DOJ.
At most some low-level flunkie will get named and slapped on the wrist.
Rendered at 18:43:26 GMT+0000 (Coordinated Universal Time) with Vercel.
[1] https://www.citizen.org/article/biden-doj-2024-corporate-cri...
So like, which is it, is insider trading expected, or are these just gambling sites that should be illegal in many jurisdictions?
But sometimes the answer is more difficult than it seems. Is a mid level military officer an insider? If you overheard a conversation on Capitol Hill are you an insider?
No. Their defense is that they are gamified futures contracts and hence should fall under CFTC regulation.
The CFTC also cracks down on insider trading, but it took time for them to catch up with prediction markets.
It is now a priority [0]
[0] - https://www.lw.com/en/insights/new-cftc-enforcement-director...
I find prediction markets to be interesting on two fronts:
1) They like a really good way to determine the probability of something happening, which is interesting for events like elections
2) It provides an avenue for smart bettors to take advantage and sharpen their skill, whereas they get severely limited or banned from traditional sports books
However, it seems like all incentive structures for the markets and consumer behavior will steer these things to degenerate gambling.
At most some low-level flunkie will get named and slapped on the wrist.