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Comments (134)

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  tptacek
  This issue reveals the gap between the prediction market premise and what these things actually are, which is: unregulated prop gambling venues.If things like Kalshi and Polymarket are prediction markets, then, at least as far as the intrinsic concerns of the market itself are concerned, insider trading is a good thing; literally part of the point.If they are instead how they function today, then insider trading is a game-breaking fairness issue, like having a device to read your opponents cards in a poker game, and then they're a real problem.You can tell what these businesses think their platforms are for by how they handle these issues.
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  usrusr
  In stock markets, insider trading is a big no not because it ruins someone's gambling habit, but because the entire concept of the corporation requires a certain amount of trust of financiers in financees. That whole pooling of capital thing, to do stuff that has too high a capital requirement to start individually. When shares are publicly traded, that trust is impossible when holders have to assume that they will be gamed by employee-owners and that would mean nobody outside the circle of those in the know would ever put in money and then you could just give up and declare that publicly traded corporations simply can't exist. "Don't bother investing, they will strip you".Prediction markets don't have any "natural" reason like that for excluding insider trading. It's just "game designers" crying their hearts out when someone ruins their game by having an advantage.The employee could not be an insider if his employer did not exists because of a lack of rules against him trading. The prediction market not existing would not make the insider any less of an insider (we are not tking about people inside the prediction market maker!)
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  tyre
  I don't understand why it is a crime under current US law.Prediction markets can only do sports gambling (the vast majority of their volume) because they self-certify under the CFTC. The CFTC doesn't have the same standards of "insider trading" as the stock market, because insider trading is the entire point of business at the CFTC!If you're trading, like, oil futures or wheat futures or whatever, you are likely doing so specifically because you have inside information about your business needs or production that you want to hedge.I understand why people are mad about gambling versus someone who has insider information, but under current US law I'm not sure that there is a case to be made.
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  lowkey_
  > “If you commit insider trading on Kalshi, that can and will at some point be a federal crime. It is a federal crime,”Am I misunderstanding? It seems like two different statements he always conflates.If it becomes a federal crime at some point, it will become illegal from that point — you can't prosecute people for acts committed before they were crimes.The only way that this could be a federal crime right now is if the government starts prosecuting it under existing laws without any changes. I don't see that as likely.
• Sol-
  I understand he wants to deflect liability from his platform, but I guess I have to concede that it seems like a legitimate defense. We allow the stock market to exist even though insider trading can happen and it's (I think?) not Nasdaq's or NYSE's responsibility to pursue that. We have a legal system for that.I think there is still the debate to be had whether prediction market enable too much criminal activity and insider trading compared to traditional stock markets and therefore need to be limited for pragmatic reasons (i.e. the legal system can't keep up), but that's a different discussion.
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  SpaceManNabs
  Isn't the entire point of prediction markets to surface insider trading as a feature and not a bug?Short, casual reads- https://jamaalglenn.substack.com/p/prediction-markets-were-d...- https://money.com/prediction-markets-insider-trading/More academic?- https://mason.gmu.edu/~rhanson/insiderbet.pdfAND- https://www.youtube.com/watch?v=4yZKGbq1YmADiscussion on possible solutions that references the academic view- https://www.dopaminemarkets.com/p/how-to-solve-insider-tradi...
• 0xbadcafebee
  Donald Trump Jr. is a "strategic advisor" to Kalshi, and is on the advisory board of Polymarket. Fed chair nominee Kevin Warsh holds a stake in Polymarket. CFTC Chairman Michael Selig, a Trump appointee, has advocated for prediction markets, and wants to put the CEO of Polymarket on an advisory committee. David Urban, a lobbyist who worked for Trump, was hired by Polymarket.If there are any prosecutions, it won't be anyone in or connected to the administration. Even if these groups weren't in bed together, the fact that the administration has obviously been engaging in insider trading, and the DoJ hasn't done anything about it, makes it clear nothing will happen to them in the future either. The door to the vault is open and they're casually walking out with the public's money falling out their pockets.
• jmyeet
  The Kalshi CEO should put their considerable wealth into bets on Kalshi that this will happen. I'll wait.We have a situation where selective prosecution is used to command loyalty while the ringleader has been immunized from any kind of legal consequences by the Supreme Court, 6 of whom were appointed by said ringleader. Pardons are pretty openly sold now. It's cheaper to rip off the government then pay a fraction for a pardon, erasing any fine or repayment.I bet there are lower level staffers who are profiting off inside information on prediction markets. Maybe some will be made an example of. I won't hold my breath.But all the big insider trading is occurring in securities markets, particularly with oil futures and SPY futures. It's reached the point where no professionals trust the futre oil prices at all and and the physical oil prices differ from the future price by as much as $60/barrel. We've had $1b+ bets on SPY futures minutes before market-changing news. We don't know for sure who's doing this but my guess is that it's at the highest levels of the administration.
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  slg
  “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.
• nycdatasci
  Can I bet on this?
• mlmonkey
  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.
• Arubis
  Oh, come on. The DOJ doesn't prosecute _child rape_ if you're a protected class. And all these insider traders are a protected class.
• babypuncher
  This DoJ is actively working to protect actual sex traffickers from accountability. What makes this doofus think they will ever investigate their own friends for insider trading?
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  josefritzishere
  Well... it is a felony.
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  georgemcbay
  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?
• asdfman123
  Translation: "it's not our problem"
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  jazzpush2
  Zero chance. This country has become an absolute joke of corruption, especially anything related to insider trading.