As the world speculated about the future of Venezuela in the hours that followed the capture of Venezuelan President Nicolás Maduro by U.S. special forces in Caracas, one anonymous bettor who had staked money on Maduro’s ouster hours before the U.S. operation became almost half-a-million dollars richer.
That’s because the individual placed the bet on Polymarket, a popular decentralized prediction market that allows bettors to buy and sell shares that represent the probability of a future event occurring.
In the case of the Maduro bet, the anonymous trader wagered more than $32,000 that Maduro would be forced out of power in Venezuela by Jan. 31 — which led to a $410,000 payday in the wake of his capture.
By the time Maduro was aboard the USS Iwo Jima on his way to New York City, the price of shares related to U.S. action in Venezuela and other Latin American countries had soared on Polymarket and Kalshi, another major prediction market. The price of shares equates to the probability of an event happening. The higher the price, the more likely bettors believe a real-world event will take place.
On both Polymarket and Kalshi, bets can be linked to crypto wallets, debit cards or bank accounts. The companies make money by charging a transaction fee on the expected earnings of each contract. Every time users buy or sell shares in the prediction markets, a small portion of that goes to the platform.
The well-timed bet from the anonymous account, which had been created just a few weeks before the U.S. operation in Venezuela and used exclusively to place bets on U.S. military action in the country, reinvigorated concern about insider trading on prediction markets.
The bet was placed only hours before news of Maduro’s capture broke, when the “yes” position was trading at 7 cents, implying a 7% likelihood that Maduro would be ousted. After it paid out at 100 cents per share, questions about whether the bet was placed by someone with inside information on the raid swirled among traders on the platform and lawmakers alike.
Users cannot directly create betting markets on prediction platforms, but they can make suggestions or requests to the market teams tasked with generating them. Prediction markets about everything from popular culture, like which film will win the Oscar for best picture, to geopolitics, like who Venezuela’s next president will be, exist for most every current event.
Rep. Ritchie Torres, D-N.Y., plans to introduce legislation next week that would ban federally elected officials, political appointees and executive employees from placing bets on prediction markets, according to a spokesperson for Torres’ office. Torres sits on the House Subcommittee on Digital Assets, Financial Technology & Inclusion.
“When I saw reports that an anonymous trader pocketed $400,000 from a bet regarding the capture of Nicolás Maduro, it became evident to me that potential for insider trading and corruption is too glaring to ignore,” Torres told MS NOW.
Torres clarified that he is not alleging the anonymous Polymarket trader was a government insider, but said the trade raises enough risk to warrant a ban on trades placed by government officials.
“Malevolent actors could use prediction markets to manipulate the government, and those same actors could use the government to manipulate the market,” Torres said. “That to me is the very definition of corruption.”
But Shayne Coplan, the 28-year-old founder and CEO of Polymarket, has suggested that trades based on inside information could make the prediction market a more valid forecasting tool.
“Nobody is under the impression that nobody knows the answer, right? Like, of course, there’s people who are working on it that know when it’s going to come,” Coplan said during an Axios Business summit in New York late last year.
“What’s cool about Polymarket is that it creates this financial incentive for people to go and divulge the information to the market,” he added.
Advocates for the platforms offered similar views. Alex Nowrasteh, the senior vice president for policy at the Cato Institute, a libertarian think tank, called insider trading on prediction markets a “social good” in a post on X.
Torres rejected the notion, arguing that government insiders who make major foreign and domestic policy decisions aren’t actually predicting anything.
Polymarket, which was founded in 2020, drew global attention during the 2024 presidential election, when bettors correctly forecast Donald Trump’s win in November. Most traditional pollsters and pundits said the margins of the race were too close to call.
The platform was banned from the United States in 2022 and fined $1.4 million by the Commodity Futures Trading Commission, the federal agency tasked with regulating prediction markets, for operating without proper regulatory approval.
The CFTC and the Department of Justice investigated the company shortly after the 2024 election brought in more than $3.6 million in bets because of concerns that it was permitting Americans to illegally bet on the site. But obscuring locations with a virtual private network (or VPN) to place bets on a platform that mainly trades in cryptocurrency allows for easy anonymity.
That investigation was closed without charges last summer. Polymarket recently gained approval to operate in the United States by acquiring QCX, a holding company for a CFTC-licensed derivatives exchange and the clearinghouse QC Clearing, for $112 million.
Polymarket is currently granting users access to its U.S.-based app from a waitlist, and said last summer that the QCX acquisition “paves the way for U.S. users to access Polymarket in the near future.”
Polymarket’s main competitor, Kalshi, founded in 2018, has been registered with the CFTC since it opened in 2021. Both platforms have rules that prohibit market manipulation, but enforcement in the largely anonymous crypto-betting space remains difficult.
CNN and Kalshi recently struck an exclusive deal that will allow the legacy news network to integrate Kalshi’s prediction data in its reporting across television, digital and streaming platforms. It’s a big move for Kalshi as it aims to establish itself as a reliable data source for the forecasting of major political and geopolitical events.
Trump’s son Donald Trump Jr. sits on the board of advisers for both Kalshi and Polymarket. Trump Jr.’s venture capital firm, 1789 Capital, has made investments in both companies.
Polymarket and Kalshi did not immediately respond to MS NOW’s request for comment.
The app has also drawn complaints about the definition of payout terms for conceptual bets. Polymarket users are railing against the platform for refusing to pay out a bet on whether the U.S. would “invade” Venezuela by Jan. 31.
The bet amassed $10.8 million in trading volume, promising high returns for “yes” shares, but Polymarket said Trump’s statement that the U.S. would “run” Venezuela “does not alone qualify” Maduro’s capture as a full-scale invasion.
“US invaded Venezuela, but Polymarket ripped off many of its customers on this bet,” one user commented. Another warned others not to place bets on geopolitical events, alleging that the payout terms could be changed at the last minute.
Still, the popularity of the prediction markets is soaring. As Trump ramped up threats of taking control of Greenland in the days after the Venezuela invasion, the No. 1 trending bet on Kalshi was whether the U.S. would take control of any part of Greenland by the end of Trump’s second term.
As Congress prepares to take up a vote involving the War Powers Resolution later this week, bettors can wager on that, too. Whether it’s about what White House press secretary Karoline Leavitt will say in her next briefing, when Maduro will be released from U.S. custody, or even whether Jesus Christ will return by 2027, it’s all fair game.
Sydney Carruth is a breaking news reporter for MS NOW.