A trader on Polymarket reportedly pocketed more than $400,000 after betting that Venezuelan President Nicolás Maduro would soon be out of office, a move that has put prediction markets back in the spotlight. The timing of the bets—made hours before President Donald Trump publicly announced a nighttime raid that led to Maduro’s capture—has fueled online suspicion, according to the Associated Press report.
The report said the trader’s bulk of bids were placed only hours before Trump announced the raid. It also said that the trader’s activity on the platform was narrow, a detail that added to the questions being raised online.
Polymarket did not respond to requests for comment, the AP reported. Some online commenters suggested the timing of the wagers could point to potential insider trading. Others argued that the risk of getting caught was too big, and said prior speculation about Maduro’s future could have led to the transactions.
The AP placed the episode within a broader look at prediction markets, where people wager on outcomes ranging from elections and sports to other widely watched developments. In industry terms, what a participant buys or sells is an “event contract,” often marketed as “yes” or “no” wagers.
The AP report described how pricing works: the price of an event contract fluctuates between $0 and $1, reflecting what traders are collectively willing to pay based on a 0% to 100% chance that an event will occur. As prices move, users can cash out early for incremental gains, or try to avoid additional losses.
Proponents, the AP said, argue that placing money on the line can improve forecasts, and cited Koleman Strumpf, an economics professor at Wake Forest University. Strumpf said prediction markets are not a “crystal ball,” and that they can be wrong.
Still, the AP report said critics warn that the platform model can contribute to financial losses, particularly for people who already struggle with gambling. It also said critics argue the speed and ease of joining wagers can broaden the possibility of insider trading.
The AP described Polymarket as one of the largest prediction markets, where users can fund event contracts using cryptocurrency, debit or credit cards, and bank transfers. It said that under President Joe Biden, Polymarket was barred from operating in the U.S. after a 2022 settlement with the Commodity Futures Trading Commission and a broader crackdown, and that it later sought to re-enter the U.S. after clearance from the CFTC under Trump, with American users asked to join a waitlist.
The AP also said Kalshi has been a federally regulated exchange since 2020, and that it allows event contracts on elections and sports nationwide. The report said Kalshi won court approval weeks before the 2024 election to let Americans wager on political races, and began hosting sports trading about a year ago.
Competition has expanded beyond those platforms, the AP reported, including efforts by DraftKings and FanDuel, and changes at brokerages and social media. The AP said Truth Social promised an in-platform prediction market through a partnership with Crypto.com, and noted that Donald Trump Jr. holds advisory roles at both Polymarket and Kalshi.
In the regulatory framework described by the AP, prediction markets are positioned as selling event contracts and therefore are overseen by the CFTC. Melinda Roth, a visiting associate professor at Washington and Lee University’s School of Law, said in the report that “The train has left the station on these event contracts, they’re not going away.” Karl Lockhart, an assistant professor of law at DePaul University, called it “a huge loophole,” adding that users would have to comply with one set of regulations instead of a patchwork of state rules, the AP reported.
Federal law also sets limits, the AP reported, with event contracts barred for gaming and for war, terrorism and assassinations. The report said that lawyers and lawmakers are pressing for stronger enforcement—particularly after suspicions tied to the Maduro-related trade—and that Democratic Rep. Ritchie Torres introduced a bill aimed at curbing government employees’ involvement in politically related event contracts.
The AP said Kalshi CEO Tarek Mansour, on LinkedIn, maintained that insider trading has always been banned on his company’s platform but argued that more needs to be done to crack down on unregulated prediction markets.