Stoked about reality, interested in the future. Trading with @CarstenPredicts. Hari Seldon on Discord. Glass artist
Midwest USA
Joined June 2022
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On the prediction market insider trading debate, I was talking with a couple of new finance friends yesterday. One was for, and one was against. We had a good talk about why, intuitively, it seems like insider trading is good for truth seeking but it's actually bad.
Prediction markets have two primary utilities. One is accurate pricing of future events, and the other is hedging. These markets only work if there are smart people incentivized to trade on them and make them efficient.
Currently, and this is likely to change, there is not much hedging going on. So the main incentive for people to address inefficiencies is having counterparties that price things poorly and making money off of that bad pricing.
In order for sharp forecasters to trade on these markets, they have to be confident that:
1. The trading platform is secure
2. Rules are fair and understandable
3. Their counterparties don't have an insurmountable information edge
1. and 2. are mostly there, but there are still some hiccups. With 3, however, if traders think their counterparties are insiders, then they don't want to trade against them. Who can beat an insider? No one! So they don't trade in those markets. If insider trading is allowed in all markets, and it's unknown which are insidered or not, then the risk profile for traders increases, and some really sharp people may not trade any markets! (Except for markets that are insider-proof, of course.)
So now the insiders are the only ones setting prices Which is ?maybe? theoretically fine if there is an insider for all 20,000 markets constantly updating prices, but that's not currently the case and unlikely to ever be the case. The model in which prices are set by a combination of insiders+sharp forecasters is tenuous at best. And now with only insiders setting odds the pricing data is useless because it's illiquid and you don't know if the insider is manipulating it or not!
Obviously, if you're a hedger, you don't want to hedge against a manipulated price because it wouldn't be fair or reflective of real probability. So actual optimal price setting and fulfilling the promise of these markets only comes when all participants are confident there are no insiders, which in my opinion means consistently banning insider trading.
"In the context of prediction markets, there's a live debate on whether or not insider trading is even good or bad.
The reason, basically, is because the value of these markets is the idea that they can create accurate odds for everyone to see.
Of course, if there are people who are participating in the markets who have good information that they can trade on, that is actually going to create more accurate pricing in the markets.
That can be very valuable if people want to know the real odds of, let's say, an election."
— @pjchougule
Jager retweeted
Someone made a site that tracks what people are talking about at public city council meetings across the US.
The only thing discussed more than data centers?
Pickleball courts.
I don't think the Talarico race odds are a Cloobeck situation (he bet on himself as a marketing stunt). Hard to tell if this is a real opinion or generational fud to keep driving volume for famously undesirable Paxton
The Dems are flooding prediction markets with bad bets to shift perceptions of reality.
It only would cost $200,000 to change Talarico’s odds from 50 to 67%
That’s a fraction of the 114 million spent on Talaricos campaign and more effective than road signs.
People don’t believe polls but prediction markets create more certainty, because who would throw away money right?
The best we can do is make their marketing stunt as expensive as possible by placing more bets on Paxton and collecting.
Once election results hit the odds will be revealed to have been way off base and the Dems will use it as a call to regulate prediction markets.
For reference, here is a Politico article about Cloobeck's betting. tinyurl.com/mt4cd3t9 My trading partner @CarstenPredicts has a good post showing how he was Cloobeck's counterparty for his stunt betting on himself
Great write-up by Nate on some manipulation he uncovered. @NathanMeininger deserves attention for this work! Very foolish and a comically bad cover-up attempt by the perpetrator. @robertjdenault have you seen this?
This was my biggest non-election politics position yet. Stoked to win big! Thank you Maria. Didn't have any shares on Katie Zacharia tho
Very holistic article on the current state of things taking in opinions and positions from all sides of the prediction market space!
NEW w/ @PatrickSvitek: We spoke to 20+ campaign operatives, election officials, traders and other insiders about how the 2026 midterms became "the first prediction market election," with over $750m in trading volume so far. Here's what we found... (1/5)🧵
Jager retweeted
> get introduced to someone new
> being told that they are high agency
> ask if they mean breaking the rules and soiling the commons or figure out a way to push the pareto and create positive sum
> she doesn't understand: "they're high agency sir"
> meet the person
> they're soiling the commons and externalizing internalities
Jager retweeted
Kalshi for Businesses is probably the most exciting thing happening at the company right now.
We're building out the org to service the increase demand in hedging. If you're good at relationship management and GTM, apply by replying and explaining why you're a good fit.
Navore is a small produce distributor that buys from family farms. Their whole business depends on good harvests.
Heat waves are their biggest threat.
When a stretch of extreme heat dries up the fields, the farmers lose their harvests, and Navore loses their revenue.
So Caroline, who founded Navore, came to us and asked if we could build markets around this exact risk. We listed them, and now she hedges every week. When the heat waves come, the trade payouts soften the hit.
Here's the part we love. She doesn't keep all of it. Some of what she wins goes straight back to the farmers who lost the crop.
Small businesses have been carrying weather risk alone forever. They shouldn't have to.
Jager retweeted
@mansourtarek_ @luanalopeslara @Kalshi the removal of announcer mentions has been a big bummer. Any ETA on when they will be back? They were a lot of fun for a lot of people and enhanced sports viewing!
I still ended up being mogged by @catboyautist in mentions for the month, but at least Carsten and I held out on the Culture leaderboard. Some decent other small category hits too!
