A man shows a digitally altered image of ousted Venezuelan President Nicolas Maduro, in Lima, Peru, on Tuesday.ERNESTO BENAVIDES/AFP/Getty Images
Vass Bednar is the managing director of the think tank The Canadian SHIELD Institute and co-author of The Big Fix.
As people reacted to the Trump administration’s power grab in Venezuela, it was revealed that someone managed to make about US$430,000 on the crypto-betting platform Polymarket after they placed a bet on President Nicolás Maduro’s capture, clearly capitalizing on insider information.
These kind of prediction markets allow individuals to bet on specific outcomes using financial incentives. They are operated by firms such as Kalshi and Polymarket and collapse hedging, forecasting and gambling into one platform. They blur the worst of all worlds: the social legitimacy of “markets,” the behavioural risks of gambling and the plausibly-deniable regulatory posture of “we’re just a platform.”
In the United States, many of these products are structured as standardized derivatives, “event contracts” that are traded on electronic platforms and settled in cash, with the regulator-of-record debate playing out between financial and gambling frameworks.
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Last year, Kalshi’s CEO Tarek Mansour said that their “long-term vision is to financialize everything and create a tradable asset out of any difference in opinion.” But not everything should be up for grabs on these sites.
It’s one thing to forecast the outcome of a football game or ballpark GDP growth. It’s another entirely to watch platforms flirt with contracts tied to calamity or political violence, turning catastrophe into a ticker symbol.
Polymarket withdrew from the U.S. following a January, 2022, order from the Commodity Futures Trading Commission, which accused the company of running an unregistered derivatives-trading platform. It was cleared to return early last month. And on Dec. 31, the CFTC updated the associated Code of Federal Regulations to explicitly outlaw transactions related to terrorism, assassination, war, gaming or an activity that is unlawful under any state or federal law. The Maduro-related bet, however, appears to have been made four days earlier, on Dec. 27.
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Polymarket’s public figures initially showed that a single trader made US$436,759.61 on the prediction, “Maduro out by January 31, 2026?”. There was no accompanying prediction for the associated death toll, which has yet to be confirmed. It has been reported that the platform has since refused to pay out related bets that the U.S. would “invade” Venezuela. The Maduro bet is no longer viewable online.
If it is or was paid out, the Polymarket bet is essentially insider trading, but with crimes of aggression. Prediction platforms invite a familiar moral hazard: profit from privileged knowledge of something that should not be a money-making opportunity at all.
The U.S. already tried to prevent politicians and government officials from profiting from information they know in advance as regulators, such as with the Stop Trading on Congressional Knowledge Act of 2012. Canada doesn’t have comparable legislation.
But with the sheer number of people involved in the U.S. operation in Venezuela – planned months in advance and involving more than 150 aircraft – the bettor who made about US$430,000 could have been anyone. It was reported that The New York Times and The Washington Post knew of the strikes and withheld reporting in order to avoid endangering troops. That means journalists or any of their connections could have also placed the prediction.
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Canada has, so far, been comparatively cautious about legitimizing prediction markets – almost by accident. These novel event platforms run into two hard constraints. First, federal criminal law largely channels lawful commercial gambling through provincial “conduct and manage” models. Second, securities rules include a near-total ban on “binary options” sold to individuals, which functionally wipes out the yes/no cash settlement structure at the heart of prediction markets.
The result is that there is no general pathway for a private, independent retail prediction market outside provincially run or tightly licensed offerings.
We could be more explicit about whether we want these kinds of betting platforms in the country, and if so, set up better rules about what kinds of events are eligible for ‘predictions.’ Some events should not be turned into anonymous profit opportunities. Canada should ban contracts tied to violence, war, terrorism, assassination, and plainly unlawful acts. A society doesn’t need a market price for atrocity and nothing says “innovation” like turning coups and chaos into a push notification.
As the world anticipates more gunboat diplomacy from the U.S., we can become enriched from this incident, too. We can decide that we don’t want to live in a heavily armed casino where people can use apps to bet on crimes against humanity.