Online betting platforms such as Polymarket have allowed anonymous users to make multimillion-dollar bets using crypto accounts on oil prices just minutes before major military actions, which suggests insider trading. In turn, the data-feeds from these virtually unregulated prediction markets help determine algorithms that influence trading in larger, “regulated” markets such as the benchmark Brent Sea crude market. While it is clear that these corrupt insider-traders may make some short-term profits, the biggest windfall comes from the feeding-frenzy which they trigger in the much bigger oil markets and spot markets. Observers have noted that a few anonymous bets in a prediction market have triggered high-volume trades in global oil markets, causing large price fluctuations to the benefit of much bigger players.
However, instead of a crackdown against insider trading or price-rigging, the U.S.-based Intercontinental Exchange (ICE), which is the leading exchange for Brent crude futures, has worked to deepen the ties between prediction markets and global oil markets. ICE has launched a trading tool that provides “crowdsourced probability assessments” from prediction markets as “market signals.” Critics say that this move only amplifies the impact of insider betting and gives incentives to those who seek to influence the wider energy markets. Some commodity traders complain that prediction markets are less reliable indicators, and that only institutional investors such as hedge funds are eager to follow them.
