A trader reportedly turned $45 into $200,000 in less than a month by exploiting inefficiencies in time-based prediction markets. These markets, which allow participants to bet on asset price movements, often see odds set by bettors rather than the market itself. This can lead to temporary discrepancies where the combined odds of all outcomes are less than 100%, creating arbitrage opportunities. For instance, if the odds of an asset ending a period up are 60% and down are 38%, the total is 98%. By purchasing both options, a trader can spend $0.98 to guarantee a $1 return when one outcome becomes true. Automated bots can capitalize on these moments by continuously monitoring odds and executing trades when the combined odds fall below 100%, effectively printing money.
Inefficiencies in Prediction Markets Offer Arbitrage Opportunities
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