Comment by TheDong
13 hours ago
The big difference here is that if you buy short-dated out-of-the-money options and make it big, the SEC comes knocking on your door and reads your text messages to find out what you knew and when.
It's both easy to track down stock traders due to KYC, and easy to prosecute due to laws.
Polymarket and friends make it both much harder to find the trader, and also it's less clear if there's a legal theory that lets you prosecute someone dealing in these new markets.
Sure, congress and the president can insider trade a bit here and there, but the everyday joe is rightfully afraid to.
It seems like the difference is all due to historical accidents in the US and laws that should arguably be changed. Nothing to do with prediction markets by itself.