Comment by skippyboxedhero

Insider trading does not (and should not) apply to prediction markets.

When gambling companies make markets on Oscars, for example, they make those markets knowing 100% that people who know the outcome will bet on it. It is inherent to the product, they put protections in place. Equally, with some sports markets (i.e. transfers), they put in place protections to identify activity that IS a legal breach of player's agreements with sports leagues.

But on prediction markets, there is inherent insider knowledge and people should have the sense not to trade on markets where you are trading with insiders. It should be obvious. Financial markets are different, they are supposed to be open. Prediction markets are not.

There has been a strong drive to apply the concept of insider trading. In the UK, people were actually charged under a law intended to protect bookmakers...to be clear, this is happening whilst people close to central bankers and Treasury civil servants are being paid 7 figure sums to leak information, and all the stuff that happens with transfer/TV show markets. As ever, it is only when politics appears that these rules get invented (and to be very clear, politics markets have always had insider action too...it is inherent to the market, bookmakers know this, they did not ask for these people to be charged).

Btw, the Gambling Act has also been used to prevent payments to gamblers who exploited casinos that failed to ensure their games were fair. If you told the people saying "insider trading" that there was a law whose only purpose was to protect casino's margins, they wouldn't lose their mind...these same laws are being used to prevent "insider trading".