The concept of a valuable service falls apart if players can influence the actual event. Without equal footing and basic honesty, you aren't measuring reality so much as you are subsidizing those with the power to manipulate it.

Prediction markets have only events whose outcome is eventually publically resolved, by design. With insider trading, the trader is incentivized to release the information as late as possible, as close as possible to the events.

Why are these big insider bets being placed within hours of the event actually occurring? The insiders are doing the equivalent of bid sniping — waiting until the last possible moment to exercise.

This is how inside info works in trading markets in general. And again this is inevitable and by design.

It also makes them largely useless, because the timeline for which useful position is shared is compressed to the point where nothing useful can be gleaned from the information.

The thing is a “lie incentiviser” — a market entirely for suckers. That’s why 95% of volume is sports betting.

That’s setting aside insider positions having an influence on the outcome of events which is a whole separate problem.

why are publicly traded companies special? The speculation is not on securities.

You're not participating in a "market" (even though they call it that), you're purely gambling and speculating. People have been doing this since currency was a thing. Even gambling laws don't apply in my opinion. If I told you the government will publish evidence of aliens existing tomorrow, and we make a bet on it, that's not really gambling, it's not so much a game of choice as it is a competition of who can predict things better. The other person might have insider knowledge, but it's up to you to either take on that risk or assume despite that your knowledge about the topic will overcome their potential insider knowledge.

Except it's not "truth" as much as it is whatever has the most financial incentive to happen.