The thing is you're still thinking of these insiders as someone who just got a juicy stock tip from a relative.

The much more serious problem is when these insiders actually have their hands on the levers which decide the outcome. It's really no different than a mobster who bets a bunch on money on an unlikely outcome then threatens one side to throw the match.

What possible economic benefit is there to society to allow ordinary people to bet in markets like that?

Would you really like to live in a world where "Will we nuke Iran?" Is a bet you can make? Then someone in government sees how much money they could make if they bet yes & push the button?

> Isn't insider trading on a prediction market only wrong to the extent the insider is violating some duty of secrecy to the company?

Yes.

Prediction markets, for corruption reasons, are regulated by the CFTC. In commodities markets, actors are assumed to be making trades based on propriety information. Hedging is the whole purpose!

> …like it's a stock market where there is some society-level interest in giving participants protection from having less information than insiders.

Ah, no!

Insider trading in the stock market is (usually) only illegal in your first case: when the person trading is violating confidentiality.

It is not about fairness.

Fairness is a poor proxy for whether specific trading is illegal.

For example:

If a company accidentally leaves a press release for a merger publicly available, I happen to guess the URL, and then I trade on it: Unfair (I have access to insider information that other market participants do not) but legal!

If I work at the company, am sent the press release to copy edit, and then trade on it: Illegal. I have a duty to the company not to trade on it.

No, commenters here simply take into account that predictions markets have historically classified themselves as futures markets and not as gambling.

Allowing information asymmetry, like insider trading, undermines the regulatory argument that keeps these markets legal.

The insider has perverse incentives as an employee.

I think there is a society-level interest. It's very bad for the business environment if every employee of every company has monetary incentives to leak private information. It structurally encourages businesses to set up strict information silos where cross-team collaboration is hard no employee can ever be sure of the broader context of their work.

That's basically what the current US admin is doing.

I have come to the opinion that every successful tech company is basically just an arbitrage scheme to avoid regulations and extract value based on that advantage.

Airbnb for unlicensed hotels. Uber for unlicensed taxis. Amazon for whitewashing fraudulent products. Bitcoin for unlicensed securities and laundering money.

The pattern is upsetting.

>Yeah, Polymarket is explicitly advertising this

no, they are not.

you might have been an insider working on the Apple Newton, and being enthusiastic about it you might have broken the rules and traded on your "knowledge"... and you would have lost your shirt. Same with your very knowledgeable enthusiasm about myriad other technologies. Ever wonder why Wall St doesn't show up at HN asking everybody's opinion about AI in order to leverage that info into billions?

an important element of "the wisdom of crowds" is many bits of microknowledge. How many Teslas will be sold next year is very dependent on how much the people who buy Teslas will earn next year (or how secure they will feel in their jobs) working in myriad other industries that have nothing to do with Tesla, along with the price of lithium, tires, and even ... wait for it... gasoline.

Polymarket's words you quote can just as likely refer to the wisdom of crowds. Or even, and this is the subtle part: Polymarket's insiders may believe, like you, that they are creating a market to trade on inside information, and yet they, like you, could be made wrong by the superior sum knowledge of the crowd exerting its invisible hands all together to tank your Apple Newtons.