Correct. This is an important distinction.

Matt Levine has a good take on this. His informal, distilled definition is essentially:

- There is a time gap where insiders know something material and the public does not.

- Someone with access to that material nonpublic information, who is not supposed to use it for personal gain, trades on it anyway.

- That conduct is treated by courts as a deceptive scheme against the less‑informed trading counterparty and against the information’s rightful “owner.”

In other words - you profit at another person's expense (e.g. stealing) because you have information and the other person doesn't.

Two scenarios:

(1) a US Naval Officer knows about a strike 24 hours before it happens and places a bet against someone who doesn't have knowledge about the strike.

(2) Neither a US Naval Officer knows about a strike 24 hours before it happens and someone who doesn't have knowledge about the strike do nothing.

Scenario 1 is (or should be) illegal because the officer is using the information for personal gain, when the information was explicitly given to them for national defense reasons (thus violating the rightful owner clause).

It makes them more accurate at the time the insider places the bet. But to maximise profit, they are incentivised to misdirect before they place the bet (and worse still from society's perspective, are incentivised to take counter-intuitive or downright harmful actions to profit at the expense of people who bet on the view that it made no sense for them to do that)

You can be an outsider with expertise, in which case you can still beat the non-expert outsiders.

So now who are the non-expert outsiders and why would they bet? Outsiders who think they are experts but are wrong.

when have we ever defined gaming/gambling as 'a thing where the house takes a rake' ? I don't understand this argument and it always feels disingenuous when brought up.

On the Polymarket homepage right now, one of the featured markets is whether or not Bitcoin will be up or down over the next 5 minutes. It's hard to justify that as anything more than illegal gambling.

I find prediction markets to be interesting on two fronts:

1) They like a really good way to determine the probability of something happening, which is interesting for events like elections

2) It provides an avenue for smart bettors to take advantage and sharpen their skill, whereas they get severely limited or banned from traditional sports books

However, it seems like all incentive structures for the markets and consumer behavior will steer these things to degenerate gambling.

> Their defense is that they are a gamified futures contracts and hence should fall under CFTC regulation.

That might be the defense. They are inherently designed to leverage insider trading though. I made a top level comment with links/resources that argues why.

How does one "interpret" public knowledge to time bets so accurately right before Trump's announcements?