Yes. This argument doesn't even apprehend insider trading laws on regulated securities markets in the US, where the crime is about theft, not fairness.

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).