That's sort of the point of prediction markets: they surface insider information by allowing people to profit off of it. The benefit is to people watching the prices, who can then use that information to make better decisions ahead of the answer being revealed to the public. It's not necessarily to market participants, who need to be aware of who else is trading the market and have a credible reason to believe they have better information.

The unfortunate thing is that, while their academic position sounds plausible on paper, just like with most crypto things it's just a money grab.

How many crypto people (with legitimate backgrounds just like the founders of Polymarket and Kalshi) stood up and said big things about freedom and the unbanked etc., turns out they were literally just scamming people- there are so many examples besides FTX.

Letting people bet on any random thing is not at all related to this "price everything" theory. If that was their real goal they wouldn't behave so much like a normal sports betting company. I have yet to actually hear anyone defend their actual actions in a plausible way.

It barely makes sense, though? The idea is that it will surface insider information to the public. That happens only because the insider is financially incentivized to place a bet. But they will only bet if they can win money, and they can only win money if someone is taking the other side of their bet, which necessarily means someone without their insider information.

In other words, prediction markets require suckers to lose money to insiders in order for the public to learn new information. In this case, people lost over a million dollars to an insider so the public could learn that "d4vd" was searched a lot.

Is this good?

That’s the academic theory behind these markets, but there’s no actual value to knowing who the most searched celebrity will be or any of this other garbage. It’s just an unregulated casino with guesses about the popularity of Google searches instead of guessing black or red.

Sure, but let’s consider the bet the accused took: who is the most searched person in 2025. What benefit is there in knowing this ahead of time? Who is making decisions based on this?

You are correct, but you say this like the prediction markets are open about this fact. They aren't and if you ask them they will deny this.

Cool. So we benefit by prediction markets surfacing insider information about Trump's plans in the Iran conflict, and unknown insiders making hundreds of millions on that information with massive trades minutes before each announcement benefited the people watching prices in the oil market? That doesn't seem right.

Nice try to make crimes sound legal.

Couldn’t that same argument be used to justify stock market insider trading? The problem with insiders is not just that they can surface information, but they can actually manipulate the results. It’s why baseball players can’t bet on the results of their games, even if a prediction market guru might argue “their bets surface valuable information” or something.

Hmm, not following. The insider trade in this case was small enough to not change the lines meaningfully, no? D4vd's chances of being #1 went from <1% to >99% nearly overnight, was a huge upset.

Polymarket might be different, but conventional Vegas-style lines change with the amount of $$ bet, if the pool is $50M and an insider bets $10k on the long shot, the line isn't moving -- I don't see how insider information can be surfaced in this scenario except after the fact (and only maybe then).

In other words, if the line changes enough to signal insider info, it's not really insider info anymore.

The point is to make money by letting people gamble on the future. What you said is a second order effect of doing the first thing. They should at least be regulated under gambling laws, doesnt make sense without it

What Polymarket says on the topic (https://integrity.polymarket.com/) is that they do not surface insider information and you mustn't trade if you have any.

Because the prediction market community is filled with liars and fraudsters, of course, it does seem to be common knowledge that this restriction isn't meant to be taken seriously, much like Polymarket's fake rule that Americans aren't allowed to use it.

But once you start from the premise that everything prediction markets say about their rules and practices is a lie, why should we believe they provide any genuine signal for anything?