The explosion in popularity of prediction betting markets like Polymarket has changed how people make money online and has opened up access to valuable trading information to a wider range of individuals. While insider trading is illegal in traditional financial markets to promote fairness, prediction markets prioritize accuracy and allow insiders to trade in order to improve pricing accuracy. However, there is a debate among experts on whether allowing insider trading could deter uninformed investors and harm the effectiveness of the market. Polymarket, which recently faced regulatory action for offering unregistered options contracts, does not have know-your-customer (KYC) requirements and it is unclear how the platform prevents insider trading. Other platforms like Kalshi have stricter policies and require KYC for all users. The regulation of prediction betting markets by authorities like the Commodity Futures Trading Commission (CFTC) is still relatively new and untested. The rise of prediction markets raises questions about control and ethics, particularly when it comes to large sums of money being bet on outcomes determined by insiders.



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