Making insider/true expert information public more quickly in the form of influencing prices in a toy market is THE ENTIRE POINT of prediction markets.
Read the original papers on them.
http://li.mit.edu/Stuff/CNSE/Paper/Hanson90.pdf
I recall a few finance papers saying (paraphrasing) "approximately all private info is reflected in stock prices". The same is obviously true of prediction markets. If government officials are banned, they'll just give a little wink to a relative or friend, and the prediction markets will reflect the private information.
On a personal note, I find these markets incredibly useful in day to day life. There's been a joke for a while that putting site:reddit.com in your google search is the only way to get (some) real information. It's becoming true that putting <search terms> AND (kalshi OR polymarket) is how to get accurate info.
It makes sense to ban government officials from betting. It's hard enough to enforce insider trading. With legal betting, it's literally impossible.
Another worrying issue with betting is just how prevalent the last election was in betting markets. In elections won by thousands or even just hundreds of votes, betting markets can skew results where betters vote for someone just purely for the bet and persuade, shill for the person they bet on.
I can imagine betters placing a bet on a candidate and then launching a defamation campaign against the other.
Not just insider info. Folks in the government can make those things happen, making the payout for super rare events even higher and more catastrophic. It is obvious how prediction markets could be used to put blind hits out on people.
> A Mystery Trader Made $400,000 Betting on Maduro’s Downfall
> Prediction market trader 'Magamyman' made $553,000 on death of Iran's supreme leader
Insider trading has been a staple of making money in US politics for a long time, it's just more transparent now.
I don't believe a targeted ban on participating in prediction markets would do much to weed out corruption while "predictions" hide behind government officials pumping memecoins, buying stocks, using proxies, or simply sharing war plans over messaging apps. The floodgates are already open, prediction markets are just the most honest and obvious version of the corruption.
This approach to legislation is an interesting contrast to the CCP's supposed 2.3 million people prosecuted for corruption, if you believe Wikipedia [1].
[1] https://en.wikipedia.org/wiki/Anti-corruption_campaign_under...
Prediction markets should just be globally illegal. Nothing good can come from them. Public identity is not a solution, proxies would be used.
Related:
War Prediction Markets Are a National-Security Threat https://www.theatlantic.com/technology/2026/03/polymarket-in...
Aren't there already basic laws against officials profiting from their role?
I think every sane person today should abstain from insider trading markets (stop calling them "prediction markets", BTW). If you are not an insider, you are a sucker - someone who will definitely lose out to insiders' gains.
Anyone in the financial industry is required to report their brokerage accounts to their employer.
Elected officials, servants of the public, should be required to make public their trades in public securities and on prediction markets. Public servants, elected or not, should have to disclose this to their relevant inspector general. (Yes, I know. We fired them.)
Why do “prediction” markets benefit from bets over nominal sums? Isn’t the power of them based on the wisdom of crowds? Wouldn’t capping bets at say $1 be better than trying to hunt down cheaters?
Seems like they actually are less predictive if you can get more votes with larger amounts of money.
The interesting side effect of officials being banned is it reduces liquidity on geopolitical contracts, which makes the remaining prices less informative. Right now on Kalshi, some policy contracts have so little depth that a single 5k order can move the price 10+ cents. That thinness already makes the prices unreliable as forecasts — banning one of the most informed participant classes just makes it worse.
The prediction market trend will "work itself out".
It will become common knowledge that these platforms are exploited by insiders so people "trust" apparent flagged insider bets, so people will try to piggyback insiders, then it will be revealed that a sophisticated party with infinitely deep pockets burns massive amounts of cash to manipulate odds and these piggybackers will be burned badly, so in the end classical gambling and sports betting will resume as preferred ways for gamblers to lose money because of their disgust with the manipulation.
Having to put this much effort everytime a new technology comes out is so unproductive. How about have standards for elected officials not to abuse their power? Maybe have an ethics comittee or something? In academia, there's not a rule for every situation; ethics comittee handle this
All this focus on some insiders who made thousands on betting markets to distract from those who made billions on Wall Street or the oil markets this week.
Both should face consequences but only one will.
How about stopping politicians from engaging in stock markets first.
this is important from an operational security perspective and hence will probably pass. if they cared about actual insider trading they'd close that gap years ago.
Can't individuals just avoid participating, knowing that there's always someone who knows more than you?
If we can't ban them from trading stocks, good luck with this.
Does this include the stock market?
Predictions markets need to be outlawed, no exceptions, just erased from existence.
It wouldn't be a problem if the law was actually applied to prediction markets. If crime is de facto already legal, more laws seems like the least of ones worries.
The answer is simple - you price in the chance that an insider could have an edge on you when making your prediction. It's all part of the game.
Prediction markets and crypto will continue to ride the wave while this administration is in office. But I expect prediction markets will come to be thought of as slimy gambling dens ridden with fraud no different than crypto. The cancerous "greed is good/gamble on everything" attitude prevalent today in America will come crashing down at some point. When? Who knows. The sooner the better.
But for now, make sure you get in your bets er i mean predictions on this mega important market: "Elon Musk # tweets March 3 - March 10, 2026?"[1]
[1] https://polymarket.com/event/elon-musk-of-tweets-march-3-mar...
> Following multiple public reports on the growing influence of prediction markets and their potential for corruption, Merkley and Klobuchar introduced the End Prediction Market Corruption Act — a new bill to ban the President, Vice President, Members of Congress, and other public officials from trading event contracts. The bill will ensure that federal elected officials maintain their oath of office to serve the people by preventing them from trading on information that they gained through their role.
How is any of this going to get passed without enforcement of anti-trust and an end to citizen united?
> you have the perfect recipe to undermine the public’s belief that government officials are working for the public good
The public already does not believe this. Less than 25% approve of your work.
> This legislation strengthens the Commodity Futures Trading Commission’s ability to go after bad actors
And this is designed to "increase trust?"
Unfortunately, it's not just elected officials that are problematic for prediction markets. The Secretary of War, for instance is not an elected official nor are leaders of the armed forces and there is definitely a prediction market for war. Multiply this by every powerful appointee and every career bureaucrat and see what kind of picture that paints.