Prediction markets have evolved from limited legal gambling venues in the 1970s, such as Las Vegas and Atlantic City, to a vast online ecosystem where users can bet on nearly any event worldwide. Companies like Kalshi and Polymarket now facilitate markets on diverse outcomes, from political events to consumer preferences, increasing the volume of insider information circulating among participants.

David Marcus highlights the ethical dilemma posed by these markets, noting that while insider information is legally protected, informal sharing of tips can encourage betting by those with privileged knowledge. For example, in markets like "Who will win the reality TV show 'Big Brother'?" dozens or hundreds of people may know the outcome, and thousands might have inside information. Despite legal risks, such information can be informally passed along to others to place bets.

Currently, users can wager on events such as whether SpaceX will have a successful launch by July 31, 2026, or if Rihanna’s next album will release before the upcoming Grand Theft Auto video game. The proliferation of these markets means far more people have access to what Marcus calls "feedbox noise" — a flood of real-time insider data.

Attempts to regulate prediction markets are underway at both state and federal levels. However, Marcus argues that unless these markets are entirely shut down, it is nearly impossible to prevent hundreds of thousands of potential insider traders from participating. Ultimately, he suggests that individuals must decide for themselves whether placing wagers based on insider knowledge is fair, as few mechanisms exist to stop them.

Sources