“prediction markets need inside information to function, but that's also their biggest weakness”
Frames insider trading as a structural feature of prediction markets, not a bug. Walks through the DOJ case against Master Sergeant Gannon Ken Van Dyke, who made $400k on Polymarket trading the Maduro raid, and the prior Israeli reservist arrests, then quotes Mansour, Coplan, Tenev, and Hanson on how insider flow is what makes prices accurate. Argues platforms face a calibration problem: too permissive and noise traders flee perceiving rigging, too strict and informed flow disappears and prices decay into sentiment. Predicts Polymarket fully drops pseudonymous trading and ramps surveillance over the next year.
Some technical background helpful
Platforms mentioned: Polymarket, Kalshi