Do Prediction Markets Make Insider Trading Easy?: Explainer

Prediction markets, where users can place bets on real-world outcomes in anything from sports and award shows to elections, interest rate decisions, and even military operations, have become a multi-billion-dollar industry in just a few years. Along the way, they have also become the focus of growing concern that some participants are using privileged information to profit.

In April, a US Army soldier was charged with using classified information about the timing of the capture of then-Venezuelan President Nicolás Maduro to make hundreds of thousands of dollars trading on Polymarket, one of the two most popular prediction market platforms. The ...