Odd Lots · Monday, July 6, 2026
The discussion touched upon the ethical and practical implications of insider trading in prediction markets. While acknowledging that trading against informed individuals is detrimental to retail traders, some argue that such information, even if non-public, can contribute to price discovery for important events. Both Calshi and Polymarket claim to police insider trading, but specific instances suggest it still occurs, particularly in markets with potential for non-obvious informational advantages.
“On the other hand, you know, I think one of the early arguments for why prediction markets should be allowable is that they can provide price signal by allowing all information that exists to come into the public sphere. And not stay private. I mean you can imagine a scenario where I mean you could cook up a very Hollywood scenario, which I won't, but you can imagine where someone who was aware of illegal activity and had no way to make that public, we're trading on that information and sort of creating a little bit of price signal there.”
“I could tell you specific markets that I am one hundred percent sure that I lost to someone with inside information. I think you can Pick out a market and see is this possible for this market to be insidered? You get a little bit of a sense of what price movement looks like when someone actually knows the answer. Huge volume coming out of nowhere at a price that hadn't been traded on before.”
“The military guy who bet on the invasion was arrested. You know, he made something like four hundred k and now he's facing charges. I mean, there's no way that math works out for those people, right, So it's really the small insider ones.”