Democrat Introduces Bill Targeting Insider Trading in Prediction Markets

Does insider trading improve prediction market accuracy, or does it undermine credibility and create financial risks?

Published 2 days ago·Updated 1 day ago

Democrat Introduces Bill Targeting Insider Trading in Prediction Markets

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Above: U.S. Rep. Ritchie Torres during an interview Jan. 28, 2025. Image credit: Victor J. Blue/Bloomberg/Getty Images

The Spin

Narrative A

Insider trading in prediction markets could actually make forecasts more accurate. When people with real knowledge trade on events, including geopolitical developments, they provide better signals that help everyone understand what's likely to happen. The whole point of prediction markets is surfacing the best information by paying traders to be right, not creating a perfectly level playing field.

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Narrative B

Prediction markets face serious ethical problems from insider manipulation, threatening their credibility and creating financial risks. Platforms have seen unauthorized data edits to resolve bets and wash trading comprising up to 60% of volume. Without proper safeguards against material nonpublic information, these markets encourage impulsive wagers that could increase loan defaults and pressure credit quality.

Comped Cointelegraph

Public Figures

Nicolas Maduro

Ritchie Torres

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