Question of the Day - 05 February 2026

Yesterday we introduced the idea that prediction markets happily book contracts on events whose outcomes might already be known by insiders. Today we discuss how, depending on your perspective, that might be either a good or bad thing. 

The story we cited yesterday, "Coin Flips That Already Landed," quoted Captain Jack Andrews, professional sports bettor and co-founder of Unabated, a trusted source for sports betting tools and resources. "It’s the gamification of America. We’re on this pathway toward everything being a gamble and I don’t necessarily disagree with it,” Captain Jack said. “I just don’t know if it’s healthy, because a lot of people are really bad gamblers out there. And this is rigged gambling."

The story also quoted Bernard Marantelli, an Australian-born professional gambler and betting entrepreneur, who reminded us that this whole scenario played out in Europe 20 years ago with in-race horse betting; due to broadcast latency, the delay between the live action and when viewers see it on their screens, many bettors were drawing dead. That market quickly died, because in Marantelli's words, "the retail people got killed. Completely destroyed." He believes that today's insider trading is a "canary in the coal mine" for the likes of Kalshi, Polymarket, and Robinhood. 

Proponents of prediction markets go to some lengths to not only justify insider trading, but advocate for it. 

Robin Hanson, a professor of economics at George Mason University whose academic work helped the founders of Kalshi and Polymarket, told Forbes, “The point of these markets is to get information, so the only reason you should ever be trading on them is if you think you have some information. People with more information should trade more and get more money, because that’s how they get paid for the information they contribute.”

Another interviewee, a prediction market maker, said, "When you’re betting blind, you’re on the right side of the insider information roughly half the time. While it’s unethical and wrong, it doesn’t actually change EV. I understand that you’re going to lose when it’s rigged against you, but people forget that half the time, they’re on the winning side.

"You’re entering that market knowing someone knows whether [the coin flip] is heads or tails. I understand it’s unethical. I understand it’s insider trading. I understand why it bothers people. I don’t understand how it negatively impacts the end user in practice.” He added, "This exists in every market. We’re just more familiar with it in sports.”

So where does that leave us pikers who might get past-posted by an insider?

The article sums it up. "Don’t ever — as in ever — buy contracts on anything where the outcome is potentially already known by someone else. Put simply: Would you buy a 'heads' contract at 50 cents if you were aware that the person on the other side might already know the trade will settle at 'tails'? Of course you wouldn’t. You wouldn’t buy it at 49 cents either. Or 48, 47, 46 …"

Take it all the way down to zero.