Can insider betting become a big problem for crypto prediction markets?

[Botnake]

I read this news about a U.S. servicemember who is being investigated after allegedly making more than $1 million on Polymarket. He was betting on military events where he may have information that was not public yet, so basically this looks like an insider job. There is also a KPMG employee being investigated for a similar case.

So I see this as one problem prediction markets could face because of insider information. Normally we bet because it is a prediction game, but what if someone already knows the outcome because of their job or position?

But the funny thing is, everything is on the blockchain. So if there are suspicious betting activities, they can still be traced more easily. In this case, blockchain transparency can actually be very helpful.

source : https://www.wsj.com/finance/regulation/u-s-servicemember-kpmg-employee-are-targets-of-prediction-markets-crackdown-ec7fdd04)

Federal authorities are preparing charges against a U.S. servicemember suspected of placing Polymarket bets on military operations that earned him more than $1 million, part of a coming batch of insider trading cases, according to people familiar with the matter.

The serviceman, who has been under scrutiny since the spring, made successful bets related to military strikes in Iran and Venezuela on the prediction market, the people said. It is one of several investigations that have looked at members of the armed forces who traded war contracts that referenced the timing and outcome of military operations.

[yahoo62278]

I read this news about a U.S. servicemember who is being investigated after allegedly making more than $1 million on Polymarket. He was betting on military events where he may have information that was not public yet, so basically this looks like an insider job. There is also a KPMG employee being investigated for a similar case.

So I see this as one problem prediction markets could face because of insider information. Normally we bet because it is a prediction game, but what if someone already knows the outcome because of their job or position?

But the funny thing is, everything is on the blockchain. So if there are suspicious betting activities, they can still be traced more easily. In this case, blockchain transparency can actually be very helpful.

source : https://www.wsj.com/finance/regulation/u-s-servicemember-kpmg-employee-are-targets-of-prediction-markets-crackdown-ec7fdd04)

Federal authorities are preparing charges against a U.S. servicemember suspected of placing Polymarket bets on military operations that earned him more than $1 million, part of a coming batch of insider trading cases, according to people familiar with the matter.

The serviceman, who has been under scrutiny since the spring, made successful bets related to military strikes in Iran and Venezuela on the prediction market, the people said. It is one of several investigations that have looked at members of the armed forces who traded war contracts that referenced the timing and outcome of military operations.

These prediction markets are full of insider retards and it's not fair to the regular bettor. Hopefully the cheaters get caught and go to prison, but I doubt that happens. The blockchain does tell all though so that could burn them in the end.

I don't know how many people play on these prediction sites or how popular they are, but IMO insiders using info really do need to face harsh prison sentences to deter this type of activity.

[Swordsoffreedom]

In fact if someone already knows classified or non-public information, he can trade even knowing the transparency of blockchain.

And I also read some news. Last April, DOJ accused U.S. Army soldier Gannon Ken Van Dyke of making about $410k profit by trading on Polymarket using classified military information. Also a Google engineer was also accused of making more than $1.2M profit by using confidential company data.

imo, main strength and weakness of prediction market are in same place. it is information. A normal trader estimate probability from public information. But an insider can get  much more accurate signal about outcome of same event. As a result market price does not always represent collective wisdom.

[Orpichukwu]

But the funny thing is, everything is on the blockchain. So if there are suspicious betting activities, they can still be traced more easily. In this case, blockchain transparency can actually be very helpful.

Even as bets can publicly be tracked on the blockchain, it’s still not enough for those insider traders who are using privileged information to make money off the market. Only a few of them are being caught, while the majority of them are still escaping; they are hiding their trace even more this period.
The more the exposure of some people being caught, the harder it will be for the next person to get exposed; it’s someone who made the mistake of leaving some trace back to his life through the wallet that they can trace back.

[MArsland]

I read this news about a U.S. servicemember who is being investigated after allegedly making more than $1 million on Polymarket. He was betting on military events where he may have information that was not public yet, so basically this looks like an insider job. There is also a KPMG employee being investigated for a similar case.

So I see this as one problem prediction markets could face because of insider information. Normally we bet because it is a prediction game, but what if someone already knows the outcome because of their job or position?

But the funny thing is, everything is on the blockchain. So if there are suspicious betting activities, they can still be traced more easily. In this case, blockchain transparency can actually be very helpful.

source : https://www.wsj.com/finance/regulation/u-s-servicemember-kpmg-employee-are-targets-of-prediction-markets-crackdown-ec7fdd04)

Federal authorities are preparing charges against a U.S. servicemember suspected of placing Polymarket bets on military operations that earned him more than $1 million, part of a coming batch of insider trading cases, according to people familiar with the matter.

The serviceman, who has been under scrutiny since the spring, made successful bets related to military strikes in Iran and Venezuela on the prediction market, the people said. It is one of several investigations that have looked at members of the armed forces who traded war contracts that referenced the timing and outcome of military operations.

That's why I'm less interested in betting on Polymarket, because people who do not have access to A1 information and rely solely on information on the internet for free are ultimately dependent on luck. I mean, predictions around politics and economics can be easy for those who actually interact directly with the government environment, political parties, pollsters, or certain media.

[Cointxz]

That's why I'm less interested in betting on Polymarket, because people who do not have access to A1 information and rely solely on information on the internet for free are ultimately dependent on luck. I mean, predictions around politics and economics can be easy for those who actually interact directly with the government environment, political parties, pollsters, or certain media.

That’s accurate and the reason why I never touch prediction market ever since it was started.

It’s like giving your money to an inside trader in case you bet against them and what’s worst is this option usually the odds is very high which means regular gambler will not take it considering the possibility that it will happened in reality.

Better to stick on sports and don’t feed those inside traders with money.

[Botnake]

But the funny thing is, everything is on the blockchain. So if there are suspicious betting activities, they can still be traced more easily. In this case, blockchain transparency can actually be very helpful.

Even as bets can publicly be tracked on the blockchain, it’s still not enough for those insider traders who are using privileged information to make money off the market. Only a few of them are being caught, while the majority of them are still escaping; they are hiding their trace even more this period.
The more the exposure of some people being caught, the harder it will be for the next person to get exposed; it’s someone who made the mistake of leaving some trace back to his life through the wallet that they can trace back.

At least there is still a way to trace it because on the blockchain, transactions can be followed from the origin to the final destination. Once one of those wallets gets connected to an exchange account, it could become easier for authorities to identify the person behind it, and jail time could be waiting if they really committed a crime.

But the most important issue here is what Yahoo also raised, it is simply unfair. Honest bettors make predictions based on their own analysis, while someone with insider information does not have to do the same work because they may already know what is going to happen. At that point, it is no longer really a prediction for them.

[iv4n]

Can insider betting become a big problem for crypto prediction markets?

It's already a problem, and it's not something that can be solved in the future... There will always be someone desperate for money, and with some valuable information in their pockets. Cash it out or not? That temptation is real, and some will always fall for the money...

But the funny thing is, everything is on the blockchain. So if there are suspicious betting activities, they can still be traced more easily. In this case, blockchain transparency can actually be very helpful.

I guess you are right, but some people are better at covering their tracks, and some will get caught. But what does that mean for regular players? Usually, they discover this situation months later, and people have already lost their money... New markets are replacing the old ones, and the game goes on...

[danherbias07]

It's a big problem for them if they are fighting fair, but there's a chance that the insiders are part of their team, or they get a percentage of whatever the insider will feed.

Those who bet normally are actually the victims here. The prediction markets are middlemen, and there's really nothing they should lose in that type of business. They will just need some people to bet against each other, and they will make a line for it.
I think the problem they will face is government agencies trying to shut them down because of either the way they handle it or because the country doesn't want them doing business there. But there's always a right amount to fix that.

[Peanutswar]

Well for me basically this considered an edge to make a wins in a prediction but I guess its out of the bound if they have an intel with the recent happenings and there is no chance that the host of the event will make a changes on what will happen or what the outcome of the result is. So if the guy caught because he use that edge. Its their internal problem once he get caught with the officials, and they are in the work.

Ive seen some videos around the internet before like they are trying to block the passage in a stop light count before because they made a bet under 24 cars passing by.

[viljy]

People who will use insider information in prediction markets will always exist. Even if such people are exposed and face criminal penalties, this will not stop others from like them in the future. (In China, corrupt officials are executed, yet corruption persists. And in prediction markets, insiders will be endless.)

But this is not a reason for ordinary people to avoid prediction markets. We just need to be more careful when choosing event contracts. Avoid those where the outcome is highly likely to depend on a very narrow number of factors (or decision‑makers). In other words, don’t place bets like “the color of Trump’s tie tomorrow.”

[coinrifft]

I read this news about a U.S. servicemember who is being investigated after allegedly making more than $1 million on Polymarket. He was betting on military events where he may have information that was not public yet, so basically this looks like an insider job. There is also a KPMG employee being investigated for a similar case.

So I see this as one problem prediction markets could face because of insider information. Normally we bet because it is a prediction game, but what if someone already knows the outcome because of their job or position?

That is already a fact, that's why there are many states or even country that frown upon this prediction market and wanted to totally ban. It all started when someone win big when Trump win the US election.

https://www.cbsnews.com/news/french-whale-made-over-80-million-on-polymarket-betting-on-trump-election-win-60-minutes/

It was in the millions, so someone might have a insider information that Trump will surely win the election that why there is a huge bet on that. And what follows is a series of exposure. The latest is Trump's teleprompter operator.

https://www.npr.org/2026/07/16/nx-s1-5896223/kalshi-trump-white-house-teleprompter-operator-bet

[d5000]

It's of course unfair, but I doubt it's negative for the normal gambler.

Take the following examples:

1) You bet "Yes" on an event someone has insider knowledge of and knows it is "Yes" indeed. The percentage is at 40% yes.
2) An insider bets a large amount of money on "Yes". Yes price goes up to 60%.
3) The market resolves to "Yes". The insider made an unfair win. But you have won the same amount of money.

Second example:

1) Odds are at 40% before the insider bets.
1) The insider bets "before" you place your bet. The percentage goes up to 60%.
2) You bet on the Yes at 60%, and it resolves to Yes.

You could argue that you have lost 20%, because if the insider didn't place his bet, then you would have won more money. But on the other hand: Probably you did wait for the odds to go up to 60%, if you decided earlier, you could have won more, but the outcome would have been more risky from your point of view.

Thus, in this case it is not clear if the insider didn't even help you to win. If he didn't place his bet, you could have been tempted to bet on "No" because it was the majority position before the insider placed his bet, and then you would have lost.

My conclusion is: It is extremely unfair, but normal gamblers normally would not be really affected. However, due to the unfairness, it should of course be banned by the casinos and even by law.

[Outhue]

I saw a news this morning where Trump Jr is warning the other party to avoid prediction markets completely, I busted out laughing like a kid, I was like you people just want everything for yourselves only, he is pissed because others are doing the same thing they did and he isn't happy about it.

Prediction market are all the same, someone somewhere is benefitting more than others because of closed door deals and information, I don't like prediction markets because of this and I don't think there will ever be a way to end it unless the introduce some very strict laws on every available prediction market that comes with consequences.

[eisen33]

I read this news about a U.S. servicemember who is being investigated after allegedly making more than $1 million on Polymarket. He was betting on military events where he may have information that was not public yet, so basically this looks like an insider job. There is also a KPMG employee being investigated for a similar case.

So I see this as one problem prediction markets could face because of insider information. Normally we bet because it is a prediction game, but what if someone already knows the outcome because of their job or position?

But the funny thing is, everything is on the blockchain. So if there are suspicious betting activities, they can still be traced more easily. In this case, blockchain transparency can actually be very helpful.

source : https://www.wsj.com/finance/regulation/u-s-servicemember-kpmg-employee-are-targets-of-prediction-markets-crackdown-ec7fdd04)

Federal authorities are preparing charges against a U.S. servicemember suspected of placing Polymarket bets on military operations that earned him more than $1 million, part of a coming batch of insider trading cases, according to people familiar with the matter.

The serviceman, who has been under scrutiny since the spring, made successful bets related to military strikes in Iran and Venezuela on the prediction market, the people said. It is one of several investigations that have looked at members of the armed forces who traded war contracts that referenced the timing and outcome of military operations.

I think there should be simple rules regarding betting that prohibit military personnel from betting on military events, just as players playing for teams are prohibited from betting on their own team. If I'm not mistaken, players and coaches are prohibited from betting on sports altogether. Insider information has always been used by those with access to it, and with prediction markets, it's become even more accessible to anyone who can take advantage of it.

[Ruttoshi]

Prediction market has given room for insiders to manipulate the market because whatever event that's bets are ongoing on the outcome of the even will have an insider as long as the person is greedy.

The insider might not be the one placing his bet but he will give the information to someone close to him to make the bet so that he wouldn't be traced since, he knows that's a big offense. Imagine, how will a service member get a concrete information about the military operations. Insiders bet cannot stop in Poly Market or don't you think that if gamblers know how to manipulate the casinos, they will do it.

[Somegory]

It's already a bigger problem and many don't know it yet.

Prediction markets are prone to insiders trading leakouts, insider's will always make profits from information that can't get out to the public, and that's what prediction market is all about.

Regulators should be the most concern, I don't know why this is taking this long, there is a big call for regulation on prediction markets, in fact not anyhow regulations but a strict one.

Insider driven trades will never be erased, we are even knowing about it because they are exposing themselves, just imagine if they are all on the same book, no party differences, they will keep making money and no one will ever know.

[Findingnemo]

Blockchain contains the transaction details but it can be tied to nobody if the one placed the bet under someone else so these are hard to investigate and to be honest they will always exists but it will not affect the entire prediction market because the market is so big and the platform also keep increasing their strength to protect themselves from the insider jobs all the time.

[purple_sparkles]

Blockchain contains the transaction details but it can be tied to nobody if the one placed the bet under someone else so these are hard to investigate and to be honest they will always exists but it will not affect the entire prediction market because the market is so big and the platform also keep increasing their strength to protect themselves from the insider jobs all the time.

I think cases like this will always exist in prediction markets. Whoever has access to information has power, but that information is not available to everyone. So I don’t think this would affect the prediction market in any way that is fundamentally different from how it operates today. Polymarket, for example, most likely has certain algorithms and procedures for dealing with situations like this. It’s also quite possible that some bets may be influenced by lobbying or even be connected to sponsored interests. I don’t think this business is based purely on making predictions. Prediction markets themselves can also be used as a tool to shape public opinion and influence people’s attitudes and perceptions.

[Mr_Brilliant$]

You're giving too much credit to Blockchain. Yeah, the Blockchain is transparent but it can't tell who this person is or whether he has an insider information or not. You can investigate afterwards after he or she has made the profit from it. What I think the case here to be done is to disallow people to certain information to actually place on bet on prediction market. But it can still be a limitation if the person tells another. Honestly don't know what can be done.