Opinion: Insider information is precisely the key to predicting the market; those with inside knowledge will drive prices closer to the truth.

BlockBeats News, April 26 — Prediction markets Kalshi and Polymarket are currently facing increased regulatory pressure. With law enforcement agencies in multiple countries—and even U.S. state and local governments—quickly paying attention, measures are being considered to ban insider trading. However, Robin Hanson, a professor at George Mason University and one of the founders of prediction market theory, believes that insider information is precisely the key to prediction markets. Strictly banning insider trading is wrong: “You need them to engage in insider trading in order to get the most accurate prices. That is the purpose of prediction markets, to provide information for decision-making.”

Robin Hanson points out that insider trading is widespread in traditional financial markets. Prediction markets rely on informed participants to push prices closer to the truth, enabling them to surpass news and polls. Hanson argues for a moderate trade-off between insider trading and fairness: organizations can protect secrets through contracts, but society also needs the flow of information. It should not exclude ordinary people from participating in the market under the pretext of “elite control of information.” Hanson suggests that participants should view gains and losses like in a game of poker, and emphasizes that prediction markets are a democratic tool for aggregating information—but not everyone is suited to them.