After an anonymous user raked in $400,000 on a Polymarket bet that Venezuelan president Nicolás Maduro would be out by the end of January, onlookers and regulators started throwing around accusations of insider trading. The user, after all, had made $20,000 worth of bets just hours before Trump ordered the military to strike Venezuela’s capital and capture Maduro. But Robin Hanson, the economist who’s commonly known as the godfather of modern prediction markets, thinks that using inside information to place bets like this is actually necessary for these markets to work—making “insider trading” a feature, not a bug.

“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,” said Hanson, a professor of economics at George Mason University whose academic work inspired the founders of prediction markets Polymarket and Kalshi. “People with more information should trade more and get more money because that's how they get paid for the information they contribute.”

The public outcry against insider trading on prediction markets has built to a fever pitch over the last few weeks, with curiously well-timed trades making news, like one user making $1 million from guessing 22 out of 23 of Google’s most popular searches of 2025 correctly before the company released those rankings. It culminated with Rep. Ritchie Torres proposing a bill on Monday that would prevent elected officials and select government employees from trading on prediction markets.

Tarek Mansour, cofounder of Polymarket’s chief rival Kalshi, said in a LinkedIn post that Kalshi supports the bill and strictly prohibits any insider trading because prediction marketplaces are regulated as financial exchanges under the Commodity Futures Trading Commission. It’s been pretty well established that the outcome of the events traded on prediction markets qualify as a commodity—in fact, that’s how the companies........

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