The problem with prediction markets is not purely insiders but that they interface with the real world, so they encourage bettors not just to predict an outcome but to bring it into being.

You are a poorly paid Russian commander. You open an account on polymarket or Kalshi and place a bet about specific Russian troop movements, perhaps ones that would be disastrous to your war effort even, to up the leverage. When you’ve accumulated a sufficient position, you order the troops to be moved, perhaps even out of accord with orders from above. Your front collapses, your soldiers are routed, and you get rich.

These markets are dangerous. We will learn this lesson eventually.