I don't understand why insider trading would only happen as something becomes news. The inside knowledge haver is risking the information leaking some other way before they make their bet. Some very risk averse insider traders (lol?) may do so, but others are going to make their bets when they learn their information.
Assuming that they don't though, and every insider trader only ever makes their bets right before an event, I don't see how that changes anything? People working with non-insider knowledge are still going to be betting against each other before that point. They are still going to establish a likelihood of a thing happening that's more accurate than I would by myself.
The potential for scamming is high at low dollar figures sure. At some point of volume though, it's going to become too expensive to do.