The idea of prediction markets is pretty old. Nobody was able to implement a functional one until recently.
The current prediction markets are all based on crypto so it’s really hard to identify inside traders but prediction markets as a general concept don’t depend on it. Theoretically, there’s no reason why you couldn’t have a prediction market that only allowed registered investors.
They’re supposed to work using Mosaic Theory. That’s exactly the same theory that allows anyone else to make stock predictions. You can take a bunch of data that doesn’t meet the insider trading definition, ie acting on material, non-public information. You can take a bunch of public information and if you’re clever enough to aggregate it the right way, you’re allowed to trade on it.
There are two potential lines of argument. One is prediction markets in general, the other is prediction markets as they’re currently implemented.
You’re talking about how they’re implemented and I agree. It’s a total mess.
My comment was on the general (and much older) idea of prediction markets. None of the current crypto bros would like those since they would be much more heavily regulated.