"One of the founders of prediction market theory" Robin Hanson does not support a complete ban on insider trading for Kalshi and Polymarket.

Deep Tide TechFlow News, April 26 — According to Fortune magazine, as Kalshi and Polymarket accelerate cooperation with the U.S. Commodity Futures Trading Commission (CFTC) to combat insider trading, Robin Hanson, one of the founders of prediction market theory and a professor of economics at George Mason University, publicly expressed disapproval, stating that “insider participation in trading” is itself the core value of prediction markets. Previously, the U.S. Department of Justice charged a U.S. military soldier with using confidential intelligence to bet on a Venezuelan raid on Polymarket and illegally profited about $400k. In response, Robin Hanson said, “You want them to trade. You want prices to be as accurate as possible; the purpose of the market is to aid decision-making.”

Robin Hanson believes that, like all economic models: insiders will trade, informed parties will buy “certain” contracts, thereby pushing prices upward and bringing them closer to the truth. If insiders do not participate in betting, the information discovery function of prediction markets will be greatly weakened, and markets cannot reflect real outcomes faster than news media or polls. Insider trading is also widespread in traditional financial markets, yet regulation often only addresses a small number of cases. Prediction markets and journalistic investigations are fundamentally similar mechanisms for making information more quickly public and should not be completely banned. Hanson’s compromise suggestion is: any legislation prohibiting government employees from participating in prediction market trading should, under the same logic, also prohibit them from talking with journalists.