Who thought this? Be careful with your wild use of we here. I'm not part of your we. Opening betting markets has only one ultimate ending where everything is done for the betting.

The traditional espoused financial market purpose of these prediction markets is based on the premise that actors on it will have inside information.

The point is for business with vested interests (and therefore often inside information) to use these markets to hedge for things that will materially affect their profitability.

For example, in this case, suppose you ran a company that was shipping goods through the Middle East, and a war would disrupt your business. You would then place bets on there being a war, so that if it does happen you will recover some of your losses. You might know inside information because your work in the region, but that is expected.

Insider gambling has been common since the invention of gambling I think.

Did anyone really think that? The corruption is inherently far, far easier than accurate predictions.

Only for very narrow definitions of "we".

I think it's pretty obvious when betting on events that are inherently just decisions by one or a few people (e.g. when will Trump launch an attack on Iran, when will a company launch a new product, will some company acquire another one, etc.) that they will attract insider trading and corruption by their very nature - all that's necessary is to have information about the decision maker. This is fundamentally different than events that are subject to forces that no single individual controls - e.g. who will win an election, where will a crypto price be in a year, movie box office results, etc.

I think betting on "single decision maker" events is just a "sucker is born every minute"-type bet.

They actually encourage insider trading as to influence the prediction and make it more accurate.

Some insider selling changes the prediction downwards

The WANT the information

Those aren't mutually exclusive. The best predictions are going to be those based on non public information.

The best predictions are made when you already know the answer.

We knew that already from every betting market in the history of betting markets

This is exactly what I wanted prediction markets for

Looks like “we” need to update our relationships with markets

Price discovery is a visualization of the collective conscious, and the evolution of markets gets closer and closer to direct exposure to an event. Share and derisk a transaction, cleanly, quickly

Reduce all frictions towards doing so

Frictions include finding the person making the transaction, negotiating with them, trusting them to perform, disputing resolution, insurance. These hamper anything from occurring, or occurring quickly, and the pricing is too variable. Prediction markets are an example of all of those frictions being reduced to almost non-existent. And dispute resolution will improve further and attract more liquidity.

I definitely never thought so. It seemed primary as an unregulated casino to me - which usually implies criminality and frauds.

I dont think I was special or unusual.

if it is not regulated, you can always safely assume that it is a scam / corruption :) almost universally applicable

Isn't exposing corruption a good thing? If betting markets are giving the masses access to knowledge about events that would normally be restricted from them, what is wrong with that? Information wants to be free. You can make use of metrics from betting markets without actively participating in them.

Anyone who's followed the news since the 2000s would have realized a strike on Iran would have happened around now.

Notice how the bettor hedged and bet on multiple days and hedged each of their bets with a "by" clause. This is a bog standard hedging strategy that anyone who's been to a racetrack would know.

On a separate note, gamified prediction markets should not exist - they create perverse incentives and are basically a gamification of futures contracts (which requires a degree of risk management and hedging experience the median individual simply lacks), but this specific example doesn't seem like insider trading, just a seasoned gambler who knows basic hedging strategy.