Prediction markets have evolved from limited legal gambling venues in the 1970s, such as Las Vegas and Atlantic City, to widespread online platforms where users can bet on nearly any event worldwide. Companies like Kalshi and Polymarket now facilitate markets on diverse outcomes, from whether Lindy’s sells more cheesecake or strudel to the success of SpaceX launches or the release timing of Rihanna’s album compared to the next Grand Theft Auto game.

This expansion has significantly increased the number of people with access to what is described as "feedbox noise," or insider information. As noted by commentator David Marcus, "Dozens, maybe even hundreds of people know this answer, thousands probably have inside info, and while, if they say anything out loud they will get sued into oblivion, what's to stop them from telling their cousin, 'Hey, drop a few thousand on this contestant?'" referring to prediction markets on reality TV shows like "Big Brother."

Kalshi operates as a federally regulated U.S.-based prediction market exchange, allowing trading on political, economic, and other real-world events. Despite emerging attempts to regulate these markets at state and federal levels, Marcus warns that "short of shutting them down entirely, nothing can stop tens of thousands of markets from having hundreds of thousands of potential insider traders."

The ethical responsibility falls on individuals involved in businesses, campaigns, or entertainment ventures that become subjects of prediction markets to decide whether placing wagers is fair, given the minimal barriers to insider trading in this new landscape.

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