> I'm trying to understand what the criticism is here
You're correct in your understanding of prediction markets with respect to traders using insider information. There are a couple things going on here. One is the subtext from most news media now that Technology Bad. New technologies are treated as guilty until proven innocent, because that is a more engaging narrative for readers. So in this case, those covering this stuff immediately latch onto the rich get richer, insider trading viewpoint, and that gets reported without any analysis of why that might actually be desirable.
Second, prediction markets, in trying to become broadly accessible to "normal" people and desiring liquidity, need a marketing strategy that is understandable. They can't put out a Robin Hanson article as marketing material. So they market by appealing to something people do already understand, which is gambling. The public has this idea now of prediction markets as a way to make money, not as a tool for learning information. So the default perspective on insider trading is now one of unfairness: somebody used their privileged position to make money. The correct perspective is, in fact, that prediction markets are providing users with value by eliciting information from those insiders, information that the public would not otherwise have. The latter perspective is mostly foreign to degenerate gamblers, and the marketing campaigns of Kalshi and Polymarket aren't helping.
I don't think it's so easy to get true information out of all the noise in the markets, and in any case, I don't see how this helps with the fact that corruption is bad. So what if I learn that a country will be wrongfully invaded? Can I have someone impeached for it?
You're correct in your understanding of prediction markets with respect to traders using insider information. There are a couple things going on here. One is the subtext from most news media now that Technology Bad. New technologies are treated as guilty until proven innocent, because that is a more engaging narrative for readers. So in this case, those covering this stuff immediately latch onto the rich get richer, insider trading viewpoint, and that gets reported without any analysis of why that might actually be desirable.
Second, prediction markets, in trying to become broadly accessible to "normal" people and desiring liquidity, need a marketing strategy that is understandable. They can't put out a Robin Hanson article as marketing material. So they market by appealing to something people do already understand, which is gambling. The public has this idea now of prediction markets as a way to make money, not as a tool for learning information. So the default perspective on insider trading is now one of unfairness: somebody used their privileged position to make money. The correct perspective is, in fact, that prediction markets are providing users with value by eliciting information from those insiders, information that the public would not otherwise have. The latter perspective is mostly foreign to degenerate gamblers, and the marketing campaigns of Kalshi and Polymarket aren't helping.