The prediction market trend will "work itself out".
It will become common knowledge that these platforms are exploited by insiders so people "trust" apparent flagged insider bets, so people will try to piggyback insiders, then it will be revealed that a sophisticated party with infinitely deep pockets burns massive amounts of cash to manipulate odds and these piggybackers will be burned badly, so in the end classical gambling and sports betting will resume as preferred ways for gamblers to lose money because of their disgust with the manipulation.
Prediction markets do seem basically corrupting. So yeah, maybe the winning move for society is to just not regulate them at all so they just become obvious “cheaters only” leagues.
I agree. The market is flawed because there isn’t a guaranteed entropy.
Because of this, the prediction market will remain niche.
Even in the presence of insiders, these markets may still function well as hedges.