The problem with prediction markets is fundamentally that they're unregulated.

Modern equities and futures markets are highly evolved and rather carefully regulated systems. We've spent centuries learning what the failure modes are and how to guard against them. It's never perfect, it's never going to be perfect -- it's fundamentally a voting system -- but in general, we get liquidity and price discovery at a relatively low cost, while avoiding fraudulent and evil behavior like wash trading and criminal profit laundering.

These new "prediction markets" have been put in place without any of those hard-earned protections. And surprise, they're rife with dirty trick and dirty money.