Prediction Markets and the Law of Insider Trading: A Practical Guide

Prediction markets, where users can take monetary positions on nearly endless scenarios, have surged in popularity in recent months. As prediction markets become more widespread, however, concerns about insider trading on the platforms also has grown. Because prediction markets may not involve “securities” and represent a relatively new technology, many of the traditional safeguards used to combat insider trading may not address prediction markets, creating the potential for misconduct.... By: Morrison & Foerster LLP