Here’s how insider trading works. Insider trading is a variety of securities fraud. In the US, there is no specific statute prohibiting insider trading. Instead, there is a law that makes it illegal “to employ any device, scheme, or artifice to defraud” someone in connection with a securities trade, and courts have for decades agreed that insider trading is a kind of “scheme to defraud” people.

That sounds intuitive enough. If I have inside information about a merger, and you don’t, and I buy the target’s stock from you, then it does feel like I have ripped you off. But that cannot be quite right. Fraud can’t mean merely that I trade with you knowing something that you don’t: Everybody knows something that somebody else doesn’t, and an important purpose of securities markets is to create incentives for people to find out information (and make money trading on it). If I lie to you about something, sure, that’s fraud, but if I just don’t tell you some juicy information I know, that does not really seem like fraud.

The solution, in US insider trading law, is a bit odd. I like to explain it as “insider trading is not about fairness, it’s about theft.” The theory is roughly that, if I do insider trading, the fraud is that I am stealing information from its real owner. If I am the chief executive officer of a public company, I have fiduciary duties to my shareholders, and if I insider trade on merger news I am misusing the company’s information for my own benefit. If I am a banker or lawyer for a company, or a therapist or golf buddy of the CEO, and I trade on something that the CEO tells me in confidence, I am betraying a duty. There is no insider trading statute, but there is a regulation, and it says that it is illegal to trade “on the basis of material nonpublic information about that security or issuer, in breach of a duty of trust or confidence that is owed directly, indirectly, or derivatively, to the issuer of that security or the shareholders of that issuer, or to any other person who is the source of the material nonpublic information.” 

This is a bit convoluted but it all kind of works, and there are decades of cases applying it. But insider trading is, again, a variety of securities fraud, which means that this law all works in the context of securities. If you insider trade stocks or stock options, we know how it works. Elsewhere things are less clear.

I have written, for instance, about commodities insider trading. There the rules are less fully developed, but I think it is fair to say that commodities insider trading is even more about theft, not fairness. The point of commodities markets is to let big producers and users of commodities hedge their exposures, so of course they are trading on inside information, on market-moving news that they know and their counterparties don’t. They can do that. On the other hand, if you work at a big commodity producer and you go trade on its secret information, you are stealing that information from your employer and will get in trouble.

There are specific rules about securities, and there are different specific rules about commodities. What about everything else? What if I insider trade real estate or sneakers or Pokémon cards? Well, there is a US federal law prohibiting “wire fraud,” and wire fraud is sort of a generalized form of securities fraud: It means using “any scheme or artifice to defraud” someone into sending you money. By analogy, if insider trading in stocks is a kind of “device, scheme, or artifice to defraud” someone in securities trading, then insider trading in anything else could be a kind of “scheme or artifice to defraud” someone into sending you money. 

And so people — including at the US Department of Justice — sometimes think that there is a general form of insider trading, one that works for everything that isn’t a security. If you have secret information, and you have some duty to keep it confidential, and you trade some asset using that information, then that is wire fraud and you can go to jail.

In 2022, a guy got in trouble for insider trading non-fungible tokens, which are not securities or probably even commodities. He worked at OpenSea, a big NFT marketplace, and he knew which NFTs would be featured on OpenSea’s homepage. Those NFTs’ prices would go up. So he’d buy them before they were featured, and flip them for a quick profit. He was not allowed to do this, in the sense that OpenSea had written policies saying he wasn’t allowed to do it, and he signed and acknowledged those policies. But he did it anyway and he got arrested and convicted of wire fraud. I summarized the theory:

If insider trading in securities is securities fraud, then insider trading in anything is wire fraud. If insider trading — using information from someone else, to whom you have a duty to keep it confidential, to buy for your own account — is a “device, scheme, or artifice to defraud” under securities law, then surely it is also a “scheme or artifice to defraud” under wire-fraud law. If you buy real estate based on insider knowledge of where Amazon.com Inc. is going to put its new headquarters, and you had some duty to Amazon to keep that knowledge private, maybe that is insider trading in real estate. If you make sports bets based on insider knowledge of some star player’s injury or trade demands, and you had some duty to that player to keep that knowledge private, maybe that is insider trading in sports bets.

But that was … kind of wrong? This year a US appeals court reversed his conviction, in kind of a weird opinion that we talked about in July. From the opinion:

Because “the wire fraud statute reaches only traditional property interests,” we must decide whether confidential business information qualifies as a traditional property interest even if it lacks commercial value to the business. … We conclude that it does not. … 

The [trial court’s] jury instructions would allow a conviction under the wire fraud statute even if OpenSea thought it was merely unseemly to reveal the planned featured NFT before it appeared on the website — and even if the evidence showed that treating the featured NFT as confidential had no commercial value. … In other words, the instructions allowed the jury to convict based the government’s “view of[] integrity” in business conduct rather than the misappropriation of “property rights only.” 

I don’t know what that means either, but I think it means that courts are skeptical of generalized insider trading. There is a theory of securities insider trading, where if you have a duty to keep information confidential, and you trade on it, you go to jail. It is intuitive to extend that theory to everything insider trading, but it’s not clear that it works.

If you are buddies with a National Basketball Association player, and he texts you to say “hey my foot is a little sore so I might not play tonight,” do you have a duty to him (or to the NBA) to keep that confidential? Can you go to a sportsbook and bet that his team will lose (if he’s good), or at least that he will score fewer than 10 points tonight? Intuitively that feels like insider trading. But does it “qualify as a traditional property interest” because “it has commercial value to the company that holds it”? I have no idea.

On the other hand, if you go to a sportsbook to set up an account to bet on the game, the sportsbook will probably say “click here to acknowledge that you have read and agree to be bound by our terms of service,” and you will click “yes” without reading the terms of service, but if you did read the terms of service you would find something like this:

The Agreements prohibit entering a Game or using the Services if the entrant is: ...

Accessing or has had access to any pre-release, confidential information or other information that is not available to all other entrants of a Game and that provides the entrant an advantage in such a Game, including any information from any gaming site or information from a sports governing body (e.g., pre-release injury information) ("Pre-Release Data"); ...

Any entrant who has knowingly received Pre-Release Data or any other non-public information that provides an advantage in a Game from any person who is prohibited from entering a Game as provided in these Terms.

That is excerpted from the DraftKings terms of service. You are not allowed to bet if you have any “information that is not available to all other entrants” and that “provides … an advantage.” That prohibition is much broader than in traditional insider trading: It is not limited to information that is misappropriated from the NBA; it is not on its face limited to information from the NBA at all. If you have a very good weather satellite and a very good statistical model and you have determined that it will rain during tonight’s baseball game and the star pitcher will probably have a bad outing, that is advantageous information that is not available to everyone. Does that mean you are not allowed to bet using that information?

Well, whatever, it’s just the terms of service; no one reads those. Here’s some news:

Miami Heat guard Terry Rozier and Portland Trail Blazers head coach Chauncey Billups were arrested Thursday morning and charged as part of a sprawling sports gambling probe, federal prosecutors said.

In a press conference Thursday, FBI Director Kash Patel and Brooklyn federal prosecutors said at least 30 people were arrested across 11 states, including current and former National Basketball Association players and coaches, as part of two separate criminal schemes related to illegal sports betting. ...

One of the indictments charged six defendants with a fraud scheme to bet on nonpublic information about NBA athletes and teams, according to prosecutors. The non-public information included when specific players would be sitting out future games or when they would pull themselves out early for purported injuries or illnesses, authorities said. They relied on individuals, including Rozier and former NBA player Damon Jones.

The defendants also allegedly misused information obtained through long standing friendships that they had with NBA players and coaches, prosecutors said. In at least one instance, they described how Toronto Raptors forward Jontay Porter was threatened for information because of his pre-existing gambling debts.

“This is the insider trading scandal for the NBA,” said Patel. But … how? Here is the indictment, which says:

Online wagers made through the Betting Companies’ online mobile applications were made pursuant to the Betting Companies’ respective terms of use, [which] … generally prohibited users from wagering in connection with sports contests where the wagers were based on or the users had access to pre-release, confidential information or other non-public information. …

The defendants … participated in a scheme to defraud the Betting Companies by providing, obtaining and using non-public information relating to NBA games to place and cause others to place fraudulent sports wagers for profit, and to launder the proceeds thereof. ...

The defendants and certain co-conspirators had access to private information known by NBA players or NBA coaches that was likely to affect the outcome of upcoming NBA games or individual players’ performances. … As a result, many of the wagers were placed in connection with betting lines that did not reflect or account for the private information known by the defendants and their co-conspirators, rendering the wagers more profitable. …

The defendants and their co-conspirators made and caused others to make materially false and misleading statements and representations to the Betting Companies, and to omit to state one or more material facts which made what was represented under the circumstances misleading, including that the wagers were placed in accordance with the Betting Companies’ terms and conditions and house rules prohibiting, among other things, wagering based on non-public information and straw betting.

I think that says that insider betting is a crime if a sportsbook’s house rules say “you can’t insider bet.” That is considerably broader than the rule in the stock market. (If the sportsbook’s terms of service said “you can’t bet if you have a good statistical model of basketball games,” would doing so be a crime?) But, as I often write, everything is sports gambling now, and I suppose this is the rule. Insider betting is about fairness (to the sportsbook!), so if you know something that the sportsbook doesn’t you can’t bet.

Oh the other indictment alleges that Billups and others conspired with the Mafia to help induce big “fish” to play in rigged poker games that used “cheating technologies such as electronic poker chip trays that could secretly read cards placed on the poker table; card analyzers that utilized technology loaded onto decoy cellular telephones that could surreptitiously detect which cards were on the table; and playing cards that had markers visible only to individuals wearing specially designed contact lenses or sunglasses.” Honestly if I ever went to a poker game run by the Mafia:

1. I would not be particularly surprised to learn it was rigged? Like I feel like that’s a risk you take when you go to a secret Mafia poker game? Like you go to the Mafia poker game planning to lose all your money?
2. If I learned it was rigged using “markers visible only to individuals wearing specially designed contact lenses” I would think that was a pretty cool way to lose all my money.

Somehow a true sentence that I am writing in 2025 is “the world’s richest man demanded that people give him a trillion dollars so that he can have absolute control of the robot army he is building unless he goes insane”:

Elon Musk, the world’s richest person, spent the end of Tesla Inc.’s earnings call pleading with investors to approve his $1 trillion pay package and blasting the shareholder advisory firms that have come out against the proposal.

“There needs to be enough voting control to give a strong influence, but not so much that I can’t be fired if I go insane,” Musk said, interrupting his chief financial officer as the more than hour-long call wrapped up. …

“I just don’t feel comfortable building a robot army here, and then being ousted because of some asinine recommendations from ISS and Glass Lewis, who have no freaking clue,” he said.

Do … you … feel comfortable with Elon Musk getting a trillion dollars to build a robot army? Like, what sort of checks should there be on the world’s richest man building a robot army? I appreciate his concession that it should be possible to fire him if he goes insane, but. But. I submit to you that if you hop on a call with investors to say “hey guys just to interject here, you need to give me a trillion dollars to build a robot army that I can command unless I go insane,” some people might … think … you know what, never mind, it’s great, robot army. Robot army!

I feel like the previous richest people in the world have had plans for their wealth along the lines of “buy yachts” or “endow philanthropies.” And many, many 10-year-old boys have had the thought “if I was the richest person in the world of course I would build a robot army.” But the motive and the opportunity have never coincided until now.

In 2024, sports bets on DraftKings averaged a bit less than $1 billion a week. [1]  FanDuel had similar results. [2]  In the spring of 2024, volume on Kalshi, the prediction market, was mostly under $10 million a week, less than 1% of the volume on DraftKings or FanDuel. Volumes on Polymarket — a less regulated, more international, crypto-y prediction market — were higher, but still generally under $50 million a week, or 5% of either sportsbook’s volume. [3]  This makes sense. People really like betting on sports. DraftKings and FandDuel let them bet on sports. Kalshi and Polymarket let them bet on, like, political and geopolitical events. They liked that less. They bet less.

Then the US presidential election heated up, and people did like betting on that, so volumes on the prediction markets went up. By the first week of November, when the election was held, weekly volumes peaked at $1.2 billion on Polymarket and $750 million on Kalshi, basically sportsbook-type numbers. The aggregate fell back below $1 billion the next week, but it remained much higher than it had been in the spring, for a combination of reasons including (1) people apparently enjoyed the experience of betting on the election and stuck around, (2) the prediction markets’ election predictions seemed in some sense to have been right, which served as a proof of concept and (3) the winner of the election was Donald Trump, who seemed likely to usher in a far more prediction-market-friendly regulatory regime. I wrote a column titled “Prediction Markets Are a Thing Now” on Nov. 7.

Still, volumes drifted lower until about this summer, because there was not a presidential election. There were sports, though. Kalshi got increasingly aggressive about offering sports bets, and Polymarket followed. And now you can do Kalshi sports betting through your Robinhood app. And so now prediction markets are really a thing, because they are sports betting sites. We talk about this a lot. It’s weird! It’s weird that the prediction markets have become a tax-advantaged and regulatorily favored way to bet on sports, that mainstream financial institutions — Robinhood, the stock and commodities exchanges — have jumped into sports betting, and that US financial regulators are cool with that. 

One point that I sometimes make is that the rise of sports betting on prediction markets might be good for their broader social purpose of, as Polymarket’s Shayne Coplan has put it, “expanding how individuals and institutions use probabilities to understand and price the future.” You get people in the door to bet on sports (because it’s fun), and then they start to bet on geopolitical events, and their betting attracts smart money, and eventually you have a complete market that accurately predicts all sorts of future events and provides useful information for policymakers and hedging opportunities for companies. Sports, in this telling, are the gateway drug that makes it all work.

But you can’t get carried away with this. Prediction market volumes are way up, but that is not proof that they are becoming more efficient ways to price all sorts of economically meaningful events. Bloomberg’s Emily Nicolle reports:

The trading volume on the leading prediction markets platforms, Polymarket and Kalshi, has hit a new record high, surpassing the previous peak reached during the US presidential election last year.

The recent jump in trading activity offers one of the clearest indications yet of the growing excitement around the exchanges that allow investors to bet on the likelihood of real world events, just as financial firms like CME Group Inc. and Intercontinental Exchange Inc. look for a way into these hot markets.

Kalshi and Polymarket saw notional trading volume rise above $2 billion for the first time, during the week ending Oct. 19, according to publicly available data collated by the user dunedata on Dune Analytics. That figure eclipses the frenzied trading seen during last year’s US presidential election, when the two platforms first entered the financial mainstream.

What sorts of real world events, though? 

The growth over the past two months has been driven in large part by the popularity of sports betting on the New York-based exchange Kalshi, which has used its financial license to offer gambling nationwide, in defiance of state gaming regulators. But betting on politics, cultural events and economic indicators has also generally been trending up. …

Sports-focused bets were the top category on both platforms last week, pulling in $867 million in trading on Kalshi and $415 million on Polymarket, which is not legally available to US customers. The return of college football in August and the NFL season in September prompted a significant uptick in volumes across both platforms, but particularly on Kalshi, where a partnership with trading app Robinhood Markets Inc. has drawn in new users.

Right yes it turns out that legal tax-advantaged sports gambling apps do more volume than apps where you can bet on local elections and the weather. The prediction markets’ pivot to sports might or might not be good for pricing and understanding the future, but it has definitely been good for business.

In other sports-predicting news:

The National Hockey League has reached licensing agreements with prediction-market startups Kalshi and Polymarket, boosting their efforts to disrupt traditional sportsbook operators such as DraftKings and FanDuel.

The league announced the multiyear deals Wednesday after they were first reported by The Wall Street Journal. By entering the agreements, the NHL becomes the first major U.S. professional sports league to allow the use of its trademarks by prediction markets.

Traditionally, if you are an online sportsbook, you want people to use your platform to make bets on the Super Bowl. It helps if your advertisements can say things like “use our platform to make bets on the Super Bowl,” but if you want to say that you have to give the National Football League a giant bag of money. If you are a big online sportsbook, you have giant bags of money so that is a good trade.

Prediction markets had not, before this week, really made that trade. (We talked about Robinhood and Kalshi offering event contracts on the Pro Football Championship.) For one thing, they didn’t have giant bags of money. Also, though, they were in the business of helping people understand and predict the future, not in the business of partnering with sports leagues to promote sports gambling. Now they are in the business of partnering with sports leagues to promote sports gambling.

We have talked a few times about a guy in London who keeps snails in boxes to avoid taxes. The theory is that if a property is used for agriculture, it can avoid some local property taxes, and “snail farming” is the minimum amount of agriculture you can do to avoid taxes. This is an extremely funny theory that an extremely funny guy put into practice in a bunch of office buildings.

It does, however, have one flaw, which is that it is not true. Eventually the local property tax authorities will get around to suing you, and when they do, you will go to court and be like “lol snails” and the judge will be like “come on” and you’ll have to pay the taxes. A reader pointed out to me a 2021 Queen’s Bench case finding oh come on this is a sham:

This is a case about a rates-avoidance arrangement in relation to office premises in Leeds. It features some snails in some crates. In legal terms, the case concerns the approach to identifying ‘sham leases’ in the context of avoiding non-domestic rates (“NDR”) in relation to unoccupied premises. … [The lower court was] right to conclude that the leases were shams.

The guy keeps doing snail farming, because (1) come on it’s funny and (2) you never know if you might find a local council that won’t sue you. But the theory behind it is suspect. Anyway. Nothing here is ever tax advice, is one lesson here. Another is that if you find a tax arbitrage that sounds like it might work, but doesn’t work, but that involves breeding snails in office buildings, you might do it anyway for sheer love of the game.

Meanwhile in Texas [4] :

Thanks to a 2012 law that qualified beekeeping for an agricultural exemption on property taxes, [Jason] Smith found his honeybees also saved him close to $5,000 a year.

Soon, friends were asking him to help them do the same. And before long, JC’s Honey Bees w