Is it illegal to "insider trade" on InTrade?

Factual Questions
1

http://www.intrade.com/ is a prediction market that lets you bet on political and economic outcomes. For example, the current odds on a “public option” for healthcare passing is 32.8%, and you can bet for or against with those odds.

It would be very easy for a connected individual, say, a congressional aide, to have some insider knowledge that other traders will not - for example that Congressman Blowhard is going to go all-out to get a public option passed, however watered down. The aide then borrows ton of cash and bets “FOR,” and racks in the winnings.

Now if this was a stock market we’d call it insider trading and throw the aide in jail. But I would think that prediction markets are new enough that there isn’t the same level of regulation, as no actual corporations are being traded. Is there a blanket ban that might cover this sort of activity, or is it open season for the Beltway clique to clean up with Intrade?

2

Intrade is based in Ireland, so even if you were openly cheating they wouldn’t be able to do anything about it, and the US authorities would have no jurisdiction.

3

If insider trading laws did apply this simply would not be the case. You are 100% wrong.

However, they absolutely do not apply, so cheat as much as you like! (Other laws may apply, but none come to mind and IANAL etc :))

4

Insider trading laws would not apply in any case because there is no stock, security or commodity trading taking place. Any relevant law would be that pertaining to gambling.

5

Since InTrade amounts to parmutual betting, such insider knowlege makes the odds more accurate.

6

In a sense, are you not providing information to the markets when you do this?

7

I believe it is legal for members of Congress to use their inside knowledge of legislation to speculate in stock and commodity markets.
Cite.

I’m guessing InTrade wouldn’t be an issue for them.