Regulating Insider Trading in Betting Markets

David Paton (), Leighton Vaughan Williams () and Stuart Fraser

Bulletin of Economic Research, 1999, vol. 51, issue 3, pages 237-41

Abstract: Although trading in securities in conventional financial markets on the basis of inside information is restricted by law, the rules against such trading in better markets are rather more ambiguous. It is argued in this paper that, since insider trading in betting markets imposes a cost on the great majority of bettors, tighter strictures against such trading would benefit all but the insiders. This case is supported by the use of empirical evidence which shows that betting markets which are characterized by tighter controls against insider activity are also characterized by a significantly lower incidence of such activity. Copyright 1999 by Blackwell Publishing Ltd and the Board of Trustees of the Bulletin of Economic Research

Date: 1999
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