The purpose of the stock market is to play matchmaker between companies and capital. Insider trading erodes trust of unaffiliated capital owners and thus hurts

The purpose of the stock market is to play matchmaker between companies and capital. Insider trading erodes trust of unaffiliated capital owners and thus hurts the purpose. A prediction market, on the other hand, aims to provide the best possible probabilities on events (arguably), and "insider trading" helps that purpose.