Good question. Here's a long effort at an answer: For some, insurance is an option. Best recent example of this is probably La Liga club Osasuna, which bought insurance against its own relegation this year. MLB clubs certainly have access to something similar. But PMs make that better. The insurance broker above immediately hedged its risk on prediction markets, without which the insurance contract undoubtedly would have been more expensive (or unavailable) to compensate for holding the exposure. (In an ideal world we wouldn't need the middle man, but I understand why that was appropriate there.) And its not available to most. Pickles Pub outside Camden Yards or @MagicRatSF 's parking lot outside Veterans Stadium don't have access to that, and certainly not at anything close to the cost of PM fees. There are hundreds of mom-and-pops in 30 baseball cities that make or break their year on the season. So even if insurance is available to all (and its not), all that does is turn one hedge (Company --> Prediction Market) into another (Company --> Insurance --> Prediction Market), adding a middle man and increasing costs. As for insider trading, yes its a risk, but no more so than for (say) a public company earnings report or M&A transaction in my view. I don't think we assume that people act on those, and I wouldn't make that assumption here either (the owners/execs who would know have a LOT to lose).