What is unethical?

The good point of prediction markets is that they provide information. This information is available to everyone, for free, which benefits everyone.

Insiders help achieve this. Insiders have information and by participating in the market they then expose and share that information. So this is good. If we ban insiders, we're just banning accurate information from getting into the market. If we do that, we might as well just ban prediction markets altogether. I don't have a strong opinion either way on that, but a prediction market without insiders is pointless.