A powerful, practical use of AI in investment research is to verify management's track record. By feeding all historical earnings call transcripts into a large language model, an analyst can quickly ask whether management's past promises and guidance materialized, automating a crucial but time-consuming due diligence step.

Contrary to popular concern, insider trading is often easier to detect in prediction markets than in traditional equity markets. The specific, binary nature of the events means large, anomalous bets are highly suspicious, whereas a large stock purchase can have many motivations.

AI can be a powerful fraud detection tool by comparing a company's public statements against alternative data. For example, it can analyze satellite imagery of shipping traffic or factory activity and flag discrepancies with management's guidance.

AI can defeat financial obfuscation techniques, like using Swiss foundations as intermediaries. Even if a recipient's funding is hidden, AI can scan the public disclosures of potential donors, find matching transaction records, and successfully trace the money back to its source.

California's CalMatters uses an AI called 'Tip Sheet' to analyze public records of politicians, including speeches, votes, and campaign contributions. The AI flags anomalies and potential stories, which it then provides exclusively to human journalists to investigate, creating a powerful human-AI partnership.

Extreme conviction in prediction markets may not be just speculation. It could signal bets being placed by insiders with proprietary knowledge, such as developers working on AI models or administrators of the leaderboards themselves. This makes these markets a potential source of leaked alpha on who is truly ahead.

An anti-corruption group found that large, long-shot predictions on military attacks are correct 52% of the time. This improbable success rate suggests that a key winning group, aside from bots, are users with non-public, potentially illegal, insider information on geopolitical events.

While insider trading isn't new, prediction markets make it public and blatant. By creating a visible trail for bets on secret government actions, these platforms have inadvertently built a "corruption detector" that makes the problem too obvious for regulators to ignore, potentially forcing legislative action.

While praised for aggregating the 'wisdom of crowds,' prediction markets create massive, unregulated opportunities for insider trading. Foreign entities are also using these platforms to place large bets, potentially to manipulate public perception and influence political outcomes.