That's roughly correct though? Like the alleged point is exactly that - provide an incentive to establish true information earlier than otherwise. If you view prediction markets like that it's only weird to see people taking the other side with no information (I was going to say "like bar bets" but that's the same kind of thing! Don't bet on things you know nothing about if you hate losing money!)

exactly

What you're describing is know as an "assassination market". To my knowledge it's considered mostly a non-issue (It's talked about in good detail here https://www.astralcodexten.com/p/prediction-market-faq?open=...), because you could do a lot of the same stuff with the normal stock market. If you have advance knowledge that Iran is gonna be attacked, it's just as easy to trade on that info there via oil or similar, with the added downside that now no one else gains extra info about if Iran will be attacked or not, and anything more hyper-specific would just be illegal to bet on for normal law reasons.