OK, I see now that you're specifically referring to the case where someone places a bet and then actively goes out and causes the event to happen themselves. I was specifically replying to the people who were saying it was unfair for insiders to profit on the information they already possess.

I agree, I can see how that's a potential edge case, though I don't think it's as likely to happen in practice as you do. Certainly, anybody who commits a crime to cause a payout should be barred from receiving that payout, though you can tell a plausible story where someone manages to conceal it. I also really really doubt that that's what happened in this particular case.