nicholasdecker.substack.com/p/futarchy-distortions-from-hedging

This claim is incorrect because it rules out the standard informational reason prediction markets exist at all: traders buy or sell when they believe the market price differs from the contract’s expected payoff.

Robin Hanson describes speculative markets as places where traders buy or sell today in the hope of reversing the trade later for a profit. That is a linear-profit/speculative motive, not a non-linear-utility one. Likewise, research on prediction markets explicitly treats their value as coming from traders bringing private and public information into prices, with better-informed traders able to profit by trading against less-informed ones.

So even without outside subsidies, people can trade because they believe they have superior information or believe the market is mispriced. Hedging and risk aversion are not the only motives for trade.

A narrow theoretical result like the no-trade theorem requires very strong assumptions (for example, common knowledge about beliefs and rationality). The article does not state those assumptions; instead it makes a general claim about prediction markets, and in that general form the claim is false.