In the UK it is legal to bet on many things. And with the royals expecting a baby, many people were betting. This isn't a market I would want to be a part of - it seems almost obvious that some people will know the actual information and betting against people who hold the winning hand isn't usually a profitable activity. From the WSJ, we learn the odds were heavily in favor of the baby being a girl, despite 1.07 boys being born to every girl.
Bookmakers are offering bettors a chance to predict the child's gender. And a girl is the overwhelming favorite, with payouts of just £4 on a £7 bet this past week. A spokesman for the couple announced last month that the duke and duchess don't know the gender.
The betting markets turned out to be quite wrong - it was a boy. So what happened? For one thing, it seems like there wasn't a sizeable information leakage (Or maybe there was, but people didn't believe Harry enough to bet on his information). If someone made money betting on the sex of the baby, they made it without impacting the wider market. So the betting market was wrong for one of two reasons - psychic hedging and/or misinformation.
Psychic hedging is betting on an outcome that will make the person unhappy. So if a sports fan bets against their favorite team, either their favorite team will have won or they'll have money. In either situation they'll be happy. In this case, there is presumably a preference for a new king. Not only are male leaders more generally preferred, the birth of a girl would involve a messy procedure of changing the law to allow the girl to retain her place in line. This preference for a psychic hedge would be combined with misinformation and misinterpreted market signals - betting on the expensive side of this type of trade is the easiest way to presumably follow other traders who might have inside information - to skew the odds even more in favor of a girl than could be explained by psychic hedging alone.
If insiders did make money off of these betting markets they got away with it quite handily this time.