Non insiders would be if they think the odds are in their favor or that they predict that the market's opinion will shift.

>But if someone knows the actual weight, no one would play.

Now what if someone in the audience knew the weight of an average elephant, giving them an advantage. Would people still bet. I would guess yes, but they wouldn't bet as much as the person who did because they have less information.

While having better information may make it more likely for you to win, it is not surefire. Things can change last minute.