Attempts to manipulate the outcome actually make a prediction market more accurate. Every wrong bet creates a prize for others to come and put the price where it belongs.

It is important to compare futarchy against existing alternatives, instead of some imaginary ideal. Democracy is easy to manipulate. Each voter has little incentive to become an informed voter, and the cost to becoming informed is high. And once informed, each voter has little incentive to vote for what is best. (the personal benefit of a good election result) * (probability that their vote mattered) is practically zero. In this situation, people are vulnerable to bribery and propaganda.