"Woman in China, 45, made S$589,800 by buying insurance on flights she predicted would get delayed"

Buying insurance on flights you aren't going to take is oddly similar to buying Credit Default Swaps on debt you don't own.
But the latter is legal.*
It shouldn't be, tho.

From Mothership (Singapore), June 15:

To avoid getting caught, she used over 20 other identities to take out the insurance.

A woman in China was arrested by local police in the Chinese city of Nanjing after her scheme of making money off delayed flights was discovered, The Paper reported.

Used over 20 identities to purchase travel insurance
The 45-year-old woman, surnamed Li, used 20 other identities in addition to her own, to take out almost 900 travel insurance policies from 2015 to 2019.

But instead of getting onto the flights herself, Li was making use of her past travel service work experience to selectively take out insurance on flights that she thought would be delayed.
The Paper, citing Yangtse Evening Post, said she was able to receive relevant information beforehand that tells her if the flight was going to be delayed or cancelled.

Thereafter, she would purchase the tickets to the flights that are likely to be delayed or cancelled, before checking if there is any extreme weather along the route the flight is going to take that day.
In total, she made around RMB3 million (S$589,800) through such a method....

....MORE
*See, if interested:
December 2014
Perversity and Credit Default Swaps
It's Time to Regulate Credit Default Swaps Using State Gambling Laws 

*****

Side bets are a description of what bucket shops do and there are anti-bucket shop laws on the books of just about every state. Federal pre-emption you argue? Nothing a one-line tweak of the Commodity Futures Modernization Act wouldn't solve.

The ideas are not original to me. Former New York Insurance Superintendent Eric Dinallo said: 

“It’s legalized gambling. It was illegal gambling. And we made it legal gambling…with absolutely no regulatory controls. Zero, as far as I can tell,”

And earlier posts:
July 2010 
Financial Reform: Enforce New York's 1908 Bucket Shop Law and trash the 2,319 Page Dodd-Frank Bill

It is time to dispense with this congressional foolishness and enforce the 1908 Bucket Shop law.
Throw in some state anti-gambling statutes and you would have prevented the financial meltdown....

November 2011
Are Derivatives Contracts Nothing More than Unenforceable Gambling Debts?
...Here's the U.S, Senate testimony of Eric Dinallo, then-Superintendent of the New York State Insurance Department on October 14, 2008 (8 page PDF).

...I have argued that these naked credit default swaps should not be called swaps because

there is no transfer or swap of risk. Instead, risk is created by the transaction. Indeed, you

have no risk on the outcome of the day’s third race at Belmont until you place a bet on

horse number five to win....

...“Bucket shops” arose in the late nineteenth century. Customers “bought” securities or

commodities on these unauthorized exchanges, but in reality the bucket shop was simply

booking the customer’s order without executing on an exchange. In fact, they were

simply throwing the trade ticket in the bucket, which is where the name comes from, and

tearing it up when an opposite trade came in. The bucket shop would agree to take the

other side of the customer’s “bet” on the performance of the security or commodity.

Bucket shops sometimes survived for a time by balancing their books, but were wiped

out by extreme bull or bear markets. When their books failed, the bucketeers simply

closed up shop and left town, leaving the “investors” holding worthless tickets....

"Pope says credit default swaps are unethical"