Polymarket users stand to make millions if US troops enter Iran, raising fears of insider trading
US forces entering Iran with the Polymarket (1) contract has attracted more than $99.9 million since its launch in January – and as of Thursday morning, the market currently offers a 62% chance that US troops will set foot on Iranian soil on April 30.
If the name of this game sounds familiar, it is. A few weeks ago, the blockchain analytics company Bubblemaps flagged six newly created Polymarket accounts (2) that earned an estimated $1.2 million by correctly betting that the US would strike Iran on February 28 – the exact day (3) that coordinated US-Israeli airstrikes began. Most of those funds were funded within 24 hours of the attack, and their bets were placed a few hours before the first bombs fell.
One account alone turned an average of $61,000 into a profit of over $493,000 (4), according to CoinDesk. A separate account trading under the name “Magamyman” won more than $553,000 betting on the death of Iran’s Supreme Leader Ali Khamenei (5) shortly before the Israeli strike killed him, according to . NPR.
Then there is the merchant CNN identified (6), with the help of Bubblemaps, won 93% of their five-figure wagers in Iran since 2024, earning about $967,000 – even though the events they predicted were undeclared military operations. Todd Phillips, professor of finance at Georgia State University and a former member of the advisory board of the Commodity Futures Trading Commission (CFTC), said. CNN The win rate was a red flag, adding many high frequency traders increased by more than 50%.
Prediction markets work like stock markets, except that what you buy and sell are contracts tied to real-world events rather than company profits. You buy “yes” or “no” shares at a price that reflects the limited possibilities of the crowd. If you’re right, each share pays $1. If you are wrong, you lose your stake.
The model has official applications. Proponents argue that these markets combine dispersed information more effectively than polls or experts. But when the event being sold is a military operation – planned in secret and carried out without public warning – the number of people who can reasonably “predict” is greatly reduced.
That is the tension that now grips Washington. Bubblemaps CEO Nicolas Vaiman told Newsweek (7) that in military situations, planning involves officers, advisers, officials and sometimes many countries, which means that the number of people who may know something in advance can be large. Combine that with anonymous access to the market that allows you to bet directly on a specific event, he said, and the temptation is obvious.
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The retreat has been swift. On March 31, the new director of the CFTC, David Miller, announced at the New York University School of Law (8) that insider trading in the prediction markets is now a priority for enforcement, and that the belief that such rules do not apply to these platforms is a mistake.
On Capitol Hill, lawmakers introduced a number of bills.
The DEATH BETS Act (9) of Sen. Adam Schiff will prohibit any CFTC registered exchange from listing contracts related to war, terrorism, murder or death. A separate bipartisan measure, the PREDICT Act (10), targeted the misuse of classified information in predictive fields. And Experts Jeff Merkley and Elizabeth Warren, and Rep. Jamie Raskin, introduced the Corrupt Betting Act (11), which will ban market betting on elections, sports, war and government actions altogether.
Whether any of it passes the Republican-controlled Congress is another matter. And the middle ground of all this has powerful allies: Donald Trump Jr. works as an advisor to Polymarket (5) and his investment firm 1789 Capital invested in the company, according to. NPR. The Trump administration also closed two (5) federal investigations into Polymarket that were opened under President Biden.
As it stands, more than 50,000 American troops (12) have been deployed across the Middle East. The Pentagon is reportedly making contingency plans (13) for a limited land attack on targets such as Kharg Island and coastal areas near the Strait of Hormuz, although no order has been approved. And at Polymarket, the money keeps coming in.
Market defenders say this is price discovery. Its critics call it something else: a place where people with access to state secrets can turn classified intelligence into money, anonymously, without the risk of being caught.
More than half a billion dollars have now been wagered on US strikes against Iran alone (1).
Polymarket CEO Shayne Coplan said CBS News (14) that insiders have an edge “is a good thing” because it accelerates price discovery, but whether that logic holds when the commodity being traded is a war is a question Congress will soon answer.
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Polymarket (1); Block (2); Al Jazeera (3); CoinDesk (4); NPR (5); CNN (6); Newsweek (7); Luck (8); Adam Schiff (9); CoinCentral (10); Jamie Raskin (11); Bitcoin.com (12); The Washington Post (13); CBS News (14)
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