War is a profitable business on the prediction markets, with as much as $529 million trading hands on Polymarket in bets tied to the United States strikes on Iran this weekend, as per a Bloomberg report.
By 28 February (day of the attack), the biggest contract on Polymarket attracted around $90 million in trading volume since its creation. The second biggest bet on US attack on Iran was for 31 January, with $42 million bets, the report added.
Next biggest rival platform, Kalshi saw $36 million in bet volume around an Iran regime shift question, as per a Washington Post reporter.
Prediction markets embroiled in insider trading concerns
Largely unregulated, the prediction markets have no specific rules or oversight on unfair practices such as insider trading. Analysts from Bubblemaps SA found that six accounts minted $1 million in profits by betting the exact date of the attack — 28 February (Saturday), it added.
Polymarket did not immediately respond to queries on Saturday, Bloomberg said.
Tracking patterns of the accounts that made big money amid the new war, the analytics firm noted that these were new accounts were made in February. They also only placed bets on likely dates that US strikes might occur, with some predictions coming hours before the bombs dropped in Tehran.
One contract with bet for 27 February (just a day earlier), gained over $25 million in volume and a $26,513 bet for Saturday (this account’s largest bet ever), pocketed for its owner over $1,74,000., it added.
Prediction markets find war profitable
Nicolas Vaiman, CEO of Bubblemaps told Bloomberg that since prediction markets are among the first products to allow direct bets on geopolitical events, events like conflicts and wars, combined with anonymity, creates “incentives for informed participants to act early”.
Notably, users only need a wallet to trade on Polymarket.
Even while strikes in the middle east continue, new contracts have already opened betting on whether a Gulf state will attack Iran this week, or whether the US would hit Iraq by March, the report added.
The report noted that similar pattern of bets and profits was also noted during the US strikes in Venezuela, when Nicolás Maduro was captured in January.
Geopolitical bets gain traction on prediction markets
Analytics company Polysights in January noted a surge in bets over Ali Khamenei’s deposition, dated for March-end, as per Bloomberg report. The company found bets placed the overthrow of the Iranian supreme leader at 40% likelihood, but said its data showed 90% of alleged insider trading accounts, supported the contract.
Some bets also included speculation over his Khamenei’s death — a factor that critics argued could incentivise assassination. At time of writing, local reports have confirmed that the leader was killed in US strikes on Iran.
Kalshi Inc., a Commodity Futures Trading Commission (CFTC)-regulated rival of Polymarket, told Bloomberg on Saturday it does not offer markets that settle on death. In the event of Khamenei’s death, it said it would resolve its contract based on the last price offered.
Polymarket is based outside the US, and beyond the CFTC’s regulations. It has defended contracts as crowdsourced information amid lag in conventional reporting, the report added.
Actions against insider trading on prediction markets
In February, Israeli authorities filed a case against two individuals — a military reservist and a civilian, for making $1,50,000 by allegedly using secret operational information to place Polymarket bets on Israeli security operations in 2025.
The report noted this was the first criminal charges ever for prediction-market bets made using classified intelligence.
Recently, Kalshi also disclosed actions against two customers who were suspected of using insider information when betting. This included an editor for MrBeast, who used his knowledge of unaired YouTube content to place bets, and a California gubernatorial candidate, according to Axios.
(With inputs from Bloomberg)
