The unusual bets on Trump’s war that have rung alarm bells

March 5, 2026 — 10:58am

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Unusual activity in prediction markets in the 24 hours leading up to the US and Israeli strikes on Iran that decimated Iran’s leadership has cast an unsavoury spotlight on what are probably the world’s fastest-growing, and increasingly controversial, betting platforms.

A New York Times study of activity on the Polymarket predictions market platform found that 150 accounts, most of them newly created, placed more than $US850,000 ($1.2 million) of bets last Friday that there would be a strike by Saturday.

Another, by the Financial Times, found that 12 Polymarket accounts, mostly opened within days before the assault, bet $US66,993 that there would be an attack by Saturday. About half the bets were made in the six hours before the strike that killed Ayatollah Ali Khamenei and much of his leadership team.

There was a similar plunge on the other big predictions market, Kalshi, which caused outrage among its punters because it subsequently froze its trades and reimbursed punters for their bets and any losses because, it said, it doesn’t allow transactions directly tied to deaths.

Kalshi, unlike Polymarket, whose main platform is outside the US and beyond its jurisdiction, is regulated by the US Commodities Futures Trading Commission.

It’s not the first time there have been suspicious bets made on a geopolitical event involving the US.

Geopolitics bets hit a record as Iran war escalates

When the US seized Venezuela’s president Nicolas Maduro in January, one of a number of accounts set up on Polymarket in the days before the US action placed $US32,000 of bets on his removal from office. It made more than $US400,000. It was one of a number of accounts that bet successfully on the timing of Maduro’s removal from office.

Betting on geopolitical events has only recently taken off on the prediction markets as the US has become more aggressive. There are now a lot of bets, and potentially a lot of profits, tied to what Donald Trump does, or says next. There were bets, for instance, on what he might say in his recent State of the Union Address.

Most of the revenue on the major platforms, which offer the ability to make simple peer-to-peer bets where there are only binary outcomes, is generated by sports betting, with the growth in that revenue stream so significant that it has dented the revenues of the legal sport betting agencies in the US.

The impact of the predictions markets on established gambling has been so significant that the share prices of the bigger sports betting companies, like Flutter and DraftKings, have been savaged. Flutter has lost more than 60 per ent of its market value since its peak last year and DraftKings nearly 50 per cent.

Those companies have responded by setting up their own prediction markets and expanding beyond sports betting.

The moment that brought prediction markets into the mainstream of betting, however, was the 2024 presidential election campaign, where the betting patterns on Kalshi and Polymarket accurately tracked the late surge in support for Trump. They proved more accurate than the conventional pollsters.

From less than $US100 million a month of turnover before the 2024 election, their revenues have ballooned to more than $US13 billion a month, with the range of events being bet on widening rapidly.

So established have the platforms become that the company that owns the New York Stock Exchange, Intercontinental Exchange, announced last year that it would invest up to $US2 billion in Policymarket. Major news agencies, like CNN and the Wall Street Journal, have struck partnerships with then platforms.

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The Nasdaq stock exchange, plans to emulate the Cboe Global Markets derivatives exchange in trading binary options – “yes or no” bets linked to its major indices – it wants to create a predictions market within its primary market. Cboe has linked with Flutter’s sports gambling business.

Thus, these prediction market operators are moving into financial markets territory even as the established financial markets are trying to grab a share of the growth in predictions markets.

The bets on the removal of Khamenei, and the kidnapping of Maduro, have fuelled suspicion of insider trading, as have previous bets made on potential US government actions, like the government shutdowns, or releases of economic data, or even the duration of (the White House’s spokesperson) Karoline Leavitt’s media conferences.

There’s clearly a financial incentive for government and other insiders to exploit their inside information on platforms that are essentially unregulated, allow anonymity and can settle in cryptocurrencies.

Unlike insider trading in stocks, there is no legislative prohibition, although the Maduro trading caused the Democrats to try to introduce a bill to Congress that would ban government employees from betting on events that they could influence or where have non-public information.

Despite the expansion of prediction markets into financial products and the mainstream financial sector – the US retail brokerage, Robinhood, says prediction markets betting is now its fastest-growing segment – there is little, if any, regulation of the activity.

In Australia, and many jurisdictions outside the US, predictions markets are treated as illegal gambling and banned. In some countries, they are geoblocked. The Australian Securities and Investments Commission has also banned the issuance or distribution of binary options to retail investors.

There’s clearly a financial incentive for government and other insiders to exploit their inside information on platforms that are essentially unregulated, allow anonymity and can settle in cryptocurrencies.

The Trump administration’s approach to regulation (which it detests and is unwinding as much as it can) and Donald Trump jnr’s role as a Polymarket advisory board member – and an investor in the business – probably makes it appear unlikely there will be any meaningful restrictions on the platforms in the near term.

Nevertheless, with US states complaining that their income from regulated sports betting is being attacked by the predictions market operators, the platforms encroaching on the turf of highly-regulated financial market activity, the potential for insider activity and market manipulation means that they will eventually have to be regulated in the US.

These platforms are so easily exploited by the unethical that they actively create incentives for unethical behaviours, behaviours that would be illegal if occurring in regulated environments where analogous activity takes place.

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While there have always been those who argue that allowing insider trading would produce more efficient pricing, its apparent existence in predictions markets risks corruption, unfairness and, increasingly, the integrity of the regulated financial markets whose turf those predictions markets are now expanding into.

Even in the US, there’ll come a point where that fast-developing threat to mainstream financial activity can’t be ignored.

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