The prediction market backlash has arrived

Platforms like Kalshi and Polymarket are facing bipartisan backlash as lawmakers warn that prediction markets are monetizing state secrets

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War is no sport. But prediction markets are allowing spectators to gamble and profit off conflict between nations as if it were.

Prediction market platforms like Kalshi and Polymarket have boomed in popularity over the past year in part due to a marketing blitz and a hands-off regulatory approach from the Trump administration. Now Americans are placing a flood of bets on everything from weather forecasts, sporting events, and even the length of White House press conferences. Total trading volume on Kalshi reached $24 billion last year. 

Recently, the prediction market craze extended to whether Iran’s supreme leader, Ayatollah Ali Khamenei, would be out of power by March. As the U.S. moved soldiers and military equipment to bases in the Middle East, Kalshi set up the scenario as a “contract” for users to purchase. Payouts fluctuated based on the probability of Khamenei's ouster, and it grew into a $54 million market. Polymarket offered a similar contract.

Now some Democratic lawmakers and experts are raising the alarm over possible insider trading on the platforms by those with privileged access to classified information ahead of U.S.-Israeli strikes on Iran. Blockchain analytics firm Bubblemaps described “six suspected insiders” who made $1.2 million with bets placed on Polymarket just hours before the first wave of attacks.

It didn’t take long for one prominent Democratic senator to promise new legislation........

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