Polymarket War Bets Spark Insider Trading, Regulatory Crackdown

Recent instances show traders making significant profits by correctly predicting unannounced military operations. Six freshly created Polymarket accounts collectively netted roughly $1.2 million by correctly betting the U.S. would strike Iran on February 28, the exact day coordinated U.S.-Israeli airstrikes began (Bubblemaps).

One account alone turned roughly $61,000 into more than $493,000 in profit (CoinDesk). A separate account, "Magamyman," earned over $553,000 betting on the death of Iran's Supreme Leader Ali Khamenei shortly before an Israeli strike killed him (NPR).

Another trader, identified by CNN with Bubblemaps' help, won 93% of five-figure wagers on Iran since 2024, netting nearly $967,000 on unannounced military operations, a "red flag" according to finance professor Todd Phillips. The Commodity Futures Trading Commission (CFTC) enforcement director, David Miller, declared insider trading in prediction markets a top enforcement priority on March 31.

Congress introduced several bills: Sen. Adam Schiff's DEATH BETS Act, the bipartisan PREDICT Act, and the STOP Corrupt Bets Act by Sens.

Jeff Merkley and Elizabeth Warren and Rep. Jamie Raskin, all aiming to ban or regulate such contracts.

Polymarket has powerful allies, including Donald Trump Jr., who serves as an adviser and whose venture capital firm 1789 Capital has invested in the company. The Trump administration also closed two federal investigations into Polymarket that were opened under President Biden (NPR).

The debate centers on whether these markets are legitimate "price discovery" tools or platforms for turning classified intelligence into cash. Polymarket CEO Shayne Coplan states insiders having an edge is "a good thing" because it accelerates price discovery (CBS News), a perspective Congress will soon address.