The war on Iran has become the first major armed conflict to unfold alongside a highly liquid, real-time prediction market, and it is already showing signs of substantial insider trading.
Since the US-Israeli assault began on 28 February, more than $529 million has been traded on Polymarket contracts tied to the timing of airstrikes alone.
The platform's war-related category expanded to over 200 active contracts at its peak, covering everything from ceasefire dates to the fate of individual military personnel.
That kind of money has drawn a wave of suspiciously accurate bets that experts say show all the hallmarks of insider knowledge. Trading on prediction markets with confidential or classified data is prohibited by both US commodities fraud regulations and Israeli security laws.
So far, just one case has led to prosecution: an Israeli Air Force reserve major and a civilian accomplice were indicted in February, with proceedings continuing in March.
According to the indictment filed in Tel Aviv District Court, the reservist attended a classified briefing two days before the opening of Israel’s first war against Iran in June 2025, where the date of Israel's strike on Iran was disclosed.
Despite signing a confidentiality declaration, he sent the timing to a civilian associate via WhatsApp. The associate placed a bet on Polymarket that strikes would occur before July. The pair made $162,663 and split the proceeds, with the officer's share transferred in cryptocurrency.
Their scheme didn’t stop there. In September 2025, the officer passed classified information about an Israeli strike in Yemen against the Houthis, enabling a further winning bet worth approximately $5,000.
At the start of 2026, as tensions on the Iran front escalated again, the pair placed additional wagers. When media reports surfaced about an investigation, the civilian changed his username on the platform, and the two deleted their correspondence.
The case widened, with at least three additional Air Force members being questioned. A second, separate investigation concerns an air crew member who reportedly turned $1,000 into $46,000 betting on the timing of Israeli operations. The lead investigator accused the Air Force of maintaining a deficient organisational culture around classified information.
Iain Overton, director of Action on Armed Violence (AOAV), told The New Arab that the Israeli case should not be treated as an isolated incident.
"The case is not an aberration so much as an acceleration of a deeper trend, in which conflict is increasingly rendered into tradable probability," he said.
"Relatively unregulated platforms such as Polymarket do open a pathway through which privileged, and potentially classified, information can be translated into financial gain."
A wider pattern
An analysis by Bubblemaps, shared with CNN, tracked a single trader, or cluster of linked wallets, that made nearly $1 million since 2024 from dozens of bets correctly predicting US and Israeli military actions against Iran.
The account won 93 percent of its five-figure wagers on unannounced military operations, placing bets hours before Israeli strikes in October 2024, US airstrikes on Iranian nuclear facilities in June 2025, and the joint US-Israeli surprise attack on 28 February 2026.
Bubblemaps separately identified 38 accounts it believes belong to one person, which netted more than $2 million on the February 28 strikes. The accounts were prepared with cryptocurrency transfers starting on 22 February. Bets were placed within a single hour on 27 February, and the success rate was near 100 percent.
Six additional accounts collectively won $1.2 million by betting on a US strike on Iran on 28 February, the exact day the offensive began. All were funded within hours of the attack.
A trader using the handle "Magamyman" turned $87,000 into $553,000 on bets tied to the strikes and the killing of Supreme Leader Ayatollah Ali Khamenei, including a $32,000 wager placed when Polymarket's odds stood at 17 percent.
None of these traders has been identified or charged.
The pattern extends beyond Iran. In January 2026, a Polymarket account created less than a week before the US seizure of Venezuelan president Nicolás Maduro bet over $30,000 on his removal by 31 January, when the platform listed the probability at 5.5 percent. The payout was $436,759.
The account had only ever placed bets related to Maduro and US military action in Venezuela. Prosecutors from the Southern District of New York are reportedly investigating.
The 'death market' problem
The term "death markets," coined by US Representative Seth Moulton, refers to prediction market contracts that allow users to profit from the timing of deaths, military casualties, and rescue operations.
In early April, Polymarket listed a contract on whether American airmen from a downed F-15E Strike Eagle would be rescued from Iran, while a search-and-rescue operation was still underway. The platform removed the market after public backlash, but Moulton noted that 223 war-related contracts remained active the following day.
Separately, the Times of Israel's military correspondent reported receiving death threats from Polymarket users who had bet on an Iranian missile attack on Israel and attempted to pressure him into altering his reporting to protect their positions.
Polymarket CEO Shayne Coplan has described the platform's relationship with war contracts as "complicated," arguing they can provide useful information to people affected by conflict.
In late March, the company announced new integrity rules prohibiting trades based on confidential information or by users in positions to influence outcomes.
Yet many security experts and analysts remain unconvinced.
"Where individuals can benefit from the probability of a strike, a ceasefire collapse, or a bombing run, you can't help but feel someone is profiting from death," Overton said.
David Bieri, associate professor at Virginia Tech's School of Public and International Affairs, told The New Arab that the insider trading concern, while real, obscures a more fundamental risk.
"The familiar concern, that someone with privileged military or intelligence information might trade on it before the market finds out, is real but tractable in principle," Bieri said.
"The deeper problem is what I would call the interventionist case: a market participant who does not merely know more about a probable outcome but has actual causal influence over it.”
“In that scenario, the financial contract creates a structured incentive that bears on the event itself. That is a moral hazard in the technical economic sense, and no existing regulatory framework is well-designed to reach it."
Bieri was equally sceptical of Polymarket's capacity for self-regulation.
"The platforms cannot simultaneously argue that informed participants make their prices valuable and enforce rules that exclude informed participants," he said.
Their revenue model depends on volume, and contested, high-stakes markets generate the most of it.
Gaps in regulation
The regulatory response to date has been structurally constrained by political relationships between the Trump administration and the prediction market industry.
The Justice Department and the CFTC both closed their investigations of Polymarket without bringing charges, continuing a pattern of the current administration dropping enforcement actions initiated under Biden against crypto and betting platforms.
In August 2025, Donald Trump Jr. joined Polymarket's advisory board after his venture capital firm invested in the company. He also serves as a strategic advisor to Kalshi, the platform's main competitor.
Last week, the Trump administration sued Arizona, Connecticut, and Illinois to prevent those states from applying their gambling regulations to prediction markets, arguing the platforms should be regulated federally as financial instruments. The governor of Illinois described the lawsuit as the administration acting on behalf of companies facilitating insider trading.
Congress has introduced multiple bills. The BETS OFF Act would prohibit bets on government actions, terrorism, war, and assassination. The STOP Corrupt Bets Act would ban event contracts on elections, government actions, and military operations. A bipartisan Senate proposal would ban public officials from using non-public information on prediction platforms. None has advanced.
However, pressure is still mounting within the US Congress for a crackdown on war-related speculation.
On 9 April, Sen. Richard Blumenthal sent a letter to Polymarket CEO Coplan demanding answers by 24 April on the platform’s failure to prevent insider trading and bets on national security matters, describing it as “an illicit market to sell and exploit national security secrets” and a potential “honeypot for foreign intelligence services.”
That scrutiny followed an Associated Press report that at least 50 new Polymarket accounts were made in the hours and even minutes before Trump announced the two-week ceasefire with Iran. The CFTC has issued guidance stating that insider trading on prediction markets is illegal.
However, enforcement against anonymous accounts on these offshore platforms is a challenge regulators have so far struggled to address.
Todd Phillips, assistant finance professor at Georgia State University and former member of a CFTC advisory board, told The New Arab that the CFTC’s reach is structurally limited.
"These trades are taking place on exchanges that are not regulated by the CFTC, such as Polymarket, which operates offshore," Phillips said. "The commission's jurisdiction is limited; it doesn't have the same long arm reach over foreign actors. While it can sue and take action against individuals operating domestically, its ability to prevent participation on offshore platforms is far more constrained."
Phillips added that the CFTC "can and should" pursue action against such exchanges, warning that without stronger enforcement, these markets are likely to continue operating outside effective regulatory oversight.
What the Iran war has established
Global prediction market trading volumes quadrupled between 2024 and 2025, reaching nearly $64 billion. In the week ending 1 March 2026, geopolitical bets on Polymarket alone nearly tripled to over $425 million.
The Iran war has carved a dangerous path: classified military intelligence can be converted into profits through anonymous offshore platforms like Polymarket, often with limited risk of effective cross-border prosecution.
"Over time, there is a risk of a feedback loop in which conflict is not only reported and anticipated, but also priced and directly profited from," Overton added.
“That is the most troubling precedent: when war becomes wager. In that moment, the line between containing violence and profiting from its lack of containment seems to be the end product of unfettered capitalism.”
The real question now isn't whether prediction markets can be gamed during wartime; the Iran war has settled that.
What remains uncertain is whether any government will treat this as a serious enough problem to act on it. So far, the signs aren't encouraging.
Jonathan Fenton-Harvey is a journalist and researcher who focuses on conflict, geopolitics, and humanitarian issues in the Middle East and North Africa
Follow him on Twitter: @jfentonharvey
Edited by Charlie Hoyle