Well-timed bets on Polymarket tied to Iran war draw calls for investigations

NEW YORK– Calls are growing within Congress for investigations into prediction market platform Polymarket after the latest case where groups of anonymous traders made strategic and timely bets on a major geopolitical event hours before it occurred.

On Wednesday, the Associated Press reported that at least 50 new accounts on Polymarket placed substantial bets on a cease-fire between the United States and Iran in the hours, if not minutes, before President Donald Trump announced the cease-fire Tuesday evening on social media. These are the only bets made on Polymarket via these accounts.

In January, an anonymous Polymarket user made a $400,000 profit by betting that Venezuelan leader Nicolas Maduro would be removed from office, hours before his capture. In the hours before the war in Iran began, another account made about $550,000 in a series of trades betting that the United States would strike Iran and Ayatollah Ali Khamenei would be removed from office.

Such prescient bets have raised eyebrows – and accusations that prediction markets are ripe for insider trading. And the stakes go beyond these three geopolitical events, according to at least one report. Harvard University researchers published a paper last month in which, using public blockchain data, they estimate that $143 million in profits were made on Polymarket by individuals who potentially had inside information on events ranging from Taylor Swift’s engagement to last year’s Nobel Peace Prize award.

Rep. Ritchie Torres, D-N.Y., who serves on the House Financial Services Committee as well as the Subcommittee on Digital Assets and Financial Technology, sent a letter to the Commodity Futures Trading Commission on Thursday demanding that the regulator review and investigate these transactions at the right time. The CFTC regulates derivatives markets, which include prediction markets.

“This trend raises serious concerns that some market participants may have had access to material non-public information regarding a market-moving geopolitical event,” Torres wrote. The letter was shared exclusively with The AP.

“What is the statistical probability that someone other than an insider would place a winning bet 12 minutes before a presidential announcement that could influence the market,” Torres said in an interview with AP. “There are two answers: God, or an insider. And something tells me that God is not betting on Donald Trump’s posts on Truth Social.”

Prediction market platforms like Kalshi and Polymarket allow their users to bet on everything from rain next week in Phoenix, Arizona, to whether the Federal Reserve will raise or lower interest rates.

Currently, U.S. residents have limited access to Polymarket, which has been banned from entering the United States in 2022. The company has decided to re-enter the country by acquiring a CFTC-approved exchange and clearinghouse, giving it a legal path to begin offering contracts domestically. The company has begun a limited rollout in the United States

Polymarket also operates a separate crypto-based offshore platform that remains outside of US jurisdiction. This platform represents the bulk of its activity.

Sen. Richard Blumenthal of Connecticut sent a letter to Polymarket on Thursday demanding that the company explain why it continues to allow trading on war and violence, as well as whether the company is making efforts to prevent insiders from trading on the platform.

“The polymarket has become an illicit marketplace for selling and exploiting national security secrets like no other in history and, by extension, a potential honeypot for foreign intelligence services monitoring these same suspicious bets and wagers,” Blumenthal wrote.

Republicans have also criticized these platforms and called for a ban on this type of betting. There are at least two bills pending in Congress, co-signed by both parties, one in the House and one in the Senate.

“We don’t want to imagine a world in which America’s adversaries use prediction markets to anticipate our next move,” Rep. Blake Moore, Republican of Utah, said after the AP’s findings on ceasefire betting were released.

Polymarket did not immediately respond to a request for comment.

The stakes are high for Kalshi and Polymarket as they seek approval to operate in the United States and across the country, particularly in the lucrative sports betting market.

Kalshi, which is already regulated in the United States, and its executives aim to make the company the dominant prediction market in the country. Kalshi has also leaned heavily into sports, which critics say effectively makes it a sports betting platform that dabbles in event-based deals on the side. Both companies have also announced partnerships with sports teams and even news agencies to expand their reach as well.

The competition also has political connotations. Donald Trump Jr. is an investor in Polymarket through his venture capital firm, 1789 Capital, and separately serves as a paid strategic advisor to Kalshi.