Polymarket, a popular crypto-based betting market, has come under fire from U.S. lawmakers for allowing users to place direct wagers on wars.
In recent weeks, the site has added multiple betting contracts that allow users to gamble on potential geopolitical events, including a Chinese invasion of Taiwan, Russian territory gains in Ukraine and U.S. military action in countries including Colombia and Cuba.
Multiple wagers on military intervention in Iran by the U.S. have generated more than $18 million in trading, according to Bloomberg.
On Sunday, a group of 12 U.S. Senators wrote to the incoming chairman of the Commodity Futures Trading Commission, arguing that federal law “expressly prohibits” the sorts of contracts Polymarket offers and that such wagers could pose a danger to national security.
“If prediction market contracts that implicate military operations or other national security considerations are manipulated by insider information, or even listed, it is possible for foreign adversaries to use this to their advantage,” the letter to Michael Selig said.
It comes after one trader won more than $400,000 with a wager that Nicolas Maduro would be ousted as the leader of Venezuela, The Wall Street Journal reported.
“By analyzing trading volume, The Wall Street Journal found traders on Polymarket appeared to anticipate the imminent U.S. military capture of Venezuela’s leader Nicolás Maduro,” the senators wrote.
“This improbable increase in trades against Maduro’s continued authority in Venezuela mere hours before Maduro’s capture exemplifies the dangers of unregulated gaming and raises national security concerns.”
It comes after the CFTC proposed changes to its rules in 2024 that would see a crackdown on such wagers on harmful and geopolitical events, including terrorism, assassination, and war. These changes were not finalized.
Bets on such events were “at a base level, is offensive” and could “increase the risk of a terrorist attack, assassination or act of war by creating financial incentives for a perpetrator to take a position and then profit by carrying out the heinous act themselves,” the proposal wrote.
The Independent has contacted the CFTC and Polymarket for comment, though the betting site appears to be aware of the ethical concerns surrounding its wagers.
“The promise of prediction markets is to harness the wisdom of the crowd to create accurate, unbiased forecasts for the most important events to society,” a disclaimer note on Middle East betting contracts states.
“That ability is particularly invaluable in gut-wrenching times like today. After discussing with those directly affected by the attacks, who had dozens of questions, we realized that prediction markets could give them the answers they needed in ways TV news and 𝕏 could not.”
Meanwhile, some of Polymarket’s competitors, including Kalshi Inc., have steered clear of anything involving direct military action. Kalshi currently allows bets on whether politicians around the world will be out of office by a specific date.
“Kalshi avoids markets based on war altogether due to the extremely harmful incentives they can create,” a spokesperson told Bloomberg.
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