Prediction market platforms are under scrutiny from regulators and lawmakers over a series of contentious wagers on nuclear weapons, war, and foreign leaders.
This raises serious questions about who is trading and what they could know before the rest of us.
Polymarket pulls nuclear contract after backlash
Polymarket, one of the biggest names in the prediction market space, quietly pulled a contract last week that let users bet on whether a nuclear weapon would be detonated this year.
The page now shows a simple message: “The event has been archived.” Before it came down, the market, which offered resolution dates of March 31, June 30, and before 2027, had already drawn more than $650,000 in trading volume, according to a cached version of the page.
The company also deleted a post on X that had flagged a 22% probability of a nuclear detonation happening in 2026.
Polymarket’s nuclear detonation bet drew $838K in trading volume | Source:
The removal took place amid growing pressure on the platform following a disturbing incident related to U.S. military activities in Iran.
On February 28, the United States launched airstrikes against Tehran and other Iranian cities. hours before the bombs went off, six anonymous accounts on Polymarket had already made “Yes” bets on the question of whether the US would attack Iran.
Roughly $1.2 million in awards were given to these six users. Bubblemaps, a blockchain analytics business, the wallets associated with those accounts and found that most had been funded in a single day before the strikes.
The timing instantly aroused suspicions.
The trend is difficult to explain away, according to critics. Those users might have made money via a legitimate trading platform if they had access to information about a planned military operation that had not yet been made public.
Although prediction markets operate in a regulatory gray area that makes it challenging to respond to such allegations, that would amount to insider trading.
Kalshi faces heat over bets on Iran’s supreme leader
Due to a market it operated at the same time, Kalshi, a competitor site that lets users wager on actual events, came under fire.
Kalshi promoted a market inquiring as to whether Iranian Supreme Leader Ali Khamenei, 86, would be “out” as the nation’s top official following the announcement of joint U.S.-Israeli airstrikes on Tehran in the early hours of a Saturday morning.
The trade was highlighted on the company’s app and webpage, and it wrote on X, “BREAKING: The odds Ali Khamenei is out as Supreme Leader have surged to 68 percent.”
Khamenei was later confirmed dead following the strikes. Kalshi moved quickly to clarify its position, insisting in a follow-up post that it does not offer markets that settle on death.
The company said that if Khamenei died, the market would resolve based on the last traded price before his death was confirmed. CEO Tarek Mansour added on X that the market was not tied to his death at all, saying “out” had referred to the possibility of Khamenei stepping down or agreeing to a peaceful transfer of power.
The explanation did little to quiet the backlash. Kalshi offered to refund bets, fees, and any losses from trades placed before its clarification went up.
Still, the episode drew threats from U.S. lawmakers who called for an outright ban on such wagers.
Mansour defended the market’s existence, saying that leadership changes in Iran carry major consequences for global oil and commodity prices and for geopolitical relationships.
Regulators are currently working to establish some order in the area. A proposal for new regulations controlling prediction markets is being prepared by the U.S. Commodity Futures Trading Commission.
Just over two months after taking office, CFTC Chairman Michael Selig sent an advance notice of proposed rulemaking to the president’s budget office on Monday for consideration.
Before drafting anything specific, the agency can get feedback from the public and industry through this notice, which is the first official step in creating a new rule.
Speaking on Tuesday at a gathering in Washington, Selig recognized the conflict between enforcing regulations and pushing markets underground.
“The more we try to block these markets, we see with crypto, it just goes offshore,” he stated. “So my view on this stuff is that we’ve got to set the right rules and regulations for it here in the United States, or otherwise, we’re just going to have black markets offshore.”
Selig stated that rather than a patchwork of fifty separate state laws, the nation needs a unified national standard.
