You’ve just missed your chance. You could have placed a bet that I would write a column about Polymarket before February 7 and won money. It wouldn’t have been the strangest wager.
Prediction markets are making a huge – and often unwelcome – impact that goes beyond the world of online gambling, or “trading” as the companies prefer to refer to it. Platforms like Polymarket and Kalshi accept bets on almost anything – from conventional sporting results and election campaign winners, to the less predictable. When I looked at Kalshi midweek ahead of writing this column, some of the odds were odd indeed, including: “Will a major meteor strike hit Earth before 2030?” and “Will the US confirm that aliens exist before 2027?” The bets are binary, with yes and no options.
It looks like harmless fun. But looks can be deceiving.
Among the leading questions on Polymarket this week was: “US strikes Iran by...?” followed by different date options. The amount of money placed on the possibility of the strike being by February 13 exceeded $2.3 million when I looked midweek.
Polymarket added a comment: “Note on Middle East Markets: 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. 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.”
As you’ve guessed, these are not good-natured office bets among colleagues. These platforms function as a cross between a gambling platform and a stock exchange in which the ratios (odds) constantly change, and shares can be sold before the final result is known. It’s conducted anonymously using hard-to-track cryptocurrencies.
It’s one thing to (correctly) bet that Israeli basketball superstar Deni Avdija would be selected as an NBA All-Star, or predict that Israel’s entrant in the Eurovision Song Contest will be among the top five finalists, but it’s another thing altogether when big money gets involved in the question of whether the US will invade Greenland or take over Venezuela.
I was first alerted to the downside of these prediction-market platforms, particularly Polymarket, which is best known in Israel, by an interview on Israel’s KAN public broadcaster last month and an in-depth article in Israel Hayom’s supplement last weekend.
Polymarket users might have access to classified information
KAN’s military reporter Roy Sharon broke the story that the IDF and Shin Bet (Israel’s Security Agency) are looking into concerns that a Polymarket user – who accurately predicted four events surrounding Israeli military action in June during Operation Rising Lion against Iran – might have been privy to classified intelligence.
As Sharon put it: “What are the chances that an ordinary citizen would place more than $30,000 on the precise time Israel would attack Iran and would hit on precisely the right answer?”
Username RicoSauve666 raked in more than $150,000 from his bets on the four events. It gives a whole new connotation to the phrase “a lucky strike.”
Ilan Kaprov, in Israel Hayom, referred to that and similar cases. Someone under the username Burdensome-Mix joined Polymarket a few days before the US raid on Venezuela, betting on the question: “Will Nicolas Maduro be removed from power before January 31, 2026?” The bettor (or “trader”) gradually raised their wager, ultimately netting $436,000 following the operation in Caracas on January 3.
When I started reading Kaprov’s article, I was singing “Luck be a lady tonight”; by the end, I wasn’t in the mood for singing. It’s no secret – everything is tradeable.
Concerns include the illegal but hard-to-trace use of insider information, money laundering, disinformation, intelligence personnel misspending their time on analysing their bets, and the possibility of someone acting harmfully to try to influence the bet result. Another danger is that hostile powers can monitor the prediction markets and gain information. Could Iran launch a pre-emptive strike based on its assessment of the situation reflected on Kalshi and Polymarket? Your bet is as good as mine.
It is hard to forget then-IDF chief of staff Lt.-Gen. Dan Halutz was selling his large stock portfolio hours after Hezbollah killed and kidnapped soldiers on the northern border in July 2006, just ahead of the outbreak of the Second Lebanon War. For what it’s worth, he denied insider trading.
“Implications of this powerful new hit are still becoming clear,” Kaprov pointed out, “but alongside the potential, it is hard not to fear the consequences. Last summer, a Polymarket bet ran on the expected scope of fires in Los Angeles.
“The very attempt to profit from an incident where dozens died, and tens of thousands lost their home,s is horrifying in itself. But participating in an open bet while the incident is ongoing opens up far worse scenarios – what if, for example, an insurance company or private contractor betting on the fire does so to cover insurance payments they’ll be required to make to clients?” he asked.
“Polymarket’s nature turns everything into a game – whether it’s Elon Musk’s social media post count on a given day or the likelihood of war breaking out. Data no longer just reflects reality, it creates it.”
Polymarked was founded by Shayne Coplan, who took a successful gamble when he dropped out of university studies to concentrate on his double passions of capital markets and technology. He created the company in 2020, during the COVID era, and last year, at the age of 27, he became the world’s youngest self-made billionaire.
The Biden administration banned Polymarket and launched an investigation into the possibility of insider trading (although it did not, of course, stop the online platform) US President Donald Trump (who users had correctly predicted would return to power) rescinded the restrictions, and none other than Donald Trump Jr., joined Polymarket as an investor with an advisory capacity, while covering all his bets by also maintaining ties to Kalshi.
Prediction markets have moved to such a mainstream position that CNN and other leading networks have made deals with Kalshi, while Dow Jones, among others, works with Polymarket.
The Atlantic this week published a piece by Saahil Desai under the title: “America Is Slow-Walking Into a Polymarket Disaster. Why is the media obsessed with prediction markets?”
“The more that prediction markets are treated like news, especially heading into another election, the more every dip and swing in the odds may end up wildly misleading people about what might happen, or influencing what happens in the real world,” he wrote.
As Desai noted, “A billionaire congressional candidate can’t just send a check to Quinnipiac University and suddenly find himself as the polling front-runner, but he can place enormous Polymarket bets on himself that move the odds in his favor.” Talk about putting your money where your mouth is.
The possible effect during elections is also particularly pertinent this year in Israel. Could voters be tempted to stay home, convinced that their preferred party is going to win the vote? Or might people change their election vote to reflect the dominant pattern? Take into account that the prediction platforms work on the assumption that anonymous bettors are more likely to express their thoughts on who they really believe will win rather than who they want to win, which is reflected in conventional polling.
Without updated international legislation and regulation, we risk becoming global losers. There is a constant temptation to up the ante in an anything-goes atmosphere. The platforms are designed to be seductive, like any gambling environment. The anonymity they afford means that, despite their rules, it is likely that minors and other vulnerable populations are being sucked in – or “suckered” in. I often recall the advice of my late grandfather: “Never gamble with more than you can afford to lose.”
There is value in crowd wisdom, but only if it’s handled wisely. What will prediction markets bring? All bets are off.