An investigation published by the Financial Times exposes unusual betting patterns on the Polymarket platform in the days leading up to the U.S. airstrike in Iran. According to the report, 12 suspicious accounts earned around $330,000 (about NIS 1M) after betting a total of $66,993 that an attack would happen by Saturday morning. The attack occurred as predicted.
About half of the bets were placed in the six hours preceding the attack, and these were unusually large transactions relative to the odds offered. The Financial Times identified 13 digital wallets with abnormal characteristics, 12 of which were opened just a few days before the event. Most of the accounts only bet on Iran-related markets, did not sell positions, and maintained a perfect record.
Identification of unusual accounts
The identification of these accounts was carried out in two stages. First, unusual bets were detected that were disproportionate in size compared to the odds offered in other political betting markets. One Iran-related market showed 20 times more unusual bets than the average. In the second stage, further filtering was conducted to identify accounts whose behavior indicated an exceptionally high level of confidence in the outcome, such as focusing exclusively on Iran-related bets and holding positions until the end.
The investigation highlights the potential risk posed by anonymous crypto-based platforms, which in most jurisdictions do not require full user identification. The use of insider information can be a particularly significant problem in military operations, which frequently rely on the element of surprise.
Legal framework in the U.S.
In the United States, prediction markets are regulated by the Commodity Futures Trading Commission (CFTC), which allows so-called “informed” trading in certain cases but prohibits the use of material non-public information obtained from the owner of that information. Regulatory authorities emphasized that they have the power to enforce violations of manipulation or insider trading. Democratic Senator Chris Murphy also announced his intention to promote legislation. The law would ban trading on military operations. Polymarket, the Pentagon, and the White House did not respond to Financial Times inquiries on the matter.
Unusual betting patterns in Israel and other cases
The article also presents similar cases in Israel, where indictments were filed against two reserve soldiers suspected of using classified information to bet on IDF operations. These accounts earned a total of approximately $405,000 from unusual bets on immediate military actions. Additionally, a suspicious pattern was identified around the capture of Venezuelan President Nicolás Maduro in January. Six accounts, opened just days before the operation, bet about $9,807 and yielded a total profit of $133,878. Another account, created shortly beforehand, generated a profit of over $404,000 from bets totaling $32,000.
However, not every unusual bet necessarily indicates insider information. In another case, an account that placed a large bet on an early U.S. attack in Iran lost nearly $100,000 after the attack did not occur, showing that even unusual bets can be incorrect. The report points to a real risk potential in using insider information in crypto-based prediction markets, particularly regarding military operations. The transparency of blockchain allows for the identification of unusual transactions, but it also underscores the need for stricter regulatory oversight to prevent the misuse of sensitive information.