Less than one month after Kalshi got into a legal whoopsie over whether or not they should pay out bettors who wagered on the death of Ayatollah Ali Khamenei in the early days of the U.S.'s disastrous war with Iran, the don't-call-us-a-gambling-site's biggest competitor, Polymarket, another gambling site, is facing a similar problem. An F-15 Strike Eagle was shot down on Friday over the southwestern Kohgiluyeh and Boyer-Ahmad province, which prompted the U.S. military to spring into action to stage a rescue mission to retrieve the jet's two-person crew. Polymarket then posted what they call a "market" on when the rescue mission would be complete.
Users who paged over to Polymarket's Iran tab would have scrolled by "Kharg Island no longer under Iranian control by...?" and "Hezbollah military action against Israel on...?" to get to "US confirms pilots rescued by...?" People got mad at Polymarket pretty quickly, because unlike other betting markets on how many people Donald Trump will deport or whether or not Jeffrey Epstein is confirmed to be Satoshi Nakamoto by the end of 2026, this involves members of the U.S. military. Polymarket removed the wager and said in a statement, "We took this market down immediately as it does not meet our integrity standards. It should not have been posted, and we are investigating how this slipped through our internal safeguards."
U.S. Rep. and Marine Corps veteran Seth Moulton called it "DISGUSTING," and later told CNBC, "Polymarket didn’t take that market down because it violated their standards. They took it down because we called them out." He's right. The whole value proposition of prediction markets is that users can bet on anything.
Mostly, they use the platforms to bet on sports, though occasionally and notably, they cash out on the insider information they have by virtue of holding positions of power. This is not as deleterious to prediction market's integrity as it might seem; in fact, it's quite important. The theory of prediction markets actually relies on insider information entering the betting space and being marketized, as that information thus moves the markets in such a way as to have the truth more accurately reflected than it would be if nobody had any skin in the game. Whether or not it's a meaningful public good to have people who have the power to make the events people are betting on happen or not happen is another matter, as is the notion that they could make something happen expressly to win a huge bet on a prediction market. Either way, the intellectual argument for prediction markets relies on a slight redefinition of the concept of truth.
The Iran war has been a notable site of many an insider trade, and not just on prediction markets. The war is largely being played out in the arena of the global markets, as Trump and his advisers are doing everything they can to keep the price of oil from spiking out of their control, stabilize the stock market, and maintain the primacy of the petrodollar. Sometimes, this takes the form of lying that everything is fine until the weekend hits or markets close for the day, after which there is a window where there will not be immediate consequences for doing something stupid. Look at Pete Hegseth, the disgusting, besotted, alleged rapist running the Department of War: the Financial Times reported that right before the war began, "Hegseth’s broker at Morgan Stanley contacted BlackRock in February about making a multimillion-dollar investment in the asset manager’s Defense Industrials Active ETF, the people said, shortly before the US launched military action against Tehran."
This is as brazen as it gets, and is an extremely ominous sign about that dark future where markets, prediction and otherwise, do not reflect reality so much as dictate it. The Polymarket pilot whoopsie is not that, though what it highlights is that betting on all aspects of reality necessarily means taking wagers on heinous, ugly stuff.
