Traders Profit from US-Iran Tensions on Prediction Market

As tensions escalate between the US and Iran, traders on Polymarket are making significant profits by betting on military actions. With over $529 million traded on contracts predicting US strikes, unusual betting patterns have raised concerns about potential insider trading. Experts highlight the challenges in proving such activities due to the limited regulation of prediction markets. This article delves into the implications of these trends, the role of blockchain technology, and the growing scrutiny surrounding these markets, especially in light of recent criminal charges linked to classified military intelligence. Discover how these developments could shape the future of betting on geopolitical events.

By Narendra Chaudhary Mar 1, 2026, 09:26 IST

Profiting Amid Conflict

This past weekend, as US and Israeli airstrikes targeted Iran, traders on Polymarket were already capitalizing on the situation. Polymarket serves as an online prediction market where individuals wager on the outcomes of real-world events, including elections and military actions. Instead of traditional betting, users engage in buying and selling contracts that yield payouts if certain events occur. In this instance, bets were placed on the timing of potential US strikes against Iran. Data from Bloomberg indicates that approximately $529 million was exchanged on contracts related to the timing of these strikes, with one contract predicting a US strike by February 28 attracting around $90 million in trades.

Unusual Betting Trends

According to blockchain analytics firm Bubblemaps SA, six newly created accounts reportedly earned around $1 million by accurately betting on a US strike against Iran by February 28. These accounts, established in February, exclusively placed bets on US actions towards Iran. Some contracts were purchased at minimal prices, approximately 10 cents each, just hours before reports of explosions in Tehran emerged, as noted in the Bloomberg report.

Blockchain technology, which underpins Polymarket, allows for the tracking of wallet activities and trading behaviors. Such patterns—new accounts, concentrated betting on a single event, and significant wagers just before news breaks—can suggest potential insider trading. However, experts caution that these patterns alone do not confirm any illicit activity.

Challenges in Proving Insider Trading

Prediction markets like Polymarket function with limited oversight, making it challenging to distinguish between mere luck and trades based on confidential information. Similar suspicious betting patterns have been observed in the past, such as unusual bets concerning the potential ousting of Venezuela’s President Nicolás Maduro. Nonetheless, just because activity appears suspicious does not inherently imply insider knowledge.

The US had been hinting at possible military action against Iran for weeks, leading many traders to speculate that a strike was imminent. For instance, a contract predicting a strike by February 27 garnered over $25 million in trades. Not all flagged accounts profited; one account lost about $300 on an earlier bet but later won over $174,000 on a $26,513 wager predicting a strike on Saturday. Observers note that when military actions are publicly discussed for an extended period, informed traders may place significant bets without possessing insider information.

Expert Insights

Nicolas Vaiman, CEO of Bubblemaps, remarked, “Prediction markets are among the first platforms that enable direct bets on geopolitical events.” He explained that in scenarios involving conflict, information can circulate among a wider audience before it becomes public. The anonymity provided by Polymarket, which only requires a crypto wallet for trading, can incentivize informed participants to act swiftly.

Controversial Contracts and Regulation Issues

Following the strikes, Polymarket quickly introduced new betting contracts, including wagers on whether a Gulf nation would attack Iran within a week and if the US would strike Iraq by the end of March. However, these contracts have seen limited trading activity. Earlier in January, another analytics firm, Polysights, identified unusual trading patterns in a market predicting whether Iran’s Supreme Leader Ali Khamenei would step down by the end of March. At one point, traders estimated a 40% chance of his resignation, but nearly 90% of the suspicious trades supported that outcome. Critics raised concerns that this could lead to a troubling scenario where individuals profit from an assassination.

Polymarket operates outside the US and does not accept customers from the country, thus avoiding regulation by the US Commodity Futures Trading Commission (CFTC). In contrast, a competing platform, Kalshi Inc., which is regulated by the CFTC, does not offer contracts that settle based on someone's death.

Increased Scrutiny of Prediction Markets

The bets related to Iran are part of a growing scrutiny surrounding prediction markets. In February, Israeli authorities filed what appear to be the first criminal charges linking prediction market bets to classified military intelligence. An Israeli reservist and a civilian were accused of using confidential information to place bets on Polymarket regarding Israeli security operations, allegedly earning around $150,000. Kalshi has also taken enforcement actions against two customers suspected of insider trading.

The Broader Implications

Prediction markets are expanding rapidly, allowing individuals to bet directly on wars, elections, and leadership changes. However, when bets involve military actions or political leadership, distinguishing between educated guesses and illegal insider trading becomes increasingly complex. Analysts emphasize that while blockchain data can reveal unusual trading patterns, it cannot definitively prove whether someone had access to confidential information.