Washington, D.C. — A series of suspicious prediction market wagers created by anonymous accounts were placed shortly before military strikes and covert operations under the Trump administration. A new analysis from the Center for American Progress warns that Congress must move quickly to stop the misuse of prediction markets by government insiders and others with access to privileged information.
“The timing and precision of these bets raises troubling questions about whether individuals with advanced knowledge of government actions are exploiting prediction markets for personal gain,” said Alexandra Thornton, senior director of financial regulation at the Center for American Progress and author of the analysis. “Congress must act quickly to ensure that sensitive government information cannot be turned into private profit.”
CAP’s analysis highlights:
- Suspicious betting activity is happening ahead of military action. In the months before U.S. military strikes against Iran on February 28, hundreds of millions of dollars were wagered on prediction markets regarding the timing of the attack. Six newly created Polymarket accounts alone earned roughly $1.2 million after placing bets funded only hours before the strikes occurred.
- Anonymous accounts are profiting from geopolitical events. Shortly before the United States removed Venezuelan President Nicolás Maduro from power in early January, a newly created anonymous account placed a $30,000 bet predicting his ouster and earned a profit of more than $436,000.
- Cryptocurrency is allowing for anonymous betting. Some prediction market platforms allow wagers to be placed using cryptocurrency, making it easier for insiders to conceal their identities. Blockchain analysis indicates that wallets used to place some of the Iran-related bets were created within 24 hours of the attacks.
- Weak regulatory oversight leaves prediction markets vulnerable. Prediction markets operate in a murky regulatory space. While federal agencies such as the Commodity Futures Trading Commission (CFTC) have asserted jurisdiction, enforcement has been limited and current insider trading laws may not clearly apply.
The analysis urges Congress to immediately clarify that using inside government information to place bets on prediction markets is illegal. It also recommends requiring prediction market platforms to collect and verify basic identifying information from users, even when wagers are placed using cryptocurrency.
Read the analysis: “Congress Must Stop Prediction Market Corruption” by Alexandra Thornton
For more information or to speak with an expert, please contact Christian Unkenholz at [email protected].