War Betting Apps Raise Ethical and Legal Concerns Amid Conflict
The growing threat of conflict in the Middle East has prompted a surge in activity on prediction markets, where users can place bets on specific military actions. On one app, bets related to the Iran war have totalled an astonishing £393 million, highlighting a controversial trend that blends gambling with geopolitics.
What Are Prediction Markets?
Polymarket is a cryptocurrency-based prediction market that offers a wide range of foreign policy events for users to bet on. Unlike traditional gambling, where the house sets odds, Polymarket operates through contracts where prices fluctuate similarly to shares on a stock exchange. Users can suggest bet ideas, but the platform creates the bets, covering events such as the possibility of Iran closing the Strait of Hormuz or when US troops might enter Iran.
Its main competitor, Kalshi, focuses on sports and policy bets but avoids military wagers. On Polymarket, users have wagered over US$4 million on the US-Iran strikes occurring on February 28 alone, with one user winning US$4,500 by predicting the exact date of the strike.
How Do These Platforms Work?
Polymarket does not charge trading fees except on its 15-minute crypto markets, which are akin to day-trading stocks. Instead, its business model reportedly relies on selling the data generated on the platform. While Polymarket has not confirmed whether it sells this data, in other financial contexts, such information is a valuable commodity, often sold to policymakers, advertisers, and researchers.
All payments are made in cryptocurrency, and the platform offers anonymity to users. However, this lack of transparency has raised concerns about potential misuse, such as insider information influencing bets.
Legal and Regulatory Challenges
Polymarket was launched in the US in 2020 but faced a ban from 2022 to 2025 after the Commodity Futures Trading Commission found it non-compliant with gambling legislation. More than 30 countries have reached similar conclusions, with some, like Australia, geoblocking the site.
The platform argued it is not a gambling company because odds are set by user-determined probability contracts, not by the house. This argument was favourably received by the 2025 Trump administration, which overturned the ban. Notably, Donald Trump Jr is a major investor in Polymarket and serves as a strategic advisor to Kalshi, further intertwining political interests with these markets.
Ethical Dilemmas and Risks
These platforms raise significant legal, political, and moral questions. Users are betting millions on events like the US striking Iran or Russian forces capturing Ukrainian cities, potentially profiting from the suffering of innocent civilians. Reducing complex military decisions to yes/no gambles dehumanises those trapped in conflict and could pave the way for malicious activity.
For instance, what if a decision-maker profited from betting on a specific strike date? Concerns about insider information are not hypothetical; several Israeli soldiers are under investigation for allegedly using classified information to inform their bets on Polymarket. Similarly, a case where a user won US$400,000 after correctly betting on the capture of Venezuelan President Nicolas Maduro has sparked speculation about misuse.
Data and Information Warfare Risks
The value of data from these bets depends on who buys it and why. Data on US military action in Iran might attract higher prices from regional states than data on weather events. Polymarket might issue more bets on extreme events to attract attention, combined with its anonymous design, making it a potential tool for information warfare.
Hostile actors could place bets to influence public discourse or assess disinformation opportunities. How Polymarket manages its data remains unclear, including what data is stored, sold, and used by purchasers. Selling data on public expectations of war requires greater scrutiny to prevent exploitation and ensure ethical standards.
In summary, while prediction markets like Polymarket offer a novel way to engage with geopolitical events, they pose serious risks related to ethics, legality, and data security, demanding closer examination by regulators and the public alike.
