03-10-2026Price:

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Ethics in Prediction Markets Amid Geopolitical Tensions

Tuesday, March 10, 2026 · from 1 podcast
Prof G Markets
  • $529 million traded on Polymarket around the timing of US strikes on Iran, with one account pocketing over $500K on a trade placed an hour before the news went public - the insider trading question is unavoidable.
  • Prediction markets occupy a legal gray zone by calling themselves investment platforms, not gambling platforms. That distinction is doing a lot of work - and it's increasingly hard to defend.
  • The real long-term risk isn't just insider trading. It's market manipulation: bad actors engineering real-world events to cash out on prediction contracts.

Someone knew. A $529 million trading surge on Polymarket around the Iran strikes - with at least one account placing bets an hour before public news broke - raises more than eyebrows. It highlights a clash between emerging market strategies and ethical oversight within prediction markets.

Jonathan Cohen, policy lead at the Institute for Boys and Men, outlines the evolution of prediction markets as a consequence of the Supreme Court's 2018 decision on sports gambling. What began as a niche market has morphed into an extensive platform for predictions that now includes military strikes and geopolitical events. Cohen distinguishes between the utility of traditional investments and these markets. Stocks have intrinsic value; betting on events only corrupts the landscape.

The dilemma deepens as platforms like Kalshi retreat from contentious markets, reflecting heightened regulatory scrutiny. Yet speculation thrives. Cohen warns that the true peril lies not in insider trading alone but in potential market manipulation. The stakes escalate when individuals could orchestrate events, such as political unrest, to profit from their predictions.

Anticipated regulatory actions amplify the urgency. States are suing Kalshi over questionable event contracts, potentially prompting Supreme Court involvement. The Iran trades fuel a growing conversation about the responsibilities of these platforms. As Senator Chris Murphy aims to introduce legislation, the question lingers: Can prediction markets endure legislative scrutiny while maintaining legitimacy?

Jonathan Cohen, Prof G Markets:

- When there are wars, people are going to want to gamble on wars as sick and twisted and weird and sort of undemocratic as that might feel.

- My bet on will Edson get punched in the face within the next week - all of a sudden I have the ability to manipulate that market if I were to come down to New York and punch you in the face and then I can make a bunch of money.

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Source Intelligence

What each podcast actually said

Prof G Markets
Prof G Markets

$500M Bet On The Iran Strike — Before It Happened • Mar 5

  • One account on the prediction market Polymarket placed bets an hour before news of US strikes on Iran became public and pocketed over $500,000.
  • A total of $529 million was traded on Polymarket around the timing of the US strikes on Iran, creating a major insider trading question.
  • Jonathan Cohen traces the rise of prediction markets back to the 2018 Supreme Court decision that legalized sports gambling, which he calls 'the gamblification of everything.'
  • Prediction markets operate in a legal gray zone by branding themselves as investment platforms rather than gambling platforms, a distinction that is increasingly hard to defend.
  • Cohen argues the line between gambling and investing can be tested by 'secondary utility', where buying stock funds a company's operations, but buying a prediction contract funds nothing.
  • By Cohen's secondary utility standard, most activity on prediction markets constitutes gambling with better branding.
  • The prediction market Kalshi halted markets tied to the death of Iran's Ayatollah, showing how quickly these platforms reach sensitive topics.
  • Polymarket pulled its nuclear detonation market after traders priced in a 24% chance of a nuclear weapon going off somewhere.
  • Cohen suspects Polymarket's retreat from sensitive markets is strategic, as the platform needs to stay in regulators' good graces before fully re-entering the US market.
  • Cohen identifies market manipulation as a greater long-term risk for prediction markets than insider trading, where bad actors engineer real-world events to profit from contracts.
  • Cohen cites a documented case where people were paid to throw objects onto WNBA courts while prediction market contracts on that exact outcome were trading simultaneously.
  • Cohen warns that a $15,000 bet on a foreign leader's ouster could drive a news cycle, a political crisis, or even an actual coup, meaning markets can incentivize events, not just reflect them.
  • Multiple US states are suing Kalshi over its sports event contracts, which make up 90% of its daily trading volume.
  • Cohen believes lawsuits against prediction markets will eventually aggregate and reach the Supreme Court.
  • The Iran strike trades have given lawmakers a more urgent argument for regulation, and Senator Chris Murphy is already drafting legislation.
  • Jonathan Cohen stated, 'When there are wars, people are going to want to gamble on wars as sick and twisted and weird and sort of undemocratic as that might feel.'
  • Cohen gave an example of market manipulation: 'My bet on will Edson get punched in the face within the next week — all of a sudden I have the ability to manipulate that market if I were to come down to New York and punch you in the face and then I can make a bunch of money.'