Betting on US-Iran conflict seems to be very profitable
What's the story
The recent US strikes on Iran have triggered a massive surge in trading activity on prediction markets. According to Bloomberg, Polymarket, one of the leading platforms for such trades, has witnessed an unprecedented $529 million in bets related to the conflict. The most popular contract on Polymarket was created ahead of the attack and has since racked up about $90 million in trading volume.
Concerns
Allegations of insider trading
The prediction markets, which operate with little regulation or oversight, are now facing allegations of insider trading. Analysts from Bubblemaps SA have found that six accounts made around $1 million in profits by betting on the exact date of the US-Iran attack. These accounts were created in February and only placed bets on probable dates for US strikes, some just hours before the bombs hit Tehran.
Market dynamics
Prediction markets and geopolitical events
Nicolas Vaiman, the CEO of Bubblemaps, explained to Bloomberg that prediction markets are among the first platforms to allow direct bets on geopolitical events. He said such events as wars and conflicts, along with anonymity, create "incentives for informed participants to act early." Even amid the ongoing strikes in the Middle East, new contracts have already opened betting on whether a Gulf state will attack Iran this week, or if the US would hit Iraq by March.
Betting trends
Bets on Khamenei's deposition
Polysights, an analytics company, observed a spike in bets over Ali Khamenei's deposition scheduled for March-end. The firm found the bets placed the overthrow of the Iranian supreme leader at 40% likelihood. However, it also noted that around 90% of alleged insider trading accounts supported this contract. Some bets even speculated Khamenei's death, something critics argued could incentivize assassination attempts.