It would be easy to assume that if prediction markets had a red line for what users shouldn’t be allowed to trade on, it would be the likelihood of a nuclear weapon going off. But until very recently, that wasn’t the case.
Polymarket has pulled markets that let users bet on the probability of a nuclear weapon being detonated before a certain date, following online backlash.
A page on the platform asking “Nuclear weapon detonation by…?,” was live as of Tuesday, according to the Internet Archive. The market allowed users to invest in yes or no outcomes for dates like March 31, June 30, and before 2027. That URL now leads to a page that reads, “This event has been archived.”
Polymarket has allowed bets like these since at least 2023. But scrutiny over them intensified in recent days after high-profile cases of users making large profits on suspiciously timed trades tied to global conflicts, including bets related to the capture of former Venezuelan president Nicolás Maduro and the U.S.-Israel strikes on Iran.
Beyond concerns about insider trading, critics have also raised the possibility that these marketplaces could create financial incentives for people in power to make certain decisions.
“Polymarket has created a market that would monetize a nuclear attack amid increasing concerns that bets are happening among government insiders who can make military decisions,” wrote political writer David Sirota in a post on X on Tuesday.
Sen. Chris Murphy said in a post on X on Wednesday that he plans to introduce legislation banning bets on war and military strikes. Murphy warned that allowing these wagers to go on could create incentives for people in the Situation Room to think about how they could profit from military decisions instead of focusing on national security.
“The Iran War is fueling a new kind of corruption: White House officials secretly profiting off war,” Murphy wrote in the post. “It’s disgusting. We need to ban it.”
Additionally, platforms like Polymarket and its rival Kalshi have faced increasing scrutiny for allowing bets on outcomes that could be tied to death.
Kalshi, for example, faced its own controversy after a market on the possible ouster of Iran’s Supreme Leader Ayatollah Ali Khamenei garnered more than $54 million in trades.
When news of Khamenei’s death broke, the market created a dilemma for the platform. U.S. rules prohibit contracts that allow traders to profit directly from someone’s death or assassination.
“We don’t list markets directly tied to death,” Kalshi CEO Tarek Mansour wrote in a post on X. “When there are markets where potential outcomes involve death, we design the rules to prevent people from profiting from death.”
Instead of resolving the market normally, Kalshi said it would reimburse all trading fees and pay traders who held positions before Khamenei’s death based on the last traded price before the news broke. Anyone who entered the market afterward would receive a full refund.
Regulators are also signaling that clearer rules may be coming. Commodity Futures Trading Commission (CFTC) Chairman Mike Selig recently said the regulator will provide clearer guidance and standards for the prediction-market industry in the near future, reported CoinDesk.
Back in 2024, the CFTC proposed new rules that would prohibit exchanges from listing contracts tied to events such as war, terrorism, and illegal activity.
Polymarket did not immediately respond to a request for comment from Gizmodo.
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