The funding round represents a bright spot during one of the most turbulent weeks yet for the forecasting markets industry. In the past five days, Nevada issued a temporary restraining order temporarily banning Kalshi and Arizona filed criminal charges accusing him of running an illegal gambling business; An Israeli reporter said he received a series of threats from Polymarket traders who were angry at how the story he wrote affected their bets; Polymarket signed a major deal with Major League Baseball, further cementing itself in the world of professional sports; And US senators introduced legislation to ban specific types of markets offered by the industry, including those involving “government action, terrorism, war, murder and events where a person knows or controls the outcome.” The forecast is the latest in a series of bills aimed at putting guardrails around the industry.
Senator Chris Murphy, the bill’s sponsor and one of the industry’s most vocal critics, said in an interview with WIRED that prediction markets are “a rigged and dangerous product” and represent “a new source of mind-bending corruption.”
“Kalashi already prohibits insider trading and markets directly linked to death and war,” says Kalshi spokesperson Elizabeth Diana. “As a US-based exchange, we support regulators and policymakers from both parties in their efforts to keep these markets safe and responsible in the US.” Polymarket did not respond to requests for comment.
Existing law gives the Commodity Futures Trading Commission, the agency that oversees prediction markets, the power to ban offerings related to murder, war, terrorism and other topics deemed contrary to the public interest. Some forecast markets already stay away from these ranges. But not all of their users understand where exactly the lines are drawn, leading to a messy situation when some assumed the market would have an impact on the fortunes of Iran’s supreme leader if he “leaves office” after being killed.
Meanwhile, PolyMarkets, which operates largely out of the United States, offers a number of war markets – but the law is unlikely to affect these offerings. The platform is currently offering markets on whether Israeli Prime Minister Benjamin Netanyahu will be “out” by certain dates; Someone recently bet $177,000 that he would be out by March 31st. If Netanyahu dies, Polymarket will likely resolve the market to “yes” and allow its speculators to make profits, as was the case if Khamenei was killed.
One reason Senator Murphy is so passionate about prediction markets is that he sees them as a vehicle for insider trading. For example, the Israeli government has accused two of its citizens of leaking classified information by placing Polymarket bets related to the war in Iran. The Connecticut lawmaker suspects that other trades related to the conflict may have been made by members of Trump’s inner circle who have advanced knowledge of military operations. He says, “It’s pretty chilling to think that there are staff inside the Situation Room who are pushing the United States into war, not because it’s good for our security, but because they’re going to make $100,000 from it.”
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