World
AI Analysis
'Gruesome' war bets fuel calls for crackdown on prediction markets
AI
AI Legal Analyst
Summary
In theory, such bets run afoul of US financial rules, which bar trading on contracts involving war, terrorism, assassination, gaming or other illegal activities. Unlike traditional gaming firms, in which the odds are set by the company, prediction market companies function more like a stock exchange, allowing users to bet against each other on the outcome of future events using "event contracts". But critics say they are sports betting and gambling operations trying to dress up as financial exchanges in a bid to avoid stricter rules and taxes faced by traditional gaming firms, which are regulated by the states. Even some Republicans have voiced concerns, as traditional gaming firms have also stepped up their lobbying, enlisting a savvy former Trump official, Mick Mulvaney, to plead their case in Washington. "Nobody is saying that gambling shouldn't be allowed," says Ben Schiffrin, director of securities policy at Better Markets, which advocates for financial reforms. "What the states are saying and other advocates are saying is things that are gambling should be regulated as gambling." Bloomberg via Getty Images Suspiciously timed bets related to military operations involving Israel, Venezuela and Iran have added fodder to those calls.
## Summary
In theory, such bets run afoul of US financial rules, which bar trading on contracts involving war, terrorism, assassination, gaming or other illegal activities. Unlike traditional gaming firms, in which the odds are set by the company, prediction market companies function more like a stock exchange, allowing users to bet against each other on the outcome of future events using "event contracts". But critics say they are sports betting and gambling operations trying to dress up as financial exchanges in a bid to avoid stricter rules and taxes faced by traditional gaming firms, which are regulated by the states. Even some Republicans have voiced concerns, as traditional gaming firms have also stepped up their lobbying, enlisting a savvy former Trump official, Mick Mulvaney, to plead their case in Washington. "Nobody is saying that gambling shouldn't be allowed," says Ben Schiffrin, director of securities policy at Better Markets, which advocates for financial reforms. "What the states are saying and other advocates are saying is things that are gambling should be regulated as gambling." Bloomberg via Getty Images Suspiciously timed bets related to military operations involving Israel, Venezuela and Iran have added fodder to those calls.
## Article Content
'Gruesome' war bets fuel calls for crackdown on prediction markets
14 minutes ago
Share
Save
Natalie Sherman
Business reporter
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Save
Bloomberg via Getty Images
Betting apps Polymarket has announced an investment of up to $2bn from the owner of the New York Stock Exchange
Stew, a 35-year-old from Montana, has enjoyed dabbling in sports bets since he downloaded the Kalshi app about 18 months ago.
But just a few weeks ago, after spotting reports of elevated pizza deliveries around the Pentagon during some late-night scrolling, he made a different kind of bet - wagering $10 (£7.50) on the odds that Iran's Ayatollah Ali Khamenei would be "out" by 1 March.
It was a trade that tested the limits of the kinds of bets Americans are allowed to make.
So-called predictions markets
- overseen by firms such as Kalshi - have exploded in popularity over the last year, hosting more than $44bn in trades.
They are rapidly transforming the betting landscape in the US, where sports betting was largely illegal until 2018 and gambling on elections had been off-limits for years until 2024.
While much of the activity on the platforms revolves around sporting matches, users can speculate on any number of questions, including local elections, whether the US central bank will cut interest rates and the year of Jesus Christ's return.
The apps caught fire during America's 2024 presidential campaign, after a legal victory cleared the way for them to accept election bets and they showed the odds tilting toward Donald Trump.
But it is more grisly wagers tied to military action involving Iran, Venezuela and Israel that have drawn attention lately.
In theory, such bets run afoul of US financial rules, which bar trading on contracts involving war, terrorism, assassination, gaming or other illegal activities.
But that hasn't stopped firms from taking in millions of trades.
Critics have seized on the activity, calling for a crackdown on the apps, which they say are facilitating unseemly, and potentially illegal, war profiteering, generating national security risks and enabling opportunities for insider trading and corruption.
"You have now opened up gambling basically on almost anything and it has turned into this very, very gruesome type of thing on the death of a head of state," said Craig Holman, government affairs lobbyist at the Public Citizen advocacy group, which recently filed a complaint this week over the bets.
Polymarket alone has hosted what Bloomberg estimated as more than $500m in bets related to the Iran war, at one point offering an opportunity to play the odds on the chance of nuclear detonation.
The company, which is headquartered in New York but operates on a limited basis in the US, eventually removed that market after it drew scrutiny on social media but users can still submit bets on questions like when US forces will enter Iran. It did not respond to the BBC's request for comment.
Kalshi also ended up cancelling the Khamenei market, which had drawn $54m in trades, noting that US-regulated entities are barred from "having a market directly settling on someone's death".
The company, which did not respond to a request for comment for this article, has said the war bets are happening on unregulated exchanges outside the US.
Concerns about the war bets have collided with a bigger battle over how prediction market firms should be regulated.
Unlike traditional gaming firms, in which the odds are set by the company, prediction market companies function more like a stock exchange, allowing users to bet against each other on the outcome of future events using "event contracts".
That design has allowed national financial regulators at the Commodities Futures Trading Commission (CFTC) to claim oversight.
But critics say they are sports betting and gambling operations trying to dress up as financial exchanges in a bid to avoid stricter rules and taxes faced by traditional gaming firms, which are regulated by the states.
Disagreement over who should be policing the apps
has sparked dozens of legal battles across the US, as states start to assert their right to regulate the companies like other gaming firms, rather than leave oversight up to the CFTC.
Even some Republicans have voiced concerns, as traditional gaming firms have also stepped up their lobbying, enlisting a savvy former Trump official, Mick Mulvaney, to plead their case in Washington.
"Nobody is saying that gambling shouldn't be allowed," says Ben Schiffrin, director of securities policy at Better Markets, which advocates for financial reforms. "What the states are saying and other advocates are saying is things that are gambling should be regulated as gambling."
Bloomberg via Getty Images
Suspiciously timed bets related to military operations involving Israel, Venezuela and Iran have added fodder to those calls.
In recent weeks, Democrats have introduced legislation to bar federal officials from trading event contracts, pointing to incidents such as when
a gambler new
---
## Expert Analysis
### Merits
- Though the Biden administration had taken a hard line on the sector, proposing to ban sports and politics-related event contracts, that regulatory drive stalled after a court defeat and the 2024 election of Donald Trump, who came to power promising a lighter hand.
### Areas for Consideration
N/A
### Implications
- While much of the activity on the platforms revolves around sporting matches, users can speculate on any number of questions, including local elections, whether the US central bank will cut interest rates and the year of Jesus Christ's return.
- The company, which is headquartered in New York but operates on a limited basis in the US, eventually removed that market after it drew scrutiny on social media but users can still submit bets on questions like when US forces will enter Iran.
- Concerns about the war bets have collided with a bigger battle over how prediction market firms should be regulated.
- Unlike traditional gaming firms, in which the odds are set by the company, prediction market companies function more like a stock exchange, allowing users to bet against each other on the outcome of future events using "event contracts".
### Expert Commentary
This article covers bets, trading, firms topics. Notable strengths include discussion of bets. Readability: Flesch-Kincaid grade 0.0. Word count: 1234.
In theory, such bets run afoul of US financial rules, which bar trading on contracts involving war, terrorism, assassination, gaming or other illegal activities. Unlike traditional gaming firms, in which the odds are set by the company, prediction market companies function more like a stock exchange, allowing users to bet against each other on the outcome of future events using "event contracts". But critics say they are sports betting and gambling operations trying to dress up as financial exchanges in a bid to avoid stricter rules and taxes faced by traditional gaming firms, which are regulated by the states. Even some Republicans have voiced concerns, as traditional gaming firms have also stepped up their lobbying, enlisting a savvy former Trump official, Mick Mulvaney, to plead their case in Washington. "Nobody is saying that gambling shouldn't be allowed," says Ben Schiffrin, director of securities policy at Better Markets, which advocates for financial reforms. "What the states are saying and other advocates are saying is things that are gambling should be regulated as gambling." Bloomberg via Getty Images Suspiciously timed bets related to military operations involving Israel, Venezuela and Iran have added fodder to those calls.
## Article Content
'Gruesome' war bets fuel calls for crackdown on prediction markets
14 minutes ago
Share
Save
Natalie Sherman
Business reporter
Share
Save
Bloomberg via Getty Images
Betting apps Polymarket has announced an investment of up to $2bn from the owner of the New York Stock Exchange
Stew, a 35-year-old from Montana, has enjoyed dabbling in sports bets since he downloaded the Kalshi app about 18 months ago.
But just a few weeks ago, after spotting reports of elevated pizza deliveries around the Pentagon during some late-night scrolling, he made a different kind of bet - wagering $10 (£7.50) on the odds that Iran's Ayatollah Ali Khamenei would be "out" by 1 March.
It was a trade that tested the limits of the kinds of bets Americans are allowed to make.
So-called predictions markets
- overseen by firms such as Kalshi - have exploded in popularity over the last year, hosting more than $44bn in trades.
They are rapidly transforming the betting landscape in the US, where sports betting was largely illegal until 2018 and gambling on elections had been off-limits for years until 2024.
While much of the activity on the platforms revolves around sporting matches, users can speculate on any number of questions, including local elections, whether the US central bank will cut interest rates and the year of Jesus Christ's return.
The apps caught fire during America's 2024 presidential campaign, after a legal victory cleared the way for them to accept election bets and they showed the odds tilting toward Donald Trump.
But it is more grisly wagers tied to military action involving Iran, Venezuela and Israel that have drawn attention lately.
In theory, such bets run afoul of US financial rules, which bar trading on contracts involving war, terrorism, assassination, gaming or other illegal activities.
But that hasn't stopped firms from taking in millions of trades.
Critics have seized on the activity, calling for a crackdown on the apps, which they say are facilitating unseemly, and potentially illegal, war profiteering, generating national security risks and enabling opportunities for insider trading and corruption.
"You have now opened up gambling basically on almost anything and it has turned into this very, very gruesome type of thing on the death of a head of state," said Craig Holman, government affairs lobbyist at the Public Citizen advocacy group, which recently filed a complaint this week over the bets.
Polymarket alone has hosted what Bloomberg estimated as more than $500m in bets related to the Iran war, at one point offering an opportunity to play the odds on the chance of nuclear detonation.
The company, which is headquartered in New York but operates on a limited basis in the US, eventually removed that market after it drew scrutiny on social media but users can still submit bets on questions like when US forces will enter Iran. It did not respond to the BBC's request for comment.
Kalshi also ended up cancelling the Khamenei market, which had drawn $54m in trades, noting that US-regulated entities are barred from "having a market directly settling on someone's death".
The company, which did not respond to a request for comment for this article, has said the war bets are happening on unregulated exchanges outside the US.
Concerns about the war bets have collided with a bigger battle over how prediction market firms should be regulated.
Unlike traditional gaming firms, in which the odds are set by the company, prediction market companies function more like a stock exchange, allowing users to bet against each other on the outcome of future events using "event contracts".
That design has allowed national financial regulators at the Commodities Futures Trading Commission (CFTC) to claim oversight.
But critics say they are sports betting and gambling operations trying to dress up as financial exchanges in a bid to avoid stricter rules and taxes faced by traditional gaming firms, which are regulated by the states.
Disagreement over who should be policing the apps
has sparked dozens of legal battles across the US, as states start to assert their right to regulate the companies like other gaming firms, rather than leave oversight up to the CFTC.
Even some Republicans have voiced concerns, as traditional gaming firms have also stepped up their lobbying, enlisting a savvy former Trump official, Mick Mulvaney, to plead their case in Washington.
"Nobody is saying that gambling shouldn't be allowed," says Ben Schiffrin, director of securities policy at Better Markets, which advocates for financial reforms. "What the states are saying and other advocates are saying is things that are gambling should be regulated as gambling."
Bloomberg via Getty Images
Suspiciously timed bets related to military operations involving Israel, Venezuela and Iran have added fodder to those calls.
In recent weeks, Democrats have introduced legislation to bar federal officials from trading event contracts, pointing to incidents such as when
a gambler new
---
## Expert Analysis
### Merits
- Though the Biden administration had taken a hard line on the sector, proposing to ban sports and politics-related event contracts, that regulatory drive stalled after a court defeat and the 2024 election of Donald Trump, who came to power promising a lighter hand.
### Areas for Consideration
N/A
### Implications
- While much of the activity on the platforms revolves around sporting matches, users can speculate on any number of questions, including local elections, whether the US central bank will cut interest rates and the year of Jesus Christ's return.
- The company, which is headquartered in New York but operates on a limited basis in the US, eventually removed that market after it drew scrutiny on social media but users can still submit bets on questions like when US forces will enter Iran.
- Concerns about the war bets have collided with a bigger battle over how prediction market firms should be regulated.
- Unlike traditional gaming firms, in which the odds are set by the company, prediction market companies function more like a stock exchange, allowing users to bet against each other on the outcome of future events using "event contracts".
### Expert Commentary
This article covers bets, trading, firms topics. Notable strengths include discussion of bets. Readability: Flesch-Kincaid grade 0.0. Word count: 1234.
bets
trading
firms
war
gambling
market
contracts
betting
