Prediction markets wagers on Iran war, nuclear detonation

Polymarket last week archived markets that had allowed bets on the timing of a nuclear detonation, after the contracts attracted hundreds of thousands of dollars.

Most of the contracts fell under a market titled “Nuclear weapon detonation by…?” that allowed users to wager on whether the event would occur by a certain date, according to webpages saved in the Internet Archive’s Wayback Machine.

The removal of nuclear-related markets came hours after the company reportedly posted — and later deleted — odds on X showing roughly a 22% probability of a detonation by year-end.

Over the weekend, the company’s founder and CEO, Shayne Coplan, was asked about some of the broader controversy regarding prediction markets concerning geopolitical conflicts like Iran at the MIT Sloan Sports Analytics Conference.

Coplan said it was a “complicated question,” but said that prediction markets serve a powerful informational function and value proposition, including in war zones.

He also dismissed some of the criticism as “more money, more problems.” “There’s still a lot of resistance to innovation that kind of seems jarring to begin with … that’s what makes it innovative and disruptive,” he said.

The Commodity Futures Trading Commission is the main regulator of U.S. prediction markets like Polymarket and Kalshi, with trades on those platforms treated as financial derivatives contracts.

Polymarket’s main international exchange operates offshore, but the company is planning a separate CFTC-regulated U.S. version of its platform.

U.S.-based prediction sites like Manifold Markets were still allowing bets on a nuclear detonation as this article went live.

CNBC did not identify such bets on larger platforms like Kalshi, the company has not been free of Iran-related controversy.

Earlier, Kalshi faced backlash over a multi-million dollar market on whether Iran’s supreme leader, Ali Khamenei, would be ousted. He was later confirmed to have been killed in the first wave of Israeli and US air strikes on Feb. 28.

The company ultimately issued refunds on the market, citing regulations barring wagers on death.

In a statement to CNBC, Kalshi said it “doesn’t allow markets directly tied to death.”

Last week, Sen. Chris Murphy (D-Conn.) and Rep. Mike Levin (D-Calif.) proposed a bill that would restrict or prohibit markets resolving on military actions, regime change, or deaths that could incentivize conflict or reward access to classified information.

That comes after crypto-analytics firm Bubblemaps identified what it called “six suspected insiders” who made a $1.2 million wager that the US would strike Iran. A single multi-outcome prediction market on the timing of strikes had accumulated over half a billion dollars in bets on Polymarket, which occurred on Feb. 28.

Merkley and Klobuchar’s bill, however, does not have any Republican co-sponsors, and GOP lawmakers in Congress have not yet signaled their support for such proposals.

Disclosure: CNBC and Kalshi have a commercial relationship that includes customer acquisition and a minority investment.

— CNBC’s Garrett Downs contributed to this report