Wagering on warfare

Wagering on warfare

When the US and Israel launched their military operations in Iran in late February, some anonymous online gamblers made a fortune. They'd placed bets on that exact event taking place - and on the country's Supreme Leader, Ayatollah Ali Khamenei, being either killed or removed from power. They did this using prediction markets, online gambling sites where people bet on real-world events. So in this Squiz Shortcut, we'll explain:

• What these sites are

• How they work

• And why they’ve got some experts concerned

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Squiz the Shortcut

Let’s assume I’ve never heard of prediction markets… Can you give me some examples?
You might not have heard of them because they’re currently not legal in Australia - they’re classified as unlicensed gambling services. But they’re taking off overseas… Some examples are Polymarket - a cryptocurrency-based model known for its prices shifting quickly based on breaking news events; Kalshi - a regulated US exchange; PredictIt - an older platform often used by academics to study political trends; and Manifold Markets - a popular play money version where you can practice without using real cash. For this Shortcut, we’re going to focus on Polymarket…

Got it… How does Polymarket differ from regular gambling websites?
Regular gambling websites like Sportsbet and Ladbrokes have been taking bets on real world events for a while. It’s been a regular promotional tactic for lots of them to offer up a market on newsy events like who the next leader of a political party is going to be, or who might win an Oscar. But gambling sites in Oz are regulated to some degree, so there’s a limit on the sort of things you can bet on, and the amount you can bet on them. In prediction markets like Polymarket, no such limitations exist. 

So how does it work?
It’s a bit different to traditional betting markets. The way we might generally think of gambling in Australia is that you’re offered odds on a certain outcome, and the less likely the outcome, the more money you stand to win… Polymarket works a bit differently. Here, you’re buying something more akin to shares on a stock market… 

Just explain that a bit more…
Essentially, if an event happens, a share will pay out $1. Each share typically costs between $0 and $1. The price represents the crowd's estimated probability. For example, a share priced at $0.65 means the market believes there is a 65% chance the event will occur. If you're right, the share pays out $1, but if you're wrong, it's worth $0. 

How do the odds work?
The price of the shares depend on the likelihood of an event happening. Using the Iran war as an example, the price of a share betting on the US striking Iran by 9 March this year was USD 49c. If that eventuated - and as we know, it did - the user would’ve nearly doubled their money on the amount of shares they bought. 

Where is all the money coming from… As in, how does Polymarket fund the payouts?
That’s also where the site differs from a more traditional bookmaker, or even a casino, where there’s a ‘house’ that you’re betting against… In this case, you’re betting against other users who have bet the other way. That means you can’t just make an easy prediction and make money on it - you need to find people who will bet against you, making up the other side of that $1 pot that each share is worth. So for everyone who makes money, there’s someone else out there who has lost it…

What else should I know about it?
Another key thing to know is that the international version of the site is almost completely anonymous. Polymarket operates mostly on cryptocurrency, which means you can place bets on sensitive events without people knowing who you are. Some people have been identified, but mostly this is something users can do almost entirely in secret… 

Um… Doesn’t that present some problems?
Spot on… As you might imagine, regulators in the US weren’t happy about any of this taking place. Think of the amount of rules and regulations the Australian Stock Exchange is under, and you can see how this platform operating in an unlicensed, anonymous way had regulators worried. 

What happened?
It was initially banned under US law and fined for not having a license. But in 2025, it bought a different company that did have a license, and then it was approved to operate again in December 2025, with a full relaunch and some structural changes. The company now operates 2 versions - a regulated US one where identity has to be verified, and an international one where things are looser but there’s almost no consumer protections in place…

Even though it’s banned here in Oz, can we access it?
Australians are accessing these sites by using Virtual Private Networks (VPNs). The Australian Communications and Media Authority found that there were 1.88 million visits to the Polymarket website in the first half of 2025. It’s only growing in popularity, but as we mentioned, a lot of regulators, experts and lawmakers have some significant concerns about it. 

What are the main concerns about these sites?
Mostly they’re around ethics and corruption. We’ll start with the first one - the optics and morality, essentially, of betting on a war that has killed thousands of people… Betting on military actions, regime changes, deaths has a lot of experts worried that these platforms are gamifying tragedy, ie. risking a level of previously unseen desensitisation around these very real, very tragic events; they say that war is essentially being treated as a sporting contest…

What other issues have they flagged?
There’s also the point that Polymarket is making money out of all of this; that it’s directly profiting off people betting on human misery.

How has the company responded?
Polymarket says that its system is based on the idea that exposing the public to the truth is better than keeping it under wraps. The company’s CEO Shayne Coplan says that people might look at Polymarket to protect themselves, giving them real-time data on whether the area they live in is under threat. Polymarket frames this as a better source of truth because it’s people putting their money behind their knowledge…

What’s the flip side of that argument?
The counterargument is that if you offer a financial incentive for an event - even a tragedy - to take place, you also offer an incentive for someone to ensure the tragedy does take place. Especially in an anonymous market… What’s to stop a high-ranking official in the US government from pushing for an invasion of a foreign country if they know they can make a buck through betting that it happens… 

Has the company drawn any red lines?
Yes… Earlier this month, Polymarket allowed users to bet on a nuclear detonation - that led to an enormous backlash and it took that market down. But that’s a rare example, and it leads to the question of whether it’s being used by high-ranking government officials - and their friends and family - to profit directly from military conflict.

That would be problematic…
It sure would… In the case of bets on the Iran war breaking out, several of those were found to have come from a specific account created just before the US/Israeli strikes were carried out. That account made around $500,000 betting on different aspects of the war, for example, exactly when Khamenei would be removed as Supreme Leader, when the US would strike Iran, and when there would be a ceasefire. It’s led to Democratic Senator Chris Murphy saying that these websites present a “new kind of corruption”, and accusing White House officials of “secretly profiting off war”... 

What is he calling for?
Senator Murphy wants the site banned, but that’s unlikely as long as US President Donald Trump - and the Republican House and Senate - are in power. Trump is a big fan of cryptocurrency. You might remember him launching his own crypto products at various points during his presidency - and his son, Donald Trump Jr, is an investor in Polymarket. Trump Media and Technology Group (the owner of Truth Social) is also in the process of setting up a prediction market called Truth Predict. So it’s bound to be around for a while. And there’s another element of this that has experts worried - the behaviour of people who lose bets based on real-world events, or the reporting of those events…

What’s going on there?
This has been a thing in sport for a while - ask any professional athlete and they’ve probably got a story of someone DMing abusive comments to them over money lost through bets. But this is even higher stakes, and the point was crystallised when Polymarket gamblers started threatening the Israeli journalist Emanuel Fabian, after he reported on a missile strike near Jerusalem. No one was hurt in the strike, and Fabian wrote a quick report saying that the missile had struck the earth and moved on. But then he got a bunch of emails asking him to change the story to say that the missile had been intercepted, and missile fragments had hit the earth.

Why was that?
Fabian worked out that the emails and messages were from people who had bet that Iran would not strike Israel on 10 March. If the missile had been intercepted and only fragments had hit the ground, no strike would be judged to have taken place, and those people would have won their bet. They were requesting that the reporting be changed, so they’d make money…  

Yikes… So where to next for these sites?
Even though plenty of people are concerned, Polymarket is continuing to grow in popularity. It just signed a deal with Major League Baseball in the US to become an official partner, and one of its key investors is the owner of the New York Stock Exchange, so there are no signs that it’s going anywhere… 

Onto our Recommendations

Reading: This article by UNSW discusses the issues arising from betting on warfare…

Reading: This piece in CNN looks at the Trump family’s investment in prediction markets with Truth Predict…

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