Well-timed bets on Polymarket tied to the Iran war draw calls for investigations from lawmakers

NEW YORK (AP) -- Calls are increasing inside Congress for investigations into the prediction market platform Polymarket after the latest instance where groups of anonymous traders made strategic, well-timed bets on a major geopolitical event hours before it occurred.

On Wednesday, The Associated Press reported that at least 50 brand new accounts on Polymarket placed substantial bets on a U.S.-Iran ceasefire in the hours, even minutes, before President Donald Trump announced the ceasefire late Tuesday on social media. These were the sole bets made on Polymarket through these accounts.

In January, an anonymous Polymarket user made a $400,000 profit by betting that Venezuelan leader Nicolas Maduro would be out of office, hours before Maduro was captured. In the hours before the start of the Iran war, another account made roughly $550,000 in a series of trades effectively betting that the U.S. would strike Iran and that Ayatollah Ali Khamenei would be removed from office.

Such prescient wagers have raised eyebrows -- and accusations that prediction markets are ripe for insider trading. And the issue goes beyond these three geopolitical events, according to at least one report. Researchers at Harvard University released a paper last month where, using public blockchain data, they estimated that $143 million in profits have been made on Polymarket by individuals who potentially had insider information about events ranging from Taylor Swift's engagement to the awarding of the Nobel Peace Prize last year.

Rep. Ritchie Torres, D-N.Y who sits on the House Financial Services Committee as well as the subcommittee on digital assets and financial technology, sent a letter Thursday to the Commodity Futures Trading Commission demanding the regulator review and investigate these well-timed trades. The CFTC regulates the derivatives markets, which includes prediction markets.

"This pattern raises serious concerns that certain market participants may have had access to material nonpublic information regarding a market-moving geopolitical event," Torres wrote. The letter was shared exclusively with The AP.

"What is the statistical likelihood that of anyone other than an insider trader placing a winning bet 12 minutes before a market-moving presidential announcement," Torres said in an interview with AP. "There are two answers: God, or an insider trader. And something tells me that God it not placing bets around Donald Trump's posts on Truth Social. "

Prediction market platforms like Kalshi and Polymarket allow their users to bet on everything from whether it will rain in Phoenix, Arizona next week to whether the Federal Reserve will raise or lower interest rates. U.S. residents are barred from using Polymarket under both its terms of service and federal law, though Polymarket's crypto-based design and limited identity checks can make those restrictions hard to police.