The Rise of Betting on Military Conflicts

The ongoing conflicts, particularly between the United States and Iran, alongside the U.S. military’s capture of Venezuelan President Nicolás Maduro, have introduced a new dimension to warfare: betting on military events. This year, individuals have wagered over one billion dollars online on military decisions and outcomes. Just like sports and entertainment events, people worldwide are placing bets on military strategies and even the fate of global leaders. Some of these bets appear suspiciously timed with inside information, leading to a new form of insider trading.

Nicolás Maduro was captured on January 3 by U.S. Special Operations forces to face charges. Surprisingly, the president wasn’t the only individual facing federal charges after the operation. U.S. Army soldier Gannon Ken Van Dyke, involved in the mission, is charged with insider trading by using classified intelligence for betting on the raid’s timing. Rob Schwartz, a former officer at the Commodity Futures Trading Commission, describes this as an unprecedented betrayal of trust.

The Justice Department claims Van Dyke wagered around $34,000, including significant bets placed just before the raid, netting over $400,000. Van Dyke allegedly tried to delete his account on Polymarket, a major online prediction market, but the platform cooperated with law enforcement. Insider trading is well-known in corporate contexts, but prediction markets are a new frontier where non-public information is misused for profit.

Prediction markets have gained popularity, offering bets on future occurrences such as sports events and even military conflicts. Despite being illegal to bet on military outcomes in the U.S., individuals find digital workarounds to participate. Michelle Kendler-Kretsch and the Anti-Corruption Data Collective found that long-shot military bets on these markets have a suspiciously high success rate, indicating systemic insider trading.

In Paris, the data analytics firm Bubblemaps identified suspicious betting patterns on Polymarket, pointing to insider activity. They found nine connected accounts profiting $2.4 million from bets on U.S. military operations. The pattern of success is unusually high at a 98% win rate, which cannot be chalked up to mere luck.

There’s also scrutiny in traditional commodities markets. David Kovel, a former commodities trader turned lawyer, uncovered suspicious trades linked to military events, such as a case where oil futures spiked in response to diplomatic developments, implying insider knowledge.

Even journalists, like Emanuel Fabian from the Times of Israel, faced pressure and threats related to military bets. After reporting on an Iranian missile strike, he received messages demanding story alterations due to big wagers hinging on his report’s accuracy.

The Commodity Futures Trading Commission, the U.S. agency tasked with regulation, has faced declining enforcement numbers and staffing, raising concerns about addressing such insider trading. There’s increasing worry that this trend could escalate into national security issues if enemies use bet-derived insights for strategic planning.

Since May, more cases have emerged, including charges against a Google software engineer accused of making over a million dollars in profits through insider trading on Polymarket.