Online markets are turning war—and other policies—into wagers.
This month’s headlines on the fraught intersection of technology and politics have mostly focused on the tussle between OpenAI and Anthropic and the Pentagon over guardrails for military AI. Less attention has gone toward how a new wave of tech startups may be shaping wartime decisions — and corrupting this administration with consequences more deadly than any bribery or sex scandal.
The platforms introducing this hazard are prediction markets, online exchanges like Kalshi and Polymarket, where gamblers bet on real-world events far beyond horse races and pork belly futures. Some bets are quotidian, like the weather in Los Angeles tomorrow or the date of Taylor Swift’s wedding. But many are political, like the nicknames Trump will call his rivals on Social Media (last week odds were 3-to-1 for “Gavin Newscum”).
More concerning are hints that these markets can exploit or precipitate a leak of military secrets. An anonymous Polymarket user made $400,000 after wagering that Venezuelan president Nicolás Maduro would be in US custody by the end of February before any public timeline predicted the abduction. In another case, last-minute wagers on a February 28 strike on Iran yielded roughly $330,000, with half the bets placed in the final six hours before the strike.
What this means and why it matters: Venal government officials at any level could be cashing in without anyone finding out. Even worse is the possibility that operational decisions might be influenced by, say, an unscrupulous staffer who spins a congressional briefing to favor timing on a particular day—giving new meaning to the expression “making a killing.” Although some may find it hard to imagine US leaders making battlefield decisions for mercenary reasons, a platform that blends crypto, gambling, and insider trading offers a fertile environment for cultivating corruption at scale.
Plus, while some prediction markets have policies against insider trading or betting on violence, it’s unclear how these rules are enforced, especially when the very structure of these markets incentivizes users to ignore them. For its part, Kalshi did try to wiggle out of paying $54 million on a wager that Iranian leader Ali Khamenei would “leave office” before March 1, but its customers sued for their payout anyway. That’s why Democrats Chris Murphy and Greg Casar just introduced a bill to “Ban Event Trading on Sensitive Operations and Federal Functions” (a pedantic title redeemed by its acronym, BETS OFF).
But remember who they’re up against. Our current president is a former casino owner who has shown no sign of separating his circle’s crypto ventures from the operation of government. Former Trump advisor David Urban was Polymarket’s first lobbyist; Donald Trump Jr. sits on Polymarket’s board and is a Kalshi “strategic advisor.” Perhaps that’s why this administration has quashed investigations launched by Biden’s Justice Department and the Commodities Futures Trading Commission to determine whether prediction markets were violating federal regulations.
The upcoming ballots in 2026 and beyond will offer lucrative new ways to bet on, and potentially distort, political outcomes. The last thing we need is yet another disruptive influence destabilizing an electoral process already straining under antidemocratic pressures.
(This article was first published on the Crimson Goes Blue Substack. Photo by Derek Lynn on Unsplash.)