Lawmakers from both parties are calling for federal investigations into the prediction market platform Polymarket after groups of anonymous traders placed large, well-timed bets on the US-Iran ceasefire hours before President Trump announced the deal on Tuesday.

Why it matters

Prediction markets have exploded in popularity since the 2024 election, but the Iran ceasefire trades are the clearest case yet of potential insider knowledge being used to profit from national security decisions. If insiders are trading on classified information, it represents a new category of intelligence leak.

The trades

At least 50 brand-new Polymarket accounts placed bets on a ceasefire in the hours and minutes before the announcement, according to platform data reviewed by multiple outlets. One account made roughly $550,000 in a series of trades.

This is not the first incident. In January, an anonymous user made $400,000 by betting that Venezuelan leader Nicolas Maduro would be ousted, hours before his capture. Before the start of the Iran war, another account made similar profits.

The response

Senator Richard Blumenthal wrote to Polymarket demanding the company explain why it allows trades on war and violence. “Polymarket has become an illicit market to sell and exploit national security secrets unlike any in history,” he wrote.

Representative Ritchie Torres introduced legislation to crack down on insider trading on prediction markets. At least two bipartisan bills are pending in Congress.

The White House warned staff against insider trading on war prediction markets, according to reporting by multiple outlets.

The other side

Supporters of prediction markets argue they provide valuable information about public expectations and that well-timed trades do not necessarily indicate insider knowledge. They say heavy-handed regulation could push the industry entirely offshore, beyond any US oversight.

Harvard researchers estimate $143 million in profits have been made on Polymarket by individuals who potentially had insider information on events ranging from the Iran ceasefire to Taylor Swift’s engagement.

What happens next

The Commodity Futures Trading Commission, which governs US-based prediction markets, has limited enforcement capacity and no jurisdiction over offshore trades, where most of Polymarket’s business occurs. Whether the CFTC receives additional authority depends on the pending legislation.