Probes Open After Large Bets on Pardons and Iran Strikes

Federal regulators and lawmakers have opened probes into well-timed, large bets placed on prediction platforms Polymarket and Kalshi after several accounts won significant sums tied to presidential pardons and U.S. military action in Iran.

A Paris-based data firm traced one Polymarket account that collected $316,346 after placing bets on last-minute pardons by President Joe Biden. Separately, analysts identified six accounts that together profited about $1.2 million when U.S. airstrikes struck Iran. One Polymarket market asking when a president would declare an end to military operations in Iran drew more than $25 million in wagers by Wednesday.

Sen. Elizabeth Warren posted on X that the outcomes «look like insider trading» and said she is pushing for an investigation. Joshua Mitts, a Columbia Law School professor advising the Justice Department on the matter, described the odds of the pardons outcome occurring by chance as “virtually zero.”

Polymarket conducts transactions in cryptocurrency and operates largely offshore, which has limited direct access by U.S. authorities. Federal prosecutors in Manhattan met with Polymarket executives to discuss whether any laws were broken.

Kalshi operates under a federal license as a Designated Contract Market and is regulated by the Commodity Futures Trading Commission. Kalshi requires users to verify their identity and enforces rules intended to prevent insider trading. Kalshi chief executive Tarek Mansour warned that insider trading on the platform “can and will at some point be a federal crime” and predicted the Justice Department would pursue charges where appropriate.

Legal experts point to gaps in enforcement. Prediction markets are generally not labeled as securities, so traditional insider trading laws do not automatically apply. The STOCK Act bars federal employees from using nonpublic information for financial gain, but anonymous cryptocurrency accounts make it difficult to link bets to specific government officials. Mitts said that when subpoenas lead to crypto accounts with no identifiable ties to government staff, investigations can stall.

Regulatory capacity is also a focus of the scrutiny. The CFTC, which would normally oversee enforcement for licensed markets, currently has only its chair, Michael Selig, serving among five commissioners and operates with a budget of less than $400 million. Selig is expected to tell Congress that anyone involved in fraud or insider trading in these markets “will face the full force of the law.”

On Capitol Hill, lawmakers are pursuing several responses. Senators and representatives have introduced legislation called the Death Bets Act to ban markets tied to terrorism, assassination and war. Investigations now include congressional inquiries, meetings between prosecutors and platform executives, and internal federal reviews. Industry projections cited by analysts estimate that prediction markets could grow to roughly $1 trillion in value within four years.

Probes remain active as regulators and lawmakers gather records and examine whether existing statutes cover the new types of markets and the use of nonpublic government information in betting.