$500M Bet On The Iran Strike — Before It Happened

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0:27Ed Elson:5 a.m. I'm up with a crisp Celsius energy drink. Running 12 miles today. Grab a green juice, quick change, and head to work. Meetings, workshops. One more Celsius, no slowing down. Working late, but obviously still meeting the girls for a little dancing. Celsius. Live, fit, go. Grab a cold, refreshing Celsius at your local retailer or locate now at Celsius.com.

1:16Jonathan Cohen:Today's number, 50. That is the percentage of Gen Zers who say that beverages are part of their personality. In other words, we now know the real reason young people aren't having sex.

1:32Dan Primack:Money market's mad. If money is evil, then that building is hell. The show goes on! The folks are never watched the show, show!

1:42Jonathan Cohen:Welcome to Prof G Markets. I'm Ed Elson. It is March 5th. Let's check in on yesterday's Market Vitals. The major indices climbed as investor attention shifted stateside. A report showed robust services sector growth for February. ADP private jobs data came in better than expected and a tech rally gave the Nasdaq an extra boost. Meanwhile, the 10-year remained elevated and oil prices were flat on the day. OK, what else is happening? Prediction markets are under intense scrutiny after half a billion dollars in trades tied to the US strikes on Iran came to light. Bloomberg reported$529 million was traded on Pali Market alone on the timing of the strikes.

2:27Jonathan Cohen:One account made more than half a million dollars, with the first trade placed just an hour before the news broke publicly. Meanwhile, Pali Market's competitor Kalshi saw nearly$55 million in trade volume on whether Ayatollah Khamenei would be ousted. However, it halted those markets shortly after he was killed, saying that it doesn't allow markets tied directly to death. Now, Democratic Senator Chris Murphy says he will introduce legislation, quote, ASAP, to stop people with ties to Trump from profiting off of these wars. Here to help us break down what comes next for prediction markets, we're speaking with Jonathan Cohen, policy leader at the Institute for Boys and Men and author of Losing Big, America's Reckless Bet on Sports gambling.

3:16Jonathan Cohen:Jonathan, good to see you. I know you usually talk about sports betting and you've written a book about it, which has been massively informative to many of us. Now we're on to the next phase here where people are betting and gambling on war and potentially death. And it's creating all of these issues and all of these rifts. Calci is saying, no, we don't let you bet on people dying or not dying. That's its own conversation. Let's just start with your initial reactions to the fact that we're here and what this means in your view for markets going forward.

3:53Ed Elson:I don't know what the problem is. I'm just trying to make a little bit of money. Ed, you know, I got kids at home. You know, obviously, I'm going to start to try to gamble with all my insider information on the death of Ayatollah Khomeini. I don't know what the problem could be. I mean, really, this speaks to, I mean, when the Supreme Court legalized sports gambling in 2018, right? Surely we did not anticipate what we now have, right? Which is the basically the gamblification of everything. And this is sort of what CalG has been promising and what they, their market is based on is you can leverage your knowledge of Taylor Swift, of gas prices, of the temperature of sports to making money.

4:25Ed Elson:And the logical extreme of this is when there are wars, people are going to want to gamble on wars as sick and twisted and weird and sort of undemocratic as that might feel.

4:34Jonathan Cohen:So where do we draw the line here? Because, I mean, Kalshi is saying that they're not, I mean, it's hard for Kalshi to draw lines in the first place. And in fact, we spoke with the CEO of Kalshi and we tried to have a conversation about this. And it is a difficult thing to figure out, but they have drawn a line at death, it seems. Why is that necessarily the line? Is it because that is illegal or because that's just an arena they don't want to touch?

5:05Ed Elson:I think it's a little bit of both. Again, Kalshi, as a reminder, the reason it's able to exist is that it claims to be an investment platform and it is regulated as an investment platform rather than a gambling platform. So they really don't want to do anything that might upset that status and their sort of legitimacy or what they see as sort of the social value they are providing, which is elevating the wisdom of the crowds on issues. So I do believe there are some legal restrictions related specifically to markets on death. And maybe they see it as just a bridge too far sort of morally to kind of keep their good standing as a good citizen.

5:40Ed Elson:Whether or not they phrased, you know, this all comes down to Khomeini out as Iran leader and out apparently did not include death, which is why all these retail traders are super upset. But fundamentally it boils down to a lot of people not reading the fine print and thinking that this market that let them do sort of do whatever they want actually does have some sort of rules specifically when it comes to death.

6:01Jonathan Cohen:Apparently, what is your view on gambling versus investing versus trading? This is becoming more and more like the conversation when it comes to prediction markets, which in my view are going to become a part of how we talk about markets in the future. I mean, this is becoming integrated into everything we do. I genuinely use prediction markets data to understand the future and to report on the news. How do you draw the distinctions between gambling, investing, and trading?

6:35Ed Elson:I mean, it's always been a thin line, right? Like, why is buying a soybean future? Why is that investing? But betting on the Philadelphia Eagles is gambling. To me, it boils down to some secondary utility from the money that you place into the product. So if I buy stock in Apple, you know, the value of Apple goes up. They can make more iPhones. They can make better phones and so on. But when I buy an event contract on the New England Patriots to win the Super Bowl, first of all, I lose money. Second of all, the New England Patriots are not more likely to win the Super Bowl because I have bought an event contract on them.

7:08Ed Elson:And there is no I don't see any sort of social benefit for the rest of the country or the rest of the world to know that a 35 year old dad in central Connecticut thinks that the the New England Patriots are going to win the Super Bowl. So when there's some genuine social utility beyond just wisdom of the crowds, which I do not see as sort of actually beneficial in a real way, then I'm willing to call something investing. But when it's just about my entertainment or my attempt to make money, that to me is just gambling pure and simple. And so much of what prediction markets do to me is clearly just gambling.

7:40Jonathan Cohen:If there is a social utility to, let's say, I mean, we're talking about war here. There is an argument to be made that if we want to understand how to plan for the future, how to plan for potentially life-threatening events, then maybe it is helpful to have markets that give us some insight into that. Would that fit your view of some level of social utility that makes it something different from betting on, say, a sports game?

8:09Ed Elson:Maybe. I'm sympathetic, but let me sort of give you the opposite version, maybe the worst case scenario in all this. Let's say the opposition leader in Bangladesh or whatever goes into a prediction market and puts a bunch of money on Bangladesh prime minister out sometime this year. All it takes is what? $15 ,000 to sort of drive up the spike in the market. Everyone's going to say, huh, what does somebody in Bangladesh know about the Bangladesh prime minister? They can drive a news cycle. They could drive a political cycle, a potential actual ouster of the Bangladesh prime minister just with like$15 ,000 on poly market.

8:41Ed Elson:That's all it takes. So as whatever benefit we get on a social utility standpoint, I could see the exact opposite happening and the harm and more wars, more destruction, more death, whatever happening because of the availability to gamble on the outcome.

8:56Jonathan Cohen:The other thing I was thinking here is if there, I mean, we learned over the weekend that these platforms are very afraid or do not want to touch death. They don't want to touch people betting on death and betting on murder, assassination, etc. And when you think about why that is, to your point, I wonder if to an extent these platforms would be liable if, say, someone placed a wager on, you know, here's$500 that this guy's going to get assassinated. then someone goes out and actually assassinates them because maybe they actually had money on the line, at which point perhaps the betting platform or the prediction markets trading platform is in some sense liable and responsible for that death and for that assassination.

9:46Jonathan Cohen:Is that something that you could see playing out? And would that be like an actual argument if that were to occur?

9:52Ed Elson:Yeah, I don't know about legally liable, but like responsible. Absolutely. Like my bet on will Ed Elson get punched in the face within the next week? You know, like all of a sudden I have the ability to manipulate that market if I were to come down to New York and punch you in the face and then I can make a bunch of money. We actually saw a version of this, as crazy as it might seem, with when people were throwing dildos onto the court at WNBA games. And then there was a website where you can like, I guess, pay people to dare them to do things. And you could pay like 500 bucks to someone to throw a dildo onto the court of the WNBA game.

10:22Ed Elson:and then you could buy a prediction market contract predicting that someone would throw a dildo onto the court at the WNBA game. Why have I said that word so many times? So yes, it is rife for manipulation and rife for getting people to do things in the real world that they might not otherwise have done because they can make money off of it.

10:38Jonathan Cohen:The other thing that I found fascinating recently, Polymarket was running a market that let people trade on the odds of a nuclear detonation anywhere in the world. Volume spiked to nearly a quarter of a million dollars in a single day after the Iran strikes happened. And then people started getting very nervous because traders were pricing in a 24 % chance of a nuclear detonation somewhere. And that was on Tuesday. And then there was a lot of backlash. Polymarket decided to pull that market and now it no longer exists. I just want to get your reactions to, one, the fact that we are betting on nuclear war a nuclear detonation.

11:22Jonathan Cohen:And two, the fact that trade is priced in a 24 % probability that we would see a nuke at some point in the near future.

11:29Ed Elson:Let's hope that's the one market that had no insiders. Let's hope that's the one market that was purely speculative. I mean, I think poly market, just to be really clear, which has drawn the ire of many of the senators this past week, is actually not fully yet available in the U.S. and is sort of primed still to re-enter the U.S. market. So I wonder if them responding to this sort of public backlash is in part to sort of remain in the good graces of the U.S. market, both politically and sort of socially and culturally, so that they can sort of re-enter the market and so that this can really be the sort of Coke and Pepsi two-horse race that everyone is ultimately anticipating between Calci and between Polymarket when the company does arrive here sort of in full throat.

12:09Jonathan Cohen:Just before we end here, what do you think is going to be the future of this from a regulatory perspective. Senator Murphy is talking about regulating this stuff. It's becoming more and more popular in the cultural conversation. What is the regulatory future of these prediction markets in light of what we've seen following the strikes?

12:26Ed Elson:As folks may know, there are a lot of states that are currently suing these platforms, Calci in particular, specifically over the question of sports contracts, which just to be really clear, sports related event contracts account for 90 % of the trading volume on Calci on any given day, which any given day does not usually include a war with Iran. So I think ultimately where folks see this headed is the Supreme Court, right? Which is sort of designed to take, to aggregate lots of state-level lawsuits and sort of decide on them at once. So whether that lawsuit is going to specifically focus on sports contracts or sort of the right of these platforms to exist, I don't know.

13:04Ed Elson:But I think that is the most likely, given the administration, given the administration's ties to the prediction markets, given the comments from Mike Selig, the head of the Commodities Future Trading Commission, which is the agency that purportedly oversees prediction markets by letting them do whatever they want, then ultimately, I think the most realistic regulatory approach will actually just come from the judicial branch rather than through traditional regulation.

13:27Jonathan Cohen:All right. Jonathan Cohen, policy lead at the Institute for Boys and Men, author of Losing Big, America's Breakfast Bet on Sports Gambling. Jonathan, Jonathan, good to see you. Thank you for joining us.

13:36Ed Elson:Thanks. And proud owner of 24 % chance that there's going to be a nuclear bomb in the next year. I can't wait.

13:45Jonathan Cohen:After the break, the new era of defense tech. And for even more markets insights, you can subscribe to my weekly newsletter at edwardelson.substack.com.

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16:11Jonathan Cohen:We're back with Prof. G Markets. Defense tech startups are raising billions, and they're reshaping an industry long dominated by a handful of old economy giants. Defense tech company Anduril is currently raising$4 billion in a round that could double the startup's valuation to$60 billion. At the same time, the Pentagon is negotiating contracts with OpenAI and, of course, Anthropic, pushing to bring frontier AI into defense workflows. Sironic Technologies is building autonomous boats for the Navy, and Shield AI is building an AI pilot that's being tested in Air Force efforts. All told, defense tech startups had their best funding year ever in 2025.

16:55Jonathan Cohen:Venture capital deals jumped to a record$50 billion, up from$27 billion in 2024. So here to discuss this new wave of defense tech companies, we're joined by Dan Primack, business editor at Axios and author of the ProRata newsletter. Dan, thank you for joining us on ProfG Markets. I want to start with Andrew Rull's fundraise. I mean, just a giant round,$4 billion,$60 billion valuation. You reported on this. Tell us what we know about this round.