Betting on the Iran war

0:00There's a reporter named Emmanuel Fabian who's been covering the war in Iran for the Times of Israel. Recently, he got a ton of feedback about a tiny article he wrote, but he couldn't figure out why. It was about a missile that exploded just outside the Israeli city Beit Shemesh.

0:15Sean Rameswaram:I'd appreciate it if you could update your article. As in its current form, it does not reflect reality. Someone wanted him to say it was a missile fragment instead of a missile. Weird, because it was a missile, not a fragment. If you could correct this tonight, you'd be doing me and many others a great favor. Eventually, the messages got more threatening. You have exactly half an hour to correct your attempt at influence. You will pay the full price for your irresponsible act. Emmanuel finally figured out why people were getting so aggressive. They had bet money on how bombings in Israel would play out on Polymarket.

0:50Sean Rameswaram:After you make us lose$900 ,000, we will invest no less than that to finish you. Betting on the Iran war on Today Explained.

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2:02Today Explained, Sean Ramos from you've heard us cover prediction markets like Calci or Polymarket on the show before, places you can go to gamble on just about anything. Who's going to win an election? Who's going to hit a three-pointer? What Taylor Swift might say on late-night TV? These markets harness the wisdom of the crowd. Sometimes regular people are pretty good at guessing what might happen in an election, but also in our economy and culture, and now maybe in our wars. Prediction markets are making it possible for just about anyone to become a war profiteer. Kate Nibbs from Wired is here to help us pick our jaws up off the floor.

2:40You know, you could bet on, like, when the Strait of Hormuz is going to open. Bet!

2:44Sean Rameswaram:When will traffic at the Strait of Hormuz return to normal? There was famously this market about whether the Supreme Leader would remain in power or not. Ali Homin out as supreme leader. There were markets on who his successor was going to be. Who will be the next supreme leader of Iran? There are markets, I believe, on whether there will be troops on the ground. Will U.S. forces enter Iran by March 31st? There are markets on who allies will be. Which countries will strike Iran by March 31st? Saudi Arabia? The UAE? Qatar? It's almost like anything you think might be a market probably is a market.

3:26At least on Polymarket, because Kelshi has some stricter rules and its offerings are not quite as morbid. You can't bet on assassinations, for instance, there. But Polymarket largely exists outside of the United States, so it's like less beholden to U.S. law. Or at least that's how it's acting. How much money are people making on these kinds of bets right now? Do we know? Like in all gambling, most people who are participating in these markets are actually losing money. So the winners is like this tiny little percentage. And the winners who are winning big is an even like smaller slice of that small slice.

4:13So we have like a very select group of people who are making, in some cases, millions and millions of dollars on more. And some of those people making millions and millions of dollars kind of looked suspicious, right? Because, I don't know, they made a big bet the night before the war started that we'd be going to war in a few hours and then they made hundreds of thousands of dollars? Yeah, especially because in a lot of those cases, like, it wasn't as though they had this long history of just being super smart and savvy at geopolitical contracts. In a lot of these cases, the wallets were just created within days of making these highly suspect trades.

4:53And so, you know, a lot of different organizations that like can trace crypto wallets have been looking at the patterns that are emerging around these war markets and basically saying, look, we don't know exactly who is doing this, but it's probably insider trading. While most people are just sitting around watching the missiles fly across the screen on the news, there are literally people with insider information placing predictions on war. Yeah, it's not a prediction if you know it's going to happen. Because there's just no way that these people are popping up out of nowhere to drop a bunch of money and make these incredibly precise bets and profit and then disappear into the ether.

5:31And is insider trading on a poly market or a cal sheet as it pertains to a war the United States is fighting in the Middle East? Is that allowed? Is that within the parameters of what's allowed on these betting markets? It seems like it shouldn't be, right? Like it seems morally repugnant. It seems obviously ethically flawed. But when it comes to like, what is the definition of insider trading? We typically think of it in terms of like someone having non-public material information about a company that will like change how their stocks perform. It has a very specific definition when you're talking about like SEC stock market stuff.

6:08prediction markets are regulated differently and like there's sort of a fuzziness around what constitutes non-public material information it's like if there's a google insider who's insider trading it's it's kind of obvious oh they learned these specific facts about how the company is going to perform when it comes to prediction markets it's like there's markets on everything so who's an insider and we're seeing this on like even less serious markets like the bad bunny Super Bowl markets. People were suspecting people of insider trading. In a lot of cases, it was like their cousin was performing as the grass and told them something.

6:47Classic scenario. Yeah. Yeah. You know, you know, when your cousin's grass. I'm glad you brought up the grossness, the ick, the moral just basement. It feels like all of this lives in because children are dying in this war as they do in most wars. Is there anyone out there saying, guys, have we lost our moral compass? Yeah, I mean, I think there's been decently widespread questioning of whether this is good for society. At least in my corners of the internet, I'm seeing a lot of people express discomfort and I think it's completely reasonable. Betting markets and any sort of military conflict need to end.

7:33You don't know what kind of corruption can occur there. Our men and women in uniform are being put in harm's way. People like your brother who are traveling, Americans abroad,

7:43Sean Rameswaram:and people are betting on this crap. Yo, are people going to die? Yes or no? Yes or no? Put in$10, maybe you'll get$14. If enough people die, maybe you'll get$21. And I feel that discomfort too. And it's especially jarring because some of the prediction market boosters, in particular like Polymarket's CEO, have actually come out and said, like, no, insider trading and, like, war markets and all this stuff actually could be good for society because it's just allowing us to have access to more accurate information, wisdom of the crowds. I saw that argument and I was just like, I sat there and I, like, closed my eyes and I, like, tried to understand it.

8:22And I couldn't really get there. Like, what is the argument? Can you help us understand it? Yes. So the Polymarket CEO came out and said at a conference, like, a week or two ago, when he was being questioned about this, it's actually good because if there is a market saying, where is going to be bombed in Iran next? And the people in Iran are following the market. And like, you know, the thing that's in the lead is their hometown, then they could take shelter and not die. That's the argument. A lot of ifs in there.

8:57here's another if if there's a market where you can make bets on when the united states is going to take various actions in a war and if you're in the united states military and you actually can influence the outcomes of what the military does in a war can you place bets on actions that you're about to take or can you do things based on what people are betting on to profit off of the war and thus influence the war based on the market. Yeah, these are real questions that we're having to ask because of this entire situation. It is really wild. And like, I would bet that that is happening to some degree right now.

9:35And we're not really seeing, you know, Israel investigated two people for how they had traded on a market at some point, but we're not seeing that sort of public investigation happening yet in the U.S. Like, I'm waiting for it. And so far, I don't think anyone's been arrested. It's wild. Do you think what's happened in the past couple of weeks and what people have seen with these sort of brand new accounts, making tons of money off of a war that's just starting and wildly controversial is going to be the driving force behind some regulation? Or does the government feel like this is OK and this is just going to be the new normal for whatever following conflicts we have?

10:20Cuba? Yeah. North Korea? Who knows? Well, right now, the Trump administration is very friendly towards prediction markets. Donald Trump Jr. is an advisor to both Kelsey and Polymarket. The Trump family is planning on launching their own prediction market called Truth Predict, like a spinoff of Truth Social. And the White House hasn't been commenting directly on the prediction market stuff, but the CFTC, the Commodity Futures Trading Commission, which is the government agency that regulates these on a federal level, the chairman, Michael Selig, has come out swinging, saying, this is our turf. All of these efforts on the state level to make all of these companies abide by state gambling regulations and to put guardrails up.

11:09those efforts are something we don't stand by. We actually strongly disagree with them.

11:15Sean Rameswaram:We have authority to regulate that. So it's not the state's authority to get into regulating our swaps markets, which are a 500 plus trillion notional market. These are significant markets that we don't have a role for the states in regulating. I think there's over 50 different lawsuits flying around about this right now. Some of them, the states stand a chance at winning. And so if the states win, it'll set a precedent and, you know, these prediction markets will no longer be able to operate as they currently are. And that could really change things. But other than that, I don't see these being curbed in any real way soon.

11:53Fun. It just seems so... Sometimes I feel like I'm being a sucker by being repulsed by some of this activity. but it makes me question my life. Big Sam. Maybe you're with Kate, but maybe you're not. Who's placing these bets to the best of our knowledge when Today Explained gets back?

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16:12It's Today Explained! Hannah Aaron Lang writes about the markets for The Wall Street Journal. And lately, she's been writing about the prediction markets. She just wrote about how Calci in particular is trying to attract more women users because it turns out these prediction markets are mostly frequented by men. And it's kind of weird to be like, ooh, check out our markets where the wisdom of the crowd is going to help you understand the world when that crowd is not representative of said world. Yeah, exactly. And I think that's what, you know, the female traders that I spoke to that are involved with prediction markets and are trying to sort of bring more women into the fold themselves.

16:51That's exactly what they mentioned, right? Like this wisdom of the crowds premise is core to the entire prediction markets pitch. Which just means that a group of independent, diverse opinions can make better decisions than experts can. So together, when we are all involved in the decision making, we can make a wise choice because of all of our different views. So it seems strange that, you know, that crowd would be overwhelmingly male or not a reflection of, you know, what the actual world looks like. And do we know how the user base on, say, Kalshi breaks down between men and women, like the ratio?

17:30Yeah, so we know that Kalshi has been trying to reach out to more women and sort of diversify the traders on its platform. And those efforts seem to be paying off so far because the company told me that women now account for 26 % of the users on its platform. And that's up from about 13 % 10 months ago. Oh, wow. Yeah. That's a big jump. Yeah, yeah. I mean, so still predominantly male, but it's definitely a growing part of the user base. Is that jump due to CalShe's recruiting efforts? And if so, what do those recruiting efforts look like? Yeah, so, I mean, we know that this is something that CalShe has been trying to cultivate really intentionally.

18:13So this includes paying users like this female trader named Gigi that we talked to, who's super passionate about bringing more women into the space of prediction markets.

18:22Sean Rameswaram:The way that prediction market platforms are designed right now appeal to traders and people who are used to betting. What about the rest of the world? If we really want to build a true surfacing machine that can make a more certain future on any topic, we need everyone else. And basically, as a part of a broader social media marketing push, Gigi was paid to post about CalShe and her bets. You know, there's also been instances where, you know, some of the sources I talked to were female users that had encountered CalShe on their own, but, you know, got connected with the company through, you know, a friend that worked there or a friend of a friend, then got put in touch with them to kind of give feedback, be a kind of beta user, let them know what appealed to them and what didn't about the CalShe experience.

19:07And then Calci is also hosting these in-person events here in New York City that are not necessarily new, but they've been planning some that are a bit more targeted to a more diverse audience when it comes to gender. So, for example, like an Oscars watch party or a Bachelorette watch party versus a Super Bowl watch party or something like that. So those are a few of the tactics that we've heard. And then, of course, the company is telling us on the record that this is something that they're doing and something that they want to see more of on their platform.

19:43I think it's worth mentioning that these efforts are kind of nascent at best. We spoke to two women who have been a part of Calci's marketing program. You know, they've been paid in the past to post about Calci on social media. But also, you know, on their own, they're actively trying to bring more women into this space just because they feel that there should be more participation there.

20:05Sean Rameswaram:I swear Taylor Swift will be the number one artist on Spotify this year. Bold call because the market slightly disagrees. Market? You mean like Spotify charts? No, prediction markets, like real money on the line. Who will headline Coachella in 2027? This market is basically forecasting pop culture a year ahead before the lineup leaks, the rumors had runned, or Twitter decides who's having a moment. And they told us it's slow going. I heard from one of the traders that we interviewed that she went to a New York City mayoral election watch party late last year with another one of the female traders that we interviewed for the piece.

20:43And she told me that they were the only two women there. in the whole crowd, except for, like, girlfriends of other traders. So, like, I think this is still slow going. Why was there such an imbalance between men and women to begin with? Is there something about these sites that are inherently more appealing to dudes? I mean, I think of the three worlds that prediction markets are kind of tangential to, right? You have this world of sports gambling, which, you know, is predominantly male.

21:14Sean Rameswaram:Oh my God! I just won$117 ,000! Oh my God! I gotta watch this game. I'll show you later. I did like a 10-leg parlay. If I hit this one for real, I'm gonna be good. And, you know, this is by virtue of the fact that an overwhelming amount of the volume on Calci of the trading volume is sports contracts. So, you know, basketball, football, tennis, for example. And yeah, of course, that world has been historically male dominated. And then you have, say, the world of crypto, which, you know, I think is close to prediction markets in the sense that it's another innovative, high risk piece of the financial world.

21:54Crypto contracts also make up a sizable amount of volume on Calci, like the price of Bitcoin contracts based on things like that.

22:03Sean Rameswaram:Bitcoin price at the end of 2026. Bitcoin price on Friday at 5 p.m. Eastern. Will Trump create a national Bitcoin reserve before 2027? And then the other world that this is very close to is that of traditional finance. So think stocks, options, futures contracts. And that's historically been extremely male dominated. And so when you kind of think about where Calci and other prediction market platforms operate in close proximity to, it kind of makes sense that this is a bit of a boys' club to a certain extent, as all of these spaces are and have been historically. So I think that's primarily what's going on here.