Peter Griffin: All bets are off - how war is now tradable asset

Thousands of people are queuing up to bet on the conflict’s outcome, hanging on every Truth Social post fired off by President Trump in a bid to try to divine the next developments.

Will US forces enter Iran by April 30, or December 31? According to Polymarket, the decentralised prediction market where people buy and sell shares in the outcome of real‑world events, 68% of participants are leaning towards the end of the year. Collectively, they’ve traded US$27 million (NZ$46 million) arguing the toss.

On Polymarket, each contract trades between US$0 and US$1. If your chosen outcome comes true, it pays out $1 per contract. If not, it goes to zero. Markets cover everything from elections and interest rates to war, diplomacy, sports and celebrity gossip.

Who will win the 2028 US presidential election? Polymarket has JD Vance in the lead with a 20% chance, followed by California’s Governor Gavin Newsom on 17%. Around US$447 million has already been traded on the outcome. We’ll just have to wait around 950 days to find out who wins.

Because the prices reflect where traders are willing to put real money, fans say Polymarket offers a live, crowd-sourced probability for almost anything you can imagine. Critics see something closer to outright gambling.

During November 2024, at the time of the US election, Polymarket processed more than US$2.6 billion in trading volume, signalling how mainstream this niche has quietly become. But the Iran war has thrust the geeky trading platform into the political spotlight and revived old questions New Zealand wrestled with a decade ago via its own, much tamer prediction market.

In the lead-up to US and Israeli strikes on Iran, around US$529 million was traded on contracts tied to the timing of the attacks. Six newly created accounts reportedly cleared about US$1 million in profit by correctly betting strikes would occur by a specific date.

One “whale”, a trader making market-moving transactions, made US$128,000 by loading up on “Will Israel take military action against Iran by Friday?” when the market still priced the odds at just 10%.

Some well‑timed wagers on the outbreak of war and on the potential ousting of Iran’s Supreme Leader raised suspicions that people with diplomatic or intelligence knowledge were effectively insider trading on conflict.

Imagine this scenario: someone with access to classified military plans quietly buys Polymarket contracts on a conflict’s outcome. If insiders start betting on impending attacks, the price signals could tip off adversaries that a strike is coming.

Fearing being banned, Polymarket has scrambled to retrofit the kind of guardrails sharemarkets and sports books have had for decades. Last month, it updated its rules to explicitly prohibit using “stolen confidential information” and to bar people from betting when they hold positions of authority that could influence an outcome.

New Zealand got an early, more academic taste of this idea with iPredict, a political and economic prediction market run out of Victoria University of Wellington from 2008 to 2016. Traders could buy contracts on everything from election outcomes to inflation data, with the site pitched as a research tool for understanding how markets aggregate information.

IPredict was licensed as a “futures dealer” and kept stakes tiny – the average value of an iPredict trader’s account was $41 – in part to keep it on the right side of gambling law. It still proved politically sensitive, especially when contracts appeared to put prices on sensitive topics such as leadership spills.

Polymarket has supercharged the prediction market. It appears there really is a price on everything, even if traders are playing with more than just money.