Democrats eye prediction market laws after massive Iran war bet pays off
A massive bet made less than 90 minutes before the U.S. and Israel began bombing Iran is raising concerns among some lawmakers who say the timing may be more than a coincidence. Now, those lawmakers are looking into ways to crack down on prediction markets.
According to posts made by Rep. Mike Levin, D-Calif., and Sen. Chris Murphy, D-Conn., a Polymarket user named “Magamyman” bet $87,000 that the U.S. would strike Iran by Feb. 28, 71 minutes before the strikes took place. When the user placed the bet, they only had a 17% chance of winning based on the current bets. Magamyman made nearly $430,000 from their bet.
However, Magamyman’s bet wasn’t the only one that raised some eyebrows. Bubblemaps, a visual data platform, posted on X saying that five others made $1.2 million betting on the U.S. striking Iran. The platform went as far as to call the six users “suspected insiders.” Straight Arrow News has not yet confirmed the platform’s insider-trading allegations.
Polymarket and other prediction markets like Kalshi work by allowing users to bet on anything. For example, it features political decisions, such as elections, or technology topics, such as which artificial intelligence chatbot will be the best by the end of March.
In many cases, the user chooses between two options. The winning option is worth $1 per share, while the losing option drops to zero. The Iranian strike bet had a “yes” share of just 17 cents each when Magamyman made their bet. When the strikes happened, those shares jumped to $1, a nearly 600% increase.
These trades are largely anonymous, since users just need a crypto wallet to join.
How are lawmakers targeting prediction markets?
Democrats currently have three pieces of legislation addressing regulations for the prediction market industry. For any of these to pass on their own, Democrats would need a veto-proof coalition supporting them in both chambers of Congress in case Trump vetoes the bill.
Sen. Murphy is about to introduce the most aggressive legislation targeting prediction betting about war. While it’s already illegal to profit from death, Polymarket’s offshore structure allows it to skirt federal regulations, Benzinga reports.
“People around Trump are profiting off war and death. I’m introducing legislation ASAP to outlaw this,” Murphy wrote on X. “It’s insane this is legal.”
Murphy’s office told Straight Arrow News they would release more information on the legislation sometime this week.
Kalshi CEO Tarek Mansour pushed back, saying Murphy’s bill would have no effect on Polymarket because they operate outside the U.S.
“Senator, regulated prediction markets are not allowed to do war markets. The market you’re posting is unregulated and offshore,” Mansour posted on X.
Similar trades in the past
Magamyman’s bet isn’t the first controversial wager to raise concerns. On Dec. 27, 2025, a user placed a $96 bet that Venezuelan President Nicolás Maduro would be out as the country’s leader by Jan. 31. Then that same user dropped $20,000 on the same bet just hours before the U.S. began its operation to capture Maduro. By the end of the day, the user had made nearly $450,000 from Polymarket.
“This particular bet has all the hallmarks of a trade based on inside information,” Dennis Kelleher, cofounder and CEO of nonpartisan financial reform advocacy group Better Markets, told CBS News. “It happened very late, right before the very event they were betting on happened; it was a relatively large amount of money, and it happened in a market that is not really regulated and where there is no transparency.”
In June 2025, a Polymarket user named “ricosuave666” placed bets about Israeli military operations. Israeli officials flagged the bets as suspicious since they were incredibly accurate about what was going on. The user made about $150,000 in profit from the wagers.
Israeli Defense Forces officials tracked the suspicious activity down to an IDF reservist who accessed non-public military intelligence and gave it to an Israeli civilian to make bets. The government indicted both people for severe security violations, bribery and obstruction of justice.
The Israeli government announced it had also opened an investigation into Magamyman’s recent bet, the Middle East Eye reports.
How is the Trump family connected to this?
Besides controversial and suspicious wagers, President Donald Trump’s ties to both prediction markets have also raised questions. His son Donald Trump Jr. is a financial advisor to both Polymarket and Kalshi.
Kalshi officials said Trump’s role there is a paid position. Polymarket said it appointed him to his advisory role after his venture capital firm, 1789 Capital, invested in the company. Trump Jr. joined the company as a partner after his father won the 2024 election. Before he joined, the company reported raising just $10 million in February 2023, but by November 2025, it had collected more than $861 million in assets.
Trump’s connections to Polymarket and other prediction markets don’t end with his family. Billionaire Peter Thiel, who has close ties to the president, used his venture capital firm, Founders Fund, to lead a $200 million investment in Polymarket.
In 2025, the Department of Justice and the Commodity Futures Trading Commission both dropped investigations into Polymarket, Axios reported. The investigations included an FBI raid on CEO Shayne Coplan’s apartment in November. The timing of the decision to drop the investigations also raised questions, as it occurred shortly after Trump Jr. joined the company.
In early 2025, Trump nominated Kalshi board member and former CFTC commissioner Brian Quintez to serve as CFTC chairman. During his confirmation hearing, Quintez faced questioning from Sen. Cory Booker, D-N.J., about his willingness to take action against Kalshi, specifically because of Donald Trump Jr.’s involvement.
“I hope you can appreciate that there will be some real questions about your role,” Booker said, according to In Game. “I’m worried you’re going to be in a position where — as chairman — are you going to feel empowered to push back on a company that is being advised by the president’s son?”
President Trump’s own social media platform, Truth Social, has also announced it would release its own prediction market, according to Axios. Devin Nunez, the CEO of Trump Media and a former Republican lawmaker, framed the new prediction market as a “unique” product for Truth Social users.
“Truth Predict will allow our loyal users to engage in prediction markets with a trusted network while harnessing our social media platform to provide totally unique ways for users to discuss and compare their predictions,” Nunes said in a statement.
Ella Rae Greene, Editor In Chief
