Sixteen bets made $100,000 each accurately predicting the timing of the US airstrikes against Iran on 27 February. Later, a single user would make over $550,000 after betting that Ayatollah Ali Khamenei would topple, just moments before his assassination by Israeli forces. On 7 April, right before Donald Trump announced a temporary ceasefire with Iran, traders bet $950m that oil prices would come down. They did.

These bets and other well-timed wagers accurately predicted the precise timing of major developments in the US-Israel war with Iran, creating huge windfalls and raising concerns among lawmakers and experts over potential insider trading.

Betting – once largely siloed to sporting events – has now spread to include contracts on news events where insider information could give some traders an advantage.

The proliferation of online betting markets like Polymarket and Kalshi has allowed bets on virtually any news event. It’s also easier than ever to buy commodity derivatives like oil futures, where traders gamble on what the price of oil will be in the future.

Leaders of some US federal agencies and some members of Congress said they want to crack down on suspicious trading taking place across different marketplaces, but it’s unclear how much headway regulators will make.

“Is the problem that we don’t have legislation or that we don’t have enforcement capabilities?” said Joshua Mitts, a law professor at Columbia University. “To have a law that can’t really be enforced effectively given the technological limitations, it’s sort of putting the cart before the horse.”

Perfect timing

On the night of 27 February, the day before the US and Israel would carry out strikes on Iran, an unusual influx of about 150 accounts on Polymarket placed bets that the US would strike Iran the next day. A New York Times analysis found the bets totaled $855,000, with 16 accounts pocketing more than $100,000 each.

Soon after, a single anonymous Polymarket user, under an account named “Magamyman”, made over $553,000 after betting that Khamenei would be “removed” from power just moments before he was killed by an Israeli airstrike, according to a complaint filed to the Commodity Futures Trading Commission (CFTC), the federal agency that regulates futures markets, by Public Citizen, a consumer advocacy group. The complaint also cites a crypto-analytics firm that identified six “suspected insiders” who made a total of $1.2m on Polymarket after Khamenei was killed.

The well-timed surge of wagers were seen again on 7 April, when at least 50 Polymarket accounts placed bets that the US and Iran would reach a ceasefire hours before Trump would announce it in a Truth Social post. Earlier, the president had said “a whole civilization will die tonight” if Iran did not open the strait of Hormuz.

But traders weren’t just active on Polymarket: there were similar surges of oil futures trading activity just hours before Trump announced updates to the conflict that would lower oil prices.

On 23 March, traders placed $580m in bets on the oil futures market just 15 minutes before Trump said on social media that the US was having “productive” talks with Iran, according to the Financial Times. The traders made a windfall after Trump’s comments triggered a sell-off in the oil markets that made oil prices plummet.

The same thing happened again on 7 April, this time when traders spent $950m on oil futures, betting that the price of oil would fall just hours before the ceasefire with Iran was announced.

“We can’t say from the outset whether any of these trades were illegal. Any one of them could be lucky, and any one of them could be based on lawful information,” said Andrew Verstein, a law professor at the University of California at Los Angeles. “But many of them bear the hallmarks of suspicious trades that would naturally warrant investigation.”

‘A wild west’

For those who closely follow trading patterns, the rush of activity that happened before these events seem too big to simply be bets hedging on luck.

“Not only the timing, but the amount of these bets makes it look very likely that someone had insider knowledge … and placed very, very substantial bets on it,” said Craig Holman, a government affairs lobbyist for Public Citizen who filed the group’s complaint to the CFTC.

Holman said he is skeptical about how bold the CFTC will be in its investigations given its current structure under the Trump administration. The commission typically has five bipartisan members that are appointed by the president. Now, the CFTC has only one commissioner: Michael Selig, whom Trump appointed at the end of 2025 and who has positioned himself as friendly toward prediction markets.

Over the last few months, the CFTC has been roiled in fights with state legislatures who argue that regulation of these online betting marketplaces belongs to the states.

Kalshi, Polymarket’s competitor, was temporarily banned in Nevada after the state sued the company for offering contacts in the state without a gambling license. Arizona meanwhile filed criminal charges against the company for allowing people to place bets on elections. In both cases, Kalshi denied any wrongdoing and has argued that the CFTC has exclusive jurisdiction over online prediction markets.

“It’s a wild west phase, when we’re talking about the prediction market industry, and now it’s spilled over into the stock market as well,” Holman said.

Anonymous sources told Reuters and Bloomberg that the CFTC launched an investigation into the oil futures trades that were placed on 27 March and 7 April, though the agency has not publicly announced it is conducting an investigation.

Speaking to Congress this week, Selig said that the agency is prepared to go after those who are suspected of insider trading, warning “we will find you and you will face the full force of the law”, but said that the commission would not issue any new regulations until it had five seated commissioners.

Polymarket did not respond to request for comment. In a statement, White House spokesperson Davis Ingle said “federal employees are subject to government ethics guidelines that prohibit the use of nonpublic information for financial benefit”.

“Any implication that administration officials are engaged in such activity without evidence is baseless and irresponsible reporting,” Ingle said. “The CFTC will always uphold its duty to monitor fraud, manipulation and illicit activity daily.”

Risky bets

Federal law prohibits government employees, including those working for Congress or the White House, from using non-public information for personal profit.

In late March, a bipartisan group of representatives introduced a bill that would ban members of Congress and senior staff within the federal government from participating in prediction market contracts related to political events or policy decisions.

But experts warn that insider trading law is complicated, and the new technology that makes it easier to place bets online leaves a complicated paper trail that can be hard to follow.

Historically, insider trading takes place when a person uses exclusive information about a company to buy or sell stocks right before information becomes public. These types of illegal trades are regulated by the Securities and Exchange Commission (SEC), which regulates the stock exchanges.

Insider futures trading could be seen as a subset of this typical insider trading, but the territory is new.

“The trick is that there are essentially no clean cases of people getting in trouble for commodity futures insider trading,” Verstein said. “The law there is just not well-developed.”

In a paper published last month, Mitts, the Columbia law professor, and other researchers screened more than 200,000 “suspicious wallet-market pairs” from February 2024 to February 2026 and found that traders in this group achieved a nearly 70% win rate, making $143m in well-timed bets tied to everything from the capture of former Venezuelan leader Nicolás Maduro to Taylor Swift’s engagement to Travis Kelce. The paper notes that informed traders face fewer legal constraints by trading on platforms like Polymarket or Kalshi because these markets still operate in a legal gray area.

“The challenge here is that this trading is occurring through the blockchain or other anonymized means, so it is going to be quite difficult for a regulator enforcement authority or prosecutor to determine the identity of the trader,” Mitts said. “They would also have to prove the trader traded on the basis of information that had been wrongly misappropriated.”

But the stakes are high. Insider trading involving classified military information can lead to distrust of both markets and governments.

“Unlike corporate insider trading, there’s a lot of ways for the government to make itself be correct. You can just make the war that would occur, and that’s concerning because then the real economy is being distorted,” Verstein said. “Real decisions, including perhaps financial decisions, are being distorted by financial bets.”