Photo: Nedal Eshtayah/Anadolu/Getty Images
Prediction markets like Kalshi and Polymarket are well aware that they have an insider-trading problem. It’s inherent to their business model: When you make a website where anyone can bet on anything, there is going to be someone with some nonpublic information ready to place a wager and make a killing. Sometimes, those insider-trading scandals are relatively harmless, like the one-day-old Polymarket account that correctly predicted 17 out of 20 Super Bowl halftime show events, including appearances from Lady Gaga and Ricky Martin.
But an indictment in Israel on Thursday shows the darker side of this pattern. A joint statement from the Defense Ministry, Israeli police, and the Shin Bet domestic security announced bribery and obstruction of justice offenses against an IDF reservist and a civilian for allegedly using classified information to bet on Israeli military actions on Polymarket. The suspects made wagers based “on the basis of classified reports, which reservists were exposed to in the context of their role in the military,” according to the statement.
Israeli officials did not name the suspects or the military operations they allegedly bet on, though recent reports in Israeli media described an investigation into a Polymarket bet on the timing of the Israeli attack on Iran. (The account earned $150,000 on the wager, then went dark.) The IDF called the reservist’s action a “grave ethical failure and a clear crossing of a red line,” while insisting that “no operational harm was caused in this specific incident.”
The arrests in Israel are just the latest in a number of suspicious events on Polymarket and Kalshi, including $1.2 million that was earned by an account for a set of extremely accurate bets on Google’s most-searched people of 2025 and a $400,000 bet that nailed the exact timing of President Donald Trump’s capture of Venezuelan president Nicolás Maduro. That particular bet on Venezuela created a significant scandal for Polymarket, which refused to honor the payout; in an offhand comment in January, Trump claimed that the person responsible for leaking information that led to the wager was “in jail right now.”
Responding to the recent slate of scandals, Kalshi says it has beefed up its team responsible for curtailing insider trading. But there is no specific rule against using insider information on top betting markets (though there are blanket bans on fraudulent trading). After the Super Bowl, Kalshi’s 29-year-old CEO, Tarek Mansour, said it was “fair game” when asked if it was okay if a Bad Bunny backup dancer bet on which song the artist would play first at the halftime show. Some $238 million has already been bet on Polymarket on the timing of another potential U.S. attack on Iran, and there are markets open on the timing of further Israeli strikes on Iran, Lebanon, and Gaza.
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