Death to prediction markets profiting on war | Will Bunch Newsletter

Iranian schoolgirls, U.S. troops, Israeli villagers, random Emiratis, Pakistani rioters and maybe a couple folks in a bar in Texas. The deadly fallout from Donald Trump’s war-of-choice in Iran has spread halfway around the globe and back again. With each passing hour, it feels like more of the entire world is sucked into this war. If only there were a name for something like that.

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Donald Trump’s splendid and not-so-little war that started during a Saturday rush hour in Tehran and has spread like a coronavirus to numerous other countries is entering its fourth day on Tuesday — far too early for one of journalism’s oldest clichés, the “winners and losers” piece.

Except for these winners: a few “lucky” — if that word can even apply to such a ghoulish enterprise — gamblers who woke up Saturday morning and learned that the first deadly explosions across Iran had already made them a lot richer, regardless of who wins or loses on the battlefield.

The initial weekend of war wasn’t even over before we learned that Polymarket, one of the two leading prediction markets that are the inevitable next downward spiral of our national sports-gambling addiction, was hit by suspicious trading by six individuals who showed up to bet big on when the war would commence.

One trader up for particular attention earned a reported $553,000 over the weekend by placing large bets on when Iran’s supreme leader, Ayatollah Ali Khamenei — killed in the war’s initial minutes, reportedly — would be deposed. The handle on that well-timed if macabre gambler? “magamyman.”

My man, you aren’t even trying to hide it.

Polymarket’s brush with possible insider trading on predictive bets over the Iran War that is now a reality came as its customers bet a stunning half a billion dollars on the long-rumored conflict.

Many of them, presumably, are just regular schlubs desperate to get ahead in a dog-eat-dog economy. But it’s also hard not to contemplate that some may have had real advance knowledge of Pentagon war planning that loose-lipped insiders were audibly discussing in Joe’s Stone Crab just hours before the first cruise missile was fired.

I know...it’s shocking that something in America’s death spiral of late-stage capitalism is actually a rigged game, right? Still, it’s hard to decide which is worse about this new low of predictive betting on a war that’s already killed scores of innocent schoolgirls and hospital patients and at least six U.S. service members: The rank immorality of wagering on death and destruction, or the insider trading that corrupts this already unholy process even further?

Over the weekend, even with the main focus on the latest missile attacks and changing Trump regime explanations for this undeclared war, there was growing outrage over the popularity of predictive betting on the news, especially when the news is deadly. Or, there’s the word that the chief U.S. government official tasked with regulating Polymarket, Kalshi, or their rival firms has used to describe what’s happening.

“Exciting.”

Michael Selig, the lawyer tapped by Trump last year to head the U.S. Commodities Futures Trading Commission, which — controversially — regulates these prediction markets, seems less a regulator and more of a cheerleader, maybe as much as “magamyman.” As several states have pushed to regulate or ban predictive markets as akin to sports betting sites also under their purview, Selig has worked hard to override them with a claim of federal supremacy.

“The CFTC will no longer sit idly by while overzealous state governments undermine the agency’s exclusive jurisdiction over these markets by seeking to establish statewide prohibitions on these exciting products,” Selig wrote in a Wall Street Journal op-ed.

It’s worth noting that Selig’s moves came at the same time that six Democratic senators wrote the CFTC chair to urge him to ban gambling on outcomes that result in death or physical harm — inspired by outrage that people were betting on whether a NASA spacecraft would fail to launch, as well as predictions around the fate of the former Venezuelan strongman Nicolás Maduro, seized in January by U.S. troops. Not surprisingly, the high volume of Iran War betting has sparked fresh calls to ban predictive market betting altogether.

“Life stops being something we live, but something we sell and trade,” Connecticut Democratic Sen. Chris Murphy posted on X before saying he is studying legislation to ban prediction markets. “It will breed both corruption [and] emptiness.”

Unlike sporting events, betting on political or social developments whose occurrence and timing are controlled and known by humans is incredibly prone to insider trading. In a case that seems to typify the fundamental flaw of non-sports prediction markets, and which Kalshi was forced to acknowledge in an internal investigation, an editor for the wildly popular YouTube star MrBeast was caught betting $4,000 on predictions about what MrBeast would say in his next video.

Because betting on influencer video topics is how far off the deep end we are going here. The addictive nature of online sports betting, which was once mostly banned until elite schemers realized how much money was to be made from increasingly desperate people, was always pointing American society in this warped direction.

Zoom out and there’s a much bigger picture here: A society where the traditional pathways to prosperity are rigged for the Epstein class has created an entire ethos that seeks to match that level of wealth through unconventional not-40-hour-workweek paths, like online influencers, or by hitting the big one whether that’s through buying a meme stock, betting on college basketball, loading up on the right crypto, or — now —gambling on stuff like when Israel is going to bomb women and children in Gaza.

It seems that no one near the top of the American kleptocracy is immune to cashing in, including — sigh — Big Media. It was bad enough that CNN partnered with Kalshi to promote predictive odds on events like Tuesday’s Texas primary, but now the venerable Associated Press picked Monday — amid all the negative publicity about the Iran War wagers — to announce its own deal with the site.

Meanwhile, the only safe bet would be a prediction that no one in D.C. will be able to successfully stop this in the near future. It’s not only that reckless and potential corrupt get-rich-quick maneuvers like crypto, AI, and now these “exciting” predictive markets, are simply in the Trump regime’s toxic money-grubbing DNA.

To seal the deal, Donald Trump Jr. joined the advisory board of Polymarket last August, and his venture capital firm, called 1789 Capital, has reportedly invested tens of millions of dollars in the firm as well. In a remarkable coincidence, two federal investigations into predictive markets begun during the Joe Biden presidency were shut down around the same time.

Today’s dollars stained with blood from the Middle East are the, dare I say it, predictable result. Why merely wage war when you can also wager on it? Our leaders, whether in D.C. or our 50 statehouses, can’t shut down Polymarket, Kalshi, and all their imitators fast enough.

Question: So one school of thought is that they are already trying to steal the midterms; another is that they really can’t. Where are you on the spectrum from mildly worried to totally anxious about this? Especially with Pa. being rather swingy. — Penthesilea (@hansklocker.bsky.social) via Bluesky

Answer: Yes, this is something I’ve already thought about quite a bit, and my answer — for now, anyway — is pretty much smack in the middle of the spectrum. It’s clear that Donald Trump intends to use every implement in the voter-suppression tool box — extreme gerrymandering, executive orders aiming to require voter ID or banning mail-in ballots — that would warp the voting outcomes, without going full Mussolini and canceling the election altogether. But I don’t think that can work for him — partly because any orders will almost certainly be struck down in the courts, but mainly because it looks like a Democratic landslide too large to easily suppress is building momentum. Just look at Texas, where the scheme to gerrymander five new GOP seats depended heavily on Latinos continuing to shift Republican, when polls show the exact opposite happening. Of course, in 2020-21 few folks thought he would go so far as an attempted coup (I did). Who knows how far he’ll go to maintain power this time around?

Last week’s question about how to handle the new prediction markets — anticipating the mess that occurred with the wagers on the start of the Iran War — and the surge in sports betting drew a tepid response. But it was pretty unanimous that sites like Polymarket and Kalshi should at the bare minimum be regulated under state gambling laws and not as commodities trades — if not banned altogether. Wrote Mary Clare Gumbleton, who would ban Polymarket and Kalshi: “It’s just unregulated corruption and an incredibly awful incentive to both lose your shirt (as it were) and game the system where a handful of corrupt people can make a lot of money.”

📮 This week’s question: There’s only one thing on everyone’s mind: That crazy war in the Middle East. Now that Donald Trump and Benjamin Netanyahu have started it, how on earth do we end it? Please email me your answer and put the exact phrase “Iran War end” in the subject line.

It’s been a while since the last history lesson in this space, but the poor quality of the TV punditry about the four-day-and-counting Iran War screams out for better information. A lot of the folks advocating for this war-of-choice in the Middle East argue that we didn’t start the fire, that the roots go all the way back to the 1979 Iranian revolution. That’s the year when Americans who never paid much mind to foreign affairs were shocked to see huge throngs in the streets of Tehran chanting “Death to America” and taking 52 hostages at the U.S. Embassy.

What did we do to deserve this? Well...

For most historians and for many Iranians, the year that matters is not so much 1979 but 1953. In a post-World War II geopolitical environment where many nations sought to break free of imperialism, Iran in 1951 democratically elected a surprisingly left-leaning prime minister, Mohammad Mosaddegh, whose main project was to nationalize the then-British-controlled oil industry. This sparked great alarm in London, where U.K. leaders spent months lobbying Washington to join them in an effort to depose Mosaddegh in a coup that would advance Western oil interests.

It’s a messy story. The United States wavered and even flirted with backing Mosaddegh for a time, according to histories of the period, but ultimately British leaders leaned on the Eisenhower administration and America’s ongoing anti-left “Red Scare” of that era to get the relatively new CIA and its man in Tehran — Kermit Roosevelt Jr., grandson of Teddy Roosevelt — on board with the plot. The Americans threw around money and anti-Mosaddegh propaganda and eventually organized street protests ahead of the government’s ouster.

To be sure, there is a never-ending debate over whether the U.S. involvement was central or just a subplot to the coup that gave power to the Shah of Iran, Mohammad Reza Pahlavi, who ruled the nation with ruthless brutality for the next 26 years. Certainly the nation’s Islamic clerics — powerful then, as now — played a key part in ousting a secular government. But the American role was so great that Barack Obama apologized in his 2009 Cairo speech, stating as fact that the CIA played a key role in the “overthrow of a democratically elected Iranian government.”

Whether the U.S. led the coup or was a bit player, the Iranian people have never forgotten our involvement or our close ties to the eventually despised Shah. “The rancor has never melted,” a 24-year-old Iranian woman told the Associated Press in 2023, on the 70th anniversary of the coup, as she compared the American meddling to being “like wishing for an earthquake to get rid of a bad neighbor.”

So did a state of war between the United States and Iran start in 1979, as some GOP lawmakers insist, or in 1953, or on Feb. 28 of this year? In arguably the world’s most violent neighborhood, the cycles of violence often seem to have no beginning and no end. An imperial America chose to jump into the middle of this mess 73 years ago, and now getting out feels more impossible than ever.

He’s all but forgotten now, but up until his mysterious death 10 years ago, the flamboyant Oklahoma natural-gas mogul Aubrey McClendon had reshaped the Pennsylvania landscape as king of the commonwealth’s fracking boom. The company that McClendon (known to sports fans as an owner of the NBA’s Oklahoma City Thunder) cofounded, Chesapeake Energy, promised riches to Pa. landowners but left a trail of lawsuits and pollution. Less than 24 hours after his indictment by a federal grand jury, McClendon drove at full speed into a bridge embankment and was killed instantly. I wrote: “In Pennsylvania, Aubrey McClendon is survived by a legacy mostly of conflict, of thick lawsuits, of protesters facing off against armed marshals, of lawmakers and a governor at war over the taxes that gas drillers never had to pay, of brackish water and leaking methane adding to the greenhouse gases that may someday strangle the planet — of a promise of buried treasure that wasn’t really all it was cracked up to be.” Read the rest: “The Greek tragedy of the billionaire who fracked up Pa.”

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