Winning half a million by betting on the ceasefire in Iran: the death market on Polymarket

LondonIs everything subject to commodification? Can a war also turn uncertainty and tragedy into a negotiable asset? According to the figure reflected in the contracts on the Polymarket platform before Iran's announcement that the Strait of Hormuz would reopen, the odds of this happening within a specific timeframe (April 30) were slim. 26%. Within hours, however, following Tehran's statement, the odds rose to 44% before dropping slightly again, to 40%. And they have dropped even further, to 31%, after the Revolutionary Guard said this Saturday that it was closing it again. Bettors from all over the world have invested in one of the two possibilities (yes/no), nearly 15 million dollars.

A look at the competing platform, Kalshi, showed a similar diagnosis. Expressed in specific dates, for May 1st, the probability was 36%; 57% for May 15th, and 68% by June 1st. Another of the most relevant contracts

at play on Kalshi is the evolution of relations between the United States and Iran: will there be an agreement on the nuclear dossier? Yes or no? The odds vary depending on the timeframe, but they are moving in an upward trend: 31% before May; 59% for June, and 67% for August.

suggested a similar diagnosis. Expressed in Kalshi is a regulated platform that operates under US law, with identity verification and centralized oversight. The user must trust an institution to safeguard funds and execute payments. Polymarket, on the other hand, operates with blockchain: there are no intermediaries or central authority, and operations are automatically executed by code. In theory, there is more transparency –because all operations are visible, but not the identity of those performing them– although it does not have any traditional institutional protection. Fertile ground for the disclosure of state secrets, the use of insider information, and even a business that can condition political decision-making. According to Bloomberg, around 535 million dollars have been moved on Polymarket alone in bets on the Iran war. Last year, the two platforms managed about 44 billion dollars.

In conversation with ARA, Adnaan Jiwa, a software engineer working in the City of London, who designed his own prediction table, The Year Ahead, praises the alleged virtues of this digital oracle: "Prediction markets like Polymarket are the best tool we have to understand the future, because they aggregate the opinions of millions of people." The principle on which it is based is debatable, as there can be more or less informed opinions and more or less manipulated by social networks. Nevertheless, Jiwa argues that "groups can outperform individuals, and by combining many independent judgments, the noise cancels out and a truth is revealed." Is it really like that? Can external factors intervene that modify this supposed truth, born from the sum of the opinions of millions of people, in one direction or another?

Players on the platform earned almost $500,000 (€425,000) betting on the ceasefire between Iran and the United States. Three accounts made their first bets on Polymarket less than 24 hours before the President of the United States announced it on April 8. Until then, they had not made any other investment on Polymarket. Each account made its first move when the odds of a ceasefire were still very low, between 3% and 6%. They then sold part of their profits as the hope of a cessation of hostilities increased, but they maintained most of their positions. Two of the accounts had been created in April; the third, in March. Did they have insider information?

There are more suspicions of manipulation. Israeli authorities charged two people in February – including a reservist – accused of using classified information to bet on Polymarket during the war with Iran last June. Another player won nearly $436,000 after anticipating the fall of Nicolás Maduro hours before it was officially announced. The user had bet $32,500. The profit exceeded 1,400%. Is betting so much without a guarantee of success sensible?

What are these markets and how do they work?

The system is simple. Each bettor –cryptocurrencies: USDC, a digital dollar– buys shares in an event like those already mentioned. If the investor is right, they collect $1; if not, $0. The price of the share reflects the probability assigned by the market –0.70 equals 70%.– As the user community buys and sells (supply and demand), the price moves up and down, offering, as mentioned, a real-time estimate of what is considered most likely to happen. "Because there is money at stake, participants have incentives to quickly adjust their expectations, which often leads to more refined predictions," says Adnaan Jiwa.

. Another player won close to $436,000 after anticipating the Polymarket resembles a financial market more than a conventional betting shop, where the bookmaker sets the odds, ensures a profit margin, and you bet against the house. In contrast, in a prediction market, prices are determined by the law of supply and demand. You buy and sell against other users. All transactions are public and visible in real-time, but users are anonymous.

There is so much transparency on Polymarket that, in fact, many things can be suspected or inferred. If you take a look at the leaderboard by volume of money moved, the user who has traded the most exceeds 661 million dollars. "This indicates frantic activity or the use of automatic algorithms," Jiwa points out. The person who has earned the most money since the platform's creation is one Theo4: they have obtained more than $22 million by moving just over $44.

The large figures being bandied about and the attention-grabbing questions posed to attract clients should not hide the ethical issues surrounding a multi-billion dollar business. This is the opinion of professors Karoline Thomsen and Douglas Guilfoyle, researchers in international and humanitarian criminal law and geopolitics on social platforms and networks at the University of New South Wales, in Sydney (Australia): "Users can earn money by betting on wars, captures of cities, or civilian deaths, thus profiting from the suffering of others," they wrote in a brief essay, published shortly after the outbreak of the Iran war. "This reduces complex military decisions to a simple yes/no, which can dehumanize the conflict." And they added: "There is also the risk that politicians may be influenced by their own bets or those of their associates."

A risk that, in Adnaan Jiwa's opinion, is not such: "It is true that if someone participates in the market and at the same time has the power to influence the outcome, they could try to profit by changing reality instead of just predicting it. But most individuals do not have this level of control." Furthermore, he emphasizes: "Prediction markets treat insider information differently from traditional markets. In financial markets, it is illegal because it creates unfair advantages. In a prediction market, if someone has better information and operates on it, the price gets closer to the real probability. As a result, the market becomes more accurate." The legitimate question is whether these new agents are already as powerful as traditional ones and whether they also guide the decisions of those who govern.