Prediction Markets: Should People Be Allowed to Bet on War?

By Yosi Yahoudai Founder and Managing Partner

March 12, 2026

Digital Damage, News & Updates

Key Takeaways 

• Online prediction markets are allowing users to place financial bets on geopolitical events, including potential military conflict involving Iran. 

• Platforms like Kalshi operate legally in the United States under certain regulatory frameworks. 

• Critics warn that markets tied to real-world crises could create ethical concerns, corruption risks, and potential insider trading incentives. 

• Alex Boris, Senior Trial Attorney at J&Y Law and a former researcher on gambling behavior for the American Gaming Association, says prediction markets raise difficult questions about how society treats events involving human lives. 

Prediction markets allow users to trade contracts based on the probability of real-world events occurring. 

These platforms operate somewhat like financial markets. Instead of buying stocks, users buy positions based on whether they believe an event will happen. If the event occurs, the contract pays out. 

Recently, contracts on platforms like Kalshi have drawn attention for allowing speculation about geopolitical events, including the possibility of military conflict involving Iran. 

Supporters argue these markets can provide useful forecasting signals. Critics say they risk turning real-world crises into a form of entertainment or speculation. 

How Large Are Prediction Markets Today? 

Prediction markets are still newer compared with traditional financial or sports betting markets, but their growth has accelerated in recent years. Platforms like Kalshi, Polymarket, and PredictIt allow users to trade contracts tied to real-world outcomes ranging from election results to the economy and geopolitical events. 

The scale of activity on these platforms has grown significantly. According to Fortune, Polymarket alone recorded more than $1 billion in trading volume during the 2024 U.S. election cycle. Individual markets on the platform have also reached tens of millions of dollars in total trading volume, with thousands of trades occurring in a single day during major news developments. 

User participation has also expanded rapidly. Polymarket reported over 100,000 active monthly traders in 2024, while regulated U.S. platform Kalshi operates dozens of active event markets covering economic data, elections, and geopolitical developments under oversight from the Commodity Futures Trading Commission. 

Supporters argue that growing participation shows prediction markets can aggregate public expectations in ways that traditional polling can’t. Critics counter that as these markets scale, the incentives change as well. When large numbers of users and significant financial stakes are tied to events like elections or international conflict, regulators must ask whether these systems simply predict outcomes or risk influencing them. 

Betting on Geopolitical Conflict vs. Bettering on Sports 

For Senior Trial Attorney Alex Boris, the issue is not just about gambling. It is about the subject matter. 

“Sports betting is about competition and entertainment,” Boris explains. “When people start speculating financially on the outbreak of war or military escalation, the stakes are completely different.” 

Boris has studied gambling behavior previously through research conducted for the American Gaming Association, where he analyzed patterns in addictive behavior and how gambling incentives influence decision-making. 

Those experiences shape how he views the rise of prediction markets tied to conflict. 

“War is not a game,” Boris says. “My brother serves in the armed forces. I know firsthand that when conflict happens, it is not a hypothetical outcome on a trading screen. It is real people, real families, and history unfolding in real time.” 

Could Prediction Markets Create Corruption or Insider Trading Risks? 

One of the biggest concerns experts raise involves information advantages. 

Financial markets already struggle with insider trading risks when individuals possess nonpublic information. Critics argue prediction markets could create similar dynamics. 

If someone with privileged knowledge about military strategy, intelligence, or diplomatic negotiations could trade on that information, the implications could extend beyond market fairness. 

“Any market that rewards people for correctly predicting catastrophic events creates difficult incentives,” Boris says. “You have to ask whether the structure of the market encourages people to profit from harm or sensitive information.” 

Even if such behavior never occurs, the perception of that risk could undermine trust. 

Should Prediction Markets Be Regulated More Strictly? 

Prediction markets in the United States operate within a relatively narrow regulatory framework. 

Platforms like Kalshi are overseen by the Commodity Futures Trading Commission because their contracts are treated as derivatives tied to event outcomes. 

But regulation has not fully caught up with the expansion of markets covering geopolitical and social events. 

Boris believes policymakers should take a closer look at how these platforms operate. 

“Prediction markets are a fascinating idea,” he says. “But when the underlying event involves violence, international conflict, or loss of life, regulators should ask whether the incentives built into the system create unintended consequences.” 

What Ethical Questions Do Prediction Markets Raise? 

Beyond legality, the rise of betting markets tied to war raises broader ethical questions. 

Should people be able to financially benefit from predicting violent conflict? 

Does monetizing geopolitical instability change how society views those events? 

Some critics worry that these markets could normalize treating global crises like speculative assets. 

“There is a difference between analyzing geopolitical risk and placing wagers on whether violence will occur,” Boris says. “Those are two very different ways of engaging with the same reality.” 

What Policymakers Should Be Investigating 

Boris believes regulators and lawmakers should focus on several key questions as prediction markets grow. 

First, are these platforms designed in ways that could enable insider information to influence outcomes? 

Second, do the markets create incentives that could encourage harmful behavior or manipulation? 

Third, are adequate safeguards in place to ensure transparency and accountability? 

“These markets deserve careful scrutiny,” Boris says. “If people are able to financially benefit from predicting conflict or tragedy, we need to understand whether the systems governing those markets are strong enough to prevent real-world harm.” 

Working with J&Y Law on Digital Damages Cases 

Technology has made it easier than ever to build financial systems around predictions, and likewise causing digital damage. In many contexts, forecasting tools can provide useful insights and help people better understand risk. But when those systems intersect with war, violence, or public safety, the ethical and regulatory stakes rise quickly. 

For Alex Boris, the issue is not just about gambling policy. It is about what these systems teach people. 

“These platforms are often marketed in ways that appeal to younger audiences,” Boris says. “When you turn geopolitical conflict into a prediction market, you’re effectively gamifying war. That should concern everyone. We should be asking ourselves whether we want the next generation growing up thinking that global conflict is just another bet to be won or lost.” 

Prediction markets will likely continue to evolve as financial technology advances. But as these platforms expand into areas involving geopolitical conflict, public safety, and other real-world crises, the conversation about regulation and accountability is only beginning. Policymakers, researchers, and the public may ultimately need to ask not only whether these markets are technically possible, but whether they should exist in their current form. 

If you have questions about real-world harm that may have originated online – whether through digital platforms, emerging technologies, or financial systems designed around speculation – the team at J&Y Law is here to help. Contact us to discuss your situation and explore your legal options.