Following intense criticism from lawmakers, Polymarket has taken down a market that allowed users to bet on the rescue of US service members in Iran. The market, which was related to the rescue of two airmen after an F-15E fighter jet was shot down over Iran, sparked outrage, including from Rep. Seth Moulton, who called it 'disgusting' and argued that it turned a military rescue effort into a financial transaction.
Moulton has been a vocal critic of prediction markets, recently banning his staff from using platforms like Polymarket and Kalshi due to concerns that financial incentives could influence policy decisions. A Polymarket spokesperson stated that the listing did not meet the company's integrity standards and was removed shortly after it appeared, with the company reviewing how the market passed internal safeguards.
This incident occurs as prediction markets face growing regulatory pressure in Washington, with a group of congressional Democrats introducing legislation to ban contracts tied to elections, war, and government actions. Additionally, several senators have urged the Commodity Futures Trading Commission to prohibit markets linked to individual deaths, citing national security concerns. Regulators are also asserting their authority over the sector, with the CFTC filing lawsuits against three states over efforts it believes attempt to bypass federal oversight of prediction markets. The scrutiny of the industry has expanded beyond politics, with the NFL asking operators to avoid offering contracts it views as objectionable or open to manipulation.
Despite this, the market is continuing to expand, with Kalshi securing a license to offer margin trading to institutional investors and new players, including JPMorgan, entering the market.