Polymarket pulls controversial Iran rescue markets after intense backlash

Prediction markets face rising regulatory pressure, with congressional Democrats proposing legislation to ban contracts tied to elections, war and government actions.

What to know:

• Polymarket removed a betting market on the rescue of U.S. service members in Iran after lawmakers criticized it for reducing a military operation to a financial trade.
• Prediction markets face rising regulatory pressure, with congressional Democrats proposing legislation to ban contracts tied to elections, war and government actions.
• The industry continues to expand with new players entering, though regulators are asserting greater oversight through lawsuits and licensing restrictions.

Polymarket has removed a betting market tied to the rescue of U.S. service members in Iran, after intense backlash and criticism from lawmakers this weekend.

The market allowed users to wager on when the U.S. would confirm the rescue of two airmen after an F-15E fighter jet was shot down over Iran. The crew members have since been rescued.

Rep. Seth Moulton, a Democrat from Massachusetts, criticized the listing in a post on X, calling it “disgusting” and arguing it reduced a military rescue effort to a financial trade.

Moulton has taken a hard line on prediction markets, recently banning his staff from using platforms such as Polymarket and Kalshi over concerns that financial incentives could influence policy decisions.

A Polymarket spokesperson said the listing did not meet its integrity standards removed shortly after it appeared. The company added that it is reviewing how the market passed internal safeguards.

The incident comes as prediction markets face rising pressure in Washington. A group of congressional Democrats last month introduced legislation that would ban contracts tied to elections, war and government actions.

Separately, several senators have urged the Commodity Futures Trading Commission to prohibit markets linked to individual deaths, citing national security concerns.

Regulators are also asserting authority over the sector. The CFTC said this week it filed lawsuits against three states over efforts it believes attempt to bypass federal oversight of prediction markets.

Industry scrutiny has expanded beyond politics. The NFL has asked operators to avoid offering contracts it views as objectionable or open to manipulation, including bets tied to officiating decisions or events known in advance.

Still, the market is expanding. Kalshi has late last month secured a license to offer margin trading to institutional investors, while new players are entering the market. Among them is JPMorgan, whose CEO, Jamie Dimon, has signaled that it is looking to enter the fray.

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