The Squadron Is on Polymarket
How prediction markets commodify the public sphere
Insider trading on warfare is now a fixture of digital betting markets. A case from the Israeli Air Force shows what this looks like in practice.
In March, an Israeli Air Force officer was interrogated about bets he had placed on Polymarket. The contracts in question covered the timing of Israeli and American strikes on Iran. Investigators alleged that one squadron member fed nonpublic operational information to a colleague, and the two had earned roughly $244,000 by trading on the war they were preparing to fight. A separate crewman, interrogated about a smaller set of trades on the same conflict, offered an explanation that no senior officer wanted to enter into the record. The entire squadron is on Polymarket, he told his interrogators. The entire air force is betting.
An air force pilot, instructed to keep operational timing secret as a condition of his oath, has discovered that the timing is a tradable asset. He can monetize his knowledge of when the planes take off, making the timing financially worth more than his role in the strike. What the airman described is not a personal failure. The prediction-market design rewards anyone with insider information the same way.
Israeli airmen are not the only ones betting on their own missions. On April 23, federal prosecutors in Manhattan unsealed an indictment against Master Sergeant Gannon Ken Van Dyke, a United States Army Special Forces soldier stationed at Fort Bragg. Van Dyke participated in the planning of Operation Absolute Resolve, the January 3 raid that captured Nicolás Maduro in Caracas. Between December 27 and January 2, he opened a Polymarket account and placed roughly $33,000 in bets across thirteen contracts: that United States forces would be in Venezuela by January 31, that Maduro would be out of office by that date, and that the President would invoke the War Powers Act. The contracts paid out on the morning of the raid. Van Dyke netted $409,881. He moved most of the money to a foreign cryptocurrency vault, asked Polymarket to delete his account, and posted a photograph of himself at sunrise on a ship deck in fatigues, holding a rifle. Twenty days later, he closed on a $340,000 house.
The Commodification of Knowledge
The industry calls this “information finance,” and its operators expect it to be the next major asset class. Kalshi, valued at $22 billion in March, processes more than $100 billion in annualized trading volume. Polymarket, valued at roughly $15 billion in April, processed $29 billion through its books in the first four months of the year. Annual prediction-market volume across the sector climbed from $15 billion in 2024 to $63 billion in 2025, and is on pace to roughly double again in 2026. In March alone, the sector logged 192 million transactions. Coinbase, Robinhood, Kraken, DraftKings, and FanDuel have all added prediction markets in the past year. Both Kalshi and Polymarket launched perpetual futures contracts in April, allowing traders to take leveraged positions on unresolved political and military events indefinitely.
Polymarket and Kalshi, the two largest prediction-market platforms, refer to themselves as knowledge brokers. They offer a public-interest justification: prediction markets forecast public events more accurately than polls, pundits, or experts. Nate Silver, the most recognizable name in election forecasting, has signed on as an advisor to Polymarket. The Commodity Futures Trading Commission ruled in March that prediction markets are derivatives, placing them inside the federal regulatory framework that Wall Street investors require before they can invest in an asset class. CNBC sponsors Kalshi and holds a minority stake. Yet, despite their lofty claims of forecasting utility, sports betting accounts for 90% of Kalshi’s revenue, according to industry analysis. The product is, in Susan Strange’s words, casino capitalism.
In The Great Transformation, Karl Polanyi described how capitalism advances by treating land, labor, and money as commodities even though none of the three was produced for the market. The market treats them as ordinary goods regardless. The result is the long story of the past two centuries: the dispossession of peasants from common land, the factory acts, the recurrent monetary crises, and the fights over the length of the working day. One feature of capitalism is the steady production of new fictitious commodities, driven by capital’s need to find new outlets for accumulation when existing ones become unprofitable. The first major addition after Polanyi’s three was knowledge, commodified across the centuries from the patent office to the data broker. The next was social-media data, which Tiziana Terranova calls “free labor” and Shoshana Zuboff “surveillance capitalism.” Polymarket and Kalshi are now adding public events to the list.
Shaping the World They Price
Prediction markets convert events into prices. A missile strike, a troop deployment, a head of state’s removal, a journalist’s wire story, a strait closing: each becomes a contract, each gets a price, each attracts trading volume, each produces a payout. The contract not only predicts the event, but also turns it into an asset for the investor who profits from it. The contracts pay out on the decisions of generals, presidents, and reporters. They then reshape the behavior of those same actors, by giving each a financial stake in the outcome of his own decisions.
The defense of the platforms draws on Friedrich Hayek’s theory of the price system. In The Use of Knowledge in Society, Hayek argued that markets coordinate dispersed knowledge in ways no planner can match. The argument assumes that the trader is a passive observer with private knowledge of an outcome the market is only trying to predict. The model breaks the moment a trader can affect the outcome on which his contract pays. The platforms produce the conditions under which Hayek’s theory no longer applies.
Between Sunday, April 5, and Wednesday, April 8, 413 million bets were placed on Polymarket contracts tied to the war with Iran. More than $100 million was at risk. The largest single trading day was April 8, the day after the President warned on Truth Social that a civilization would die that night. 100,000 bets were placed that day on whether American troops would enter Iran. The President’s post triggered a wave of trading, which in turn created an audience for the next post. The President’s son, Donald Trump Jr., holds an investor stake in Polymarket through 1789 Capital and serves as an advisor to Kalshi. He is positioned to profit from the price movement generated by his father’s announcements. A spokesman called the question of conflict of interest “fact-free Democratic propaganda.” But the conflict is built into the platform’s design.
The contracts also pay out on what reporters write. On March 11, Emanuel Fabian, a military correspondent for the Times of Israel, reported that an Iranian missile had struck Israeli territory. Bettors aggressively traded on the nuances of his report, with roughly $14 million wagered on the final outcome. Those who had taken the other side messaged Fabian, demanding that he reframe the missile as intercepted debris. Some offered him a cut of their winnings. When he refused, they threatened to kill him. The threats were specific, repeated, and credible enough that he reported them to police and wrote about the experience publicly. Fabian was not pressured by the Iranian government, the Israeli government, or any state actor. He was pressured by bettors on a Polymarket contract whose payoff depended on the wording of his story.
The Public Sphere as Asset Class
What makes the present platforms historically distinctive is that the contracts shape the events they price. Earlier forms of political wagering existed at the margins of the public sphere and did not reach the actors whose decisions the markets priced. The Iowa Electronic Markets, founded by University of Iowa economists in 1988 to study aggregation properties under controlled conditions, operated at a $500-per-account limit and remained a small research project. Intrade, the Dublin-based platform that ran from 2003 to 2013, attracted a small popular following during the Bush and Obama elections, but went bankrupt after the Commodity Futures Trading Commission filed an enforcement action against it. Neither platform was integrated with the established financial system, neither attracted Wall Street money, and neither was politically connected to a serving presidential administration. The accuracy claims that emerged from the Iowa research, demonstrating that small-stakes prediction markets outperformed polling in several presidential elections, do not survive the transition to large-stakes platforms in which participants can affect the outcomes on which they bet.
The new platforms are different on every count. They are large enough to reshape the incentives of the actors whose decisions they price, integrated enough with the financial system to attract Wall Street investors, and politically connected enough to operate in the open. The platforms have positioned themselves at the meeting point of venture capital, cryptocurrency exchanges, the brokerage industry, and the political family that controls the executive branch.
Polymarket and Kalshi enmesh the actors whose decisions determine the events being priced — pilots who fly the missions, master sergeants who plan the operations, reporters who file the stories, Presidents who post the threats. Once those actors have a financial position in the outcome of their own decisions, the decisions are no longer made the same way. The platforms are not just profiting from public life; they are reshaping it from inside. Marx called this kind of operation real subsumption, though he was describing the factory floor rather than the public sphere.
Elections, wars, policy decisions, and the speech acts of public officials become assets that pay out. The pilot whose squadron is on Polymarket flies a different mission. The master sergeant whose operation moves a contract plans a different operation. The reporter whose wire story is worth $14 million writes a different story. The President whose every threat creates a hundred thousand bets governs for a different audience, regardless of his intentions.
Shayne Coplan and Tarek Mansour describe their platforms as knowledge producers. The business is more straightforward: a fee-based exchange where bettors trade contracts on events they increasingly seek to influence, and the house takes a cut of every transaction. Coplan told Axios in November that he was glad his platform paid people to leak confidential information. He called the arrangement “super cool.” Some might consider certain data leaks treasonous.
Polanyi called the social response to commodification the double movement. Society pushes back against the market’s attempt to absorb what was never made for sale. The fights over the wage, the length of the working day, the protection of land, and the regulation of money have defined political life for two centuries. A political response to prediction markets has not yet taken shape. Six states have moved against Kalshi and Polymarket: Massachusetts, Michigan, Nevada, New Jersey, Ohio, and Wisconsin. Treating this strictly as a gambling issue misses the broader pathology. The platforms convert public decisions into an asset class held by a small set of politically connected state investors. The decision-maker now answers to the contract-holders rather than to the people he is supposed to govern.
A democracy whose decisions have been priced cannot remain one.