An anonymous Polymarket user collected over $400,000 on a January bet predicting the ouster of Venezuelan President Nicolás Maduro, highlighting how speculative capital extracts profit from geopolitical instability. This transaction has raised concerns that individuals with access to private U.S. government information may have engaged in insider trading, turning state intelligence into private wealth.
Further instances of surplus extraction through speculation include a group of new accounts on Polymarket that made highly specific, well-timed bets on whether the U.S. and Iran would reach a ceasefire on April 7. These bets resulted in hundreds of thousands of dollars in profits for the new customers. Rep. Seth Moulton, D-Mass., characterized such activities as "war profiteering," specifically citing a "dystopian death market" involving bets on the rescue of a service member whose fighter jet was shot down by Iran. Moulton stated he was "absolutely not satisfied with Polymarket’s response" to this market, blaming the site for being "completely unwilling to self-regulate when it comes to betting on the lives of our service members." Senator Todd Young, an Indiana Republican, expressed concern about "market distortions, improper decision making, and undermining of public trust through self-enrichment" following the news about Venezuela.
Profiting from Imperialism
The direct ties between speculative markets and accumulated wealth are evident in the involvement of figures like Donald Trump Jr., who serves on Polymarket’s advisory board and is a paid adviser for Kalshi. 1789 Capital, the venture capital firm where Trump Jr. is a partner, has invested in Polymarket, demonstrating the integration of these platforms into the broader capital accumulation apparatus. Polymarket, founded in 2020, operates largely offshore, with its limited functions in the U.S. only permitted after President Donald Trump returned to office. Kalshi, founded in 2018, states it bans many extreme betting markets and welcomes regulation, with spokesperson Elisabeth Diana asserting, “We support Congress and regulators taking action to police insider trading, keep prediction markets onshore and under federal regulation.”
The State's Limited Response
Washington's response to these mechanisms of surplus extraction has focused on managing the system's contradictions rather than addressing its foundations. The White House issued a warning to staff against using private information to trade on prediction markets. Senator Young and Senator Elissa Slotkin, D-Mich., introduced a bill that would bar federal employees from using nonpublic information to make bets on prediction markets, representing one of several bipartisan efforts in Congress. Democrat Rahm Emanuel, eyeing a potential presidential campaign, proposed a ban on prediction market bets by all federal employees and their families, and suggested a 10% fee on these markets and online gambling to fund science and health research. California Governor Gavin Newsom, another potential Democratic presidential candidate, issued an executive order barring his appointees from using nonpublic information to trade on prediction markets. These reform efforts primarily target "insider trading" by state employees, leaving the broader structure of speculative profit from geopolitical events intact.
Capital's Defenders
The Commodity Futures Trading Commission (CFTC), the agency tasked with regulating prediction markets in the U.S., currently operates with only one member, Michael Selig, a former CFTC law clerk who represented cryptocurrency clients before his appointment. The agency is legally mandated to have a five-member board with bipartisan representation. Dennis Kelleher, president and chief executive of Better Markets, stated the agency “certainly has no experience, expertise, budget, technology to actually in any way supervise, regulate or police gambling on everything from whether it’s Iran, Venezuela, whether it’s reality TV, whether Christ is going to come back before the end of the year.” Senator Richard Durbin, D-Ill., noted in a letter to Selig in February that the number of enforcement attorneys at the agency’s Chicago office had declined from 20 to zero. Selig, during a Thursday hearing of the House Agriculture Committee, claimed the agency was hiring new staff and operating more efficiently, while refusing to delay new regulations until new board members were added. He blamed the Biden administration for creating a regulatory environment that he said discouraged companies from operating in the U.S., deflecting responsibility for the agency's weakened state. The CFTC has actively protected the market's operations by suing Connecticut, Arizona, and Illinois this month, after these states attempted to curtail prediction markets, arguing they functioned as unlicensed gambling platforms. Despite lawmakers broadly agreeing that "something should be done," there is no immediate path to passage for any of the proposed bills, ensuring the continued operation of these platforms for capital accumulation.