Prediction markets signal a flash point for the future

Energy Secretary Chris Wright wrongly and notoriously claimed on social media Tuesday that the U.S. Navy had successfully escorted an oil tanker through the Strait of Hormuz. In an unusual fiasco, his assertion was quickly refuted by the White House and the military. Agency staffers were blamed, but not before the tweet, which lasted online for 15 minutes, scrambled oil prices.

Suspicions of deliberate deception behind Wright's false report are so far unproven. The communications fiasco just happened to follow President Donald Trump's assurance on Monday that the Iran war would end shortly, which he later qualified and walked back.

Statements apparently aimed to calm markets as the Strait of Hormuz is squeezed by Iran were a separate surprise from what developed on online prediction markets, where people bet on government events. On the prediction website Kalshi, some people thought they cleaned up on their bet that Ayatollah Ali Khamenei would be "out as supreme leader" by March or April 1. But Kalshi execs froze the $54 million for everyone who laid money on that scenario, asserting that the site doesn't allow transactions "directly tied to death."

Some of the frustrated players asked rhetorically how a theocratic ruler would leave office otherwise. He was, after all, 86 years old.

Information and disinformation, gambling on military actions, and the decadence of making easy money on someone's death from afar — while U.S. troops are in harm's way — are all driving a seemingly perverse discourse in the opening months of 2026.

Regulation or the lack of it in markets like Kalshi arose as an issue when someone made $400,000 on the capture of President Nicolás Maduro in Venezuela, who's now awaiting trial in New York. Sen. Chris Murphy of Connecticut is drafting legislation that would ban prediction-market trades on sites like Kalshi and its chief rival Polymarket when related to government actions.

"This is American commercial immorality on steroids," Murphy has said of the practice. "People shouldn't be rooting for people to die because they placed a bet."

The potential for corruption among government insiders is unusually plain here. One analytics firm has reported that it found six "suspected insiders" on Polymarket that made $1.2 million on the United States hitting Iran by Feb. 28, according to The Washington Post.

None of this ethical odor appears to twitch nostrils in the White House. Murphy is a Democrat and out of the majority, at least this year, so his clout is very limited. Also, the administration's Commodity Futures Trading Commission clearly sides with the industry, seeking to shield them from restrictions in states like New York and reversing Biden administration curbs on political and sports betting.

CFTC delicately describes prediction markets as "derivative contracts" rather than gambling.

This policy posture cozily coincides with the financial interests of the Trump family, which is getting in the act by setting up an entity called "Truth Predict" as part of its Truth Social platform. And as reported last month, Donald Trump Jr. has invested in Polymarket through his venture capital firm — while a strategic adviser for Kalshi.

Here's a safe prediction, for no money: Any insider profits on confidential information would augur a corruption scandal bigger than Congress members' playing the stock market. And if Democrats win back the House in November's midterms, the questions and conflicts will earn detailed scrutiny.

Columnist Dan Janison's opinions are his own.

By Dan Janison

dan.janison@newsday.comDanJanison

Dan Janison is a member of the Newsday editorial board.