Sen. Murphy alleges White House 'insiders' profited from Iran strike bets, pushes to ban prediction markets on government actions

Senator Chris Murphy said Wednesday he is drafting legislation to prohibit trading on prediction markets tied to government actions, including military strikes, citing what he described as a corruption risk involving individuals with advance knowledge of the Feb. 28 U.S. airstrikes on Iran.

Murphy's proposal, which he said will be introduced this month, follows onchain data from Bubblemaps showing six freshly funded wallets netted a combined $989,191 betting on the Polymarket contract "US strikes Iran by Feb. 28, 2026?" hours before military action began.

The largest wallet in the cluster turned a $60,816 position into a $494,375 profit, buying 560,680 "yes" shares at 10.8 cents each. A second wallet, "Planktonbets," posted a $173,907 net profit across seven predictions, while "Dicedicedice" earned $119,964 on a single 20-cent bet, a 400% return.

In a video shared via his official X account on Wednesday, Murphy alleged that individuals with access to the White House could have placed those bets. 

“Obviously, there are people close to Donald Trump who on Friday knew what was happening on Saturday. And it is very likely, probable even, that the people that placed those bets were people with inside information,” Murphy said in the video, adding that “it looks like those six big accounts that were set up on Friday made a profit of a million dollars off of us going to war on Saturday.”

Murphy said the ability to wager on military actions could create incentives for individuals with access to sensitive information to influence policy decisions.

“If we continue to allow people to bet on war, on military strikes, then you're going to have people inside the situation room who are making decisions not based on what's good for national security … but based upon whether they'll make money off of war,” he said, adding that someone “pushing us into war because they can cash in” would represent a corruption risk.

The senator's forthcoming legislation would specifically ban trading on government actions such as war-making or what politicians will say in speeches, according to Business Insider's Bryan Metzger, who said he spoke with Murphy on Wednesday. 

The bill would include exceptions for financial markets like bond trading, Metzger said Murphy told reporters, noting that "you have to allow for bets to be made, for instance, on financial decisions made by the Federal Reserve."

The proposal has drawn support from Rep. Mike Levin of California, who said he is preparing a companion measure in the House, according to Metzger. Levin alleged earlier this month that a Polymarket account using the name “Magamyman” generated roughly $515,000 in a single day betting on the U.S. strike on Iran. The trader reportedly placed the first wager 71 minutes before news of the operation became public, turning roughly $87,000 into more than half a million dollars overnight after buying into the market when the probability of a strike stood at about 17%.

Insider trading concerns grow as prediction markets expand

Allegations of insider trading tied to geopolitical prediction markets have surfaced before. In January, a newly created account wagered roughly $32,000 on the ouster of Venezuelan President Nicolás Maduro shortly before developments surrounding Maduro were publicly announced. The trader purchased shares priced at about 7 cents and recorded more than $400,000 in profit within 24 hours.

Authorities in Israel have also pursued similar cases. Earlier this month, Israeli prosecutors indicted an Israel Defense Forces reservist and a civilian accused of using classified military intelligence to place Polymarket bets on the timing of Israel’s strike on Iran during the June 2025 Twelve-Day War. The pair allegedly generated more than $150,000 in combined profits and face charges that include severe security offenses, bribery, and obstruction of justice.

Despite the scrutiny, trading activity across prediction market platforms has continued to climb. According to The Block’s data dashboard, Kalshi recorded $10.4 billion in trading volume in February while Polymarket logged $7.9 billion, bringing combined monthly activity to roughly $18.3 billion.