Opinion by: Amit Mahensaria, CEO of PRED
In late February 2026, traders watched, as an unfortunately familiar pattern unfolded. War-related contracts on prediction markets began moving before the public story did. Odds of strike timing surged, and then missiles followed.
Hours later, mainstream outlets caught up, and social feeds declared that the market called it. In one widely shared example tied to the Iran-US-Israel escalation, some “Yes” shares were reportedly bought on Polymarket at about a 10% implied probability, just hours before the first explosions were reported, well before major news organizations treated the situation as breaking news.
That gap is the problem.
When war-linked contracts move ahead of public confirmation, prediction markets stop looking like aggregators of public intelligence and start looking like monetization layers for private briefings. If that perception hardens, geopolitical markets will not mature into legitimate financial venues.
The prediction market conundrum
Some of that speed is real. Markets can process open-source signals that television panels overlook, including flight paths, shipping routes, satellite imagery, official statements and diplomatic travel patterns. When multiple small clues arrive at once, a liquid market can compress them into a single probability faster than a newsroom can publish a headline. That is the optimistic case for prediction markets, and sometimes it is correct.
That explanation does not fit every spike.
There are moments when probabilities jump without any visible public trigger. In those cases, price action becomes the story. Screenshots circulate. Commentators retrofit explanations to match the chart. If the event happens, the market appears prescient. If it does not, the spike is dismissed as a near miss. Either way, the platform captured attention.
The uncomfortable possibility is that the move is not intelligent. It is a leakage.
An insider advantage
Geopolitical markets are structurally vulnerable to insider advantage. Military and diplomatic actions are planned within small circles. Timelines are known in advance by people who are legally and ethically prohibited from sharing and monetizing what they know. If even a fraction of those people, or their immediate networks, trade on non-public information, the market is no longer aggregating public probabilities. It converts privileged access into profit and embedding it in a market price.
The Pentagon Pizza Index captures the intuition. For years, observers joked that late-night food deliveries near security hubs preceded major events. That folklore was anecdotal; it was never a financial instrument. Prediction markets take the same instinct for early signals and attach settlement and liquidity. They turn the presence of smoke into a tradable incentive.
Sports and prediction markets
Defenders often argue that sports betting proves prediction markets can function cleanly. In sports, sharp money appears early, lines move, and outcomes are decided in public under scrutiny. Integrity units monitor manipulation. That analogy weakens in geopolitics. Wars and diplomatic decisions occur behind closed doors. Information is concentrated among far fewer people. Even contract resolution can hinge on ambiguous definitions of “attack” or “escalation.”
When war-linked prices jump ahead of public reporting, it does not resemble disciplined handicapping. It resembles someone knowing something.
If prediction markets aspire to become a serious asset class, that perception is fatal. Institutions will not allocate meaningful capital into venues where the underlying edge may be classified as information. Regulators will not tolerate instruments that appear to create financial incentives around military operations. And retail users will not reliably distinguish between open-source signal aggregation and private-intelligence monetization.
The solution is not moral outrage about betting on geopolitics; the solution is market design.
Related: Science needs prediction markets that can’t be Sybil-attacked
Decentralized cannot mean unenforceable
Platforms that want legitimacy must treat insider trading as a structural risk, not an optics issue. They need clear definitions of material non-public information in this context. They need restrictions on sensitive participants, credible identity controls where appropriate and monitoring systems that flag suspicious trading around major events.
They need contract designs that are less vulnerable to small insider circles and governance mechanisms willing to pause or delist markets that cannot be made fair.
There is a real counterargument. Prediction markets often outperform pundits because they punish bad reasoning with losses and incorporate information quickly. If a probability move reflects public breadcrumbs that traditional media missed, then the market has done its job. Speed is valuable.
The deeper problem is epistemic. Outsiders cannot reliably tell the difference between public-signal compression and private-intelligence trading. Platforms today offer limited transparency to resolve that ambiguity. Without visible safeguards, every early spike in a war contract will look less like forecasting and more like profiteering with a veneer of math.
Geopolitics will always generate uncertainty. If prediction markets want to be taken seriously, they must prove that their prices reflect public insight, not private access.
Until insider trading is confronted directly, every early spike will carry the same suspicion.
Opinion by: Amit Mahensaria, CEO of PRED.
This opinion article presents the author's expert view, and it may not reflect the views of Cointelegraph.com. This content has undergone editorial review to ensure clarity and relevance. Cointelegraph remains committed to transparent reporting and upholding the highest standards of journalism. Readers are encouraged to conduct their own research before taking any actions related to the company.
