A Polymarket contract on whether Iran would strike Israel on March 10 was designed to forecast the future. Instead, more than 90% of the betting volume on the prediction market came after the fact, as users attempted to profit from a dispute that hinged on the source of a single blast.
The stakes turned personal. Emanuel Fabian, a Times of Israel military correspondent, received death threats after reporting that a missile had struck outside Jerusalem, making him an obstacle to one side of the trade. The people behind the messages demanded he change the story to say that an intercepted projectile was responsible, which wouldn’t count as a strike.
“It’s such an irrelevant, inconsequential detail,” Fabian said in an interview. “It doesn’t matter to the average person.”
The episode exposed a vulnerability in how prediction markets resolve contested outcomes — a process that, on Polymarket, relies on holders of a third-party cryptocurrency voting in a public chatroom rather than any centralized authority. It also showed how contracts designed to aggregate information can create financial incentives to distort it.
The dispute over a single word — missile or fragment — is only the most recent controversy to hit the fast-growing prediction market platforms in recent weeks. In the opening days of the war in the Middle East, there was intense debate about how to resolve contracts on Polymarket and its chief rival Kalshi on whether Ayatollah Ali Khamenei would be out as Iran’s leader.
These episodes undercut the central promise of prediction markets: that by offering yes-or-no bets they can harness the wisdom of the crowd to produce accurate forecasts on everything from politics to the economy and sports. One example of their potential came in 2024, when they gave Donald Trump higher odds of winning the presidential election than traditional polls.
Some of the controversy stems from how the contracts are designed. Polymarket, which hosted the bets on its main platform outside the US, allows anyone to propose how a market should resolve by posting a small amount of collateral. If there’s a disagreement, another user can dispute the outcome. The matter is then put to a vote among holders of a cryptocurrency called UMA, with traders debating the evidence in a public Discord chatroom. Polymarket itself rarely intervenes to decide a market’s resolution.
More than 90% of all shares traded on the Israel strike market were swapped after March 10, while the outcome was being disputed, according to a Bloomberg analysis of trading data from Dune Analytics. This process is called “bonding,” where traders see a possibility to make money on the market resolving after the event in question takes place. Total trading volume eventually climbed to $23 million.
That looks a lot like the earlier Khamenei contract. Much of those wagers were placed after the military strikes on his offices were first reported, which quickly pushed up the odds. Many large wallets also continued to wager on the supreme leader’s removal even after the probability hit 99%, earning a quick but small profit before the market was resolved.
In the end, Fabian did not change his story about the missile strike, despite receiving threats like this one: After “you make us lose $900,000 we will invest no less than that to finish you,” a message said, according to Fabian’s account.
Polymarket condemned the incident in a social media post on Monday, adding that it had banned several accounts and will pass on the information to the relevant authorities, without elaborating on how it had identified the accounts involved. The platform’s main venue is not overseen by US regulators and does not conduct identity checks on its users. The company did not respond to a request for additional comment.
The contract has since been settled to say a missile did strike on March 10, in line with Fabian’s reporting.
