Israeli authorities announced on Thursday that they have charged two citizens for placing bets on the prediction platform Polymarket using confidential information.
This news has rekindled concerns that prediction markets facilitate insider trading and become a means of profiting.
Israeli authorities are investigating allegations of insider betting involving military personnel.
The Israeli Ministry of Defense, the Israeli Police, and Shin Bet stated in a joint statement that the suspects, who are military reservists and civilians, were arrested on suspicion of involvement in betting on Polymarket regarding military operations.
"This bet appears to have been made based on classified information encountered by the reservists during military service," the statement said.
This announcement came weeks after Israel's public broadcaster Kan News reported the matter. According to reports, security agencies have begun investigations into the misuse of classified information within the defense organization.
Reports suggest that the information was used for bets on Polymarket, particularly regarding the timing of a preemptive strike by Israel on Iran during the 12-day war in June 2025.
There has been a surge in bets on these platforms related to geopolitics, cryptocurrencies, politics, and sports. They are marketed as alternatives to traditional gambling, yet their mechanisms are nearly identical to conventional betting markets.
Users buy and sell stocks linked to the outcomes of real-world events, with prices reflecting the probabilities indicated by the market ranging from $0.01 to $1.
Combined with ease of use and anonymity, there are growing concerns about the potential for insider trading and misconduct.
Can prediction markets become a breeding ground for profits?
Since the beginning of this year, multiple incidents have occurred, raising suspicions that individuals with classified information are utilizing these platforms to generate significant profits.
At the beginning of January, multiple newly created accounts on Polymarket placed large and precisely timed bets predicting the fall of Venezuelan dictator Nicolás Maduro.
These wallets had made profits exceeding $630,000 in total just hours before reports of his detention surfaced.
A similar issue arose last December. Polymarket users made bets with very high accuracy regarding Google's 2025 search rankings, reaping nearly $1 million in profits. Due to the accuracy, suspicions arose regarding the use of insider information.
This wallet accurately predicted almost all outcomes, including those considered low probability, but no evidence supporting insider connections has been confirmed.
These series of incidents have intensified the debate regarding the role of prediction markets. Critics question whether they function as information aggregation tools or whether they serve as a venue for monetizing undisclosed confidential information.