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Australians are flocking to a controversial site offering odds on events in Middle Eastern conflict zones, including whether shrapnel from a single missile hit land, prompting death threats to journalists reporting on the conflict to change their reporting.
Polymarket, a New York-based prediction market banned from Australia due to a lack of local regulatory license, allows users to place bets with cryptocurrency on a vast array of outcomes ranging from weather events to political outcomes to more traditional sporting bets.
That regulatory hurdle has not stopped Australians using virtual private networks (VPNs) to trick the website into thinking they are based overseas so they can access the platform and place bets on military action such as “Ayatollah Khamenei leaving office” and “US forces enter Iran”.
The Australian Communications and Media Authority (ACMA) has warned about the risks of using such unregulated prediction sites, and wrote to Polymarket’s parent company last year issuing a formal warning for contravening the law.
The authority’s warning included in-house research finding there were 1.88 million visits to Polymarket’s website from Australia in the six months to last June. Experts believe Australian customer numbers have continued grow, with the platform’s popularity skyrocketing globally since.
In response to questions, the authority said that while it was illegal for companies such as Polymarket to be offering gambling services here, “it is not prohibited for Australians to access” the site.
Australians sharing advice on how to access Polymarket is common across online forums seen by this masthead, including Reddit. The banned platform is so popular that posts exist on the Australian Taxation Office’s online forum querying how winnings will be taxed.
Unlike traditional wagering outlets such as TAB and Sportbet – which also offer odds on political outcomes but not war – where the bookmaker determines odds, Polymarket’s are entirely set by user activity.
The platform counts Donald Trump Jr as an investor and adviser. The US government reversed a ban on Polymarket operating in that country in December.
Polymarket, which was contacted for comment, has justified its war markets as harnessing “the wisdom of the crowd to create accurate, unbiased forecasts…in gut-wrenching times like today”. It said it had discussed its service with people directly affected and argued its markets could give them answers that traditional media and social sites could not.
The vast array of predictions that Polymarket offers odds on have prompted fears the platform encourages insider trading, with recent suspicious betting behaviour fuelling such concerns.
Analysis conducted by the New York Times found that on February 27 – the day before the US and Israel began strikes on Iran – more than 150 accounts, mostly newly created, placed more than $US850,000 betting there would be a strike by the 28th.
Earlier in the year, one Polymarket user placed $US32,000 in bets that Venezuela’s president Nicolas Maduro would be removed from office days before US forces entered that country and captured him. The user’s payout exceeded $US436,000.
Polymarket’s betting mechanism relies on a binary yes/no outcome, and looks to a variety of sources for confirmation, including government announcements and news reports.
Karoline Thomsen, who is completing her PhD on international law and social media at UNSW Canberra, said “the potential for insider trading on the platform is extremely high”.
“It’s designed to be anonymous – you don’t even need to verify your identity when creating an account,” she said.
Several markets related to the US-Israel-Iran war have stated a “resolution source will be a consensus of credible reporting”.
It has meant news reporting plays a crucial role in determining how Polymarket resolves granular matters of truth.
On March 10, Times of Israel reporter Emanuel Fabian covered an Iranian ballistic missile which had fallen in an open area outside Jerusalem.
Later that day, a reader emailed him claiming authorities had since clarified that what fell was a fragment from an interceptor launched at the missile, not the missile itself. They asked Fabian to update his article.
After further requests to change the article, Fabian realised a connection to Polymarket. “Iran strikes Israel on March 10” was the name of the market, with more than $US14,000,000 wagered.
It was one of four Iranian missiles launched at Israel that day, but the only one not intercepted. If the story were re-written to state it was an interceptor fragment that fell, the market would change from “yes” to “no” as Polymarket stated interceptions do not count as a strike.
Within hours, fake screenshots circulated purporting to show Fabian acknowledging an error. Another person offered him a portion of their winnings if he changed his report.
Five days after his blog post, Fabian began receiving death threats, he wrote in a later article. “After you make us lose $900,000 we will invest no less than that to finish you,” one threat said, according to Fabian.
Polymarket has since condemned the harassment. “Prediction markets depend on the integrity of independent reporting. Attempts to pressure journalists to alter their reporting undermine that integrity and undermine the markets themselves,” its spokesperson said.
It’s not the first time a source of truth in war has come under scrutiny, said Thomsen, noting such situations “pose serious moral questions”.
In January, an unofficial Ukrainian online map considered an authority about incoming Russian attacks suffered a glitch. The administrator was flooded with complaints, not about the safety implications for Ukrainians, but from punters who had placed bets. “It’s not impossible that whoever is responsible for resolving those maps had a bet on the outcome,” Thomsen said.
Responsible Wagering Australia, the lobby group representing betting companies, said its members do not offer markets on war outcomes. Its CEO Kai Cantwell was critical of how Australia’s Polymarket ban is policed. “Australians can still access …(Polymarket) through offshore sites where there are no consumer protections, no integrity oversight, and no taxes or fees paid to support governments, sport or racing,” Cantwell said.
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Elias Visontay is a National Consumer Affairs Reporter at The Sydney Morning Herald and The Age.Connect via email.From our partners
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