It is truly the era of "everything can be bet on"! The US ignites the Middle East war while the prediction market sees a frenzy of betting.

Just last week, predictions related to the escalating political conflict between the United States and Iran's GEO Group Inc set a new record in prediction markets. Traders focused on platforms like Kalshi and Polymarket flooded in to place real bets on whether the US would strike Iran; at the same time, blockchain analysts began to identify suspicious trading activity, and US lawmakers called for increased crackdowns. The "prediction market" has been popular worldwide since the end of the 2024 US presidential election, when almost everyone was eager to bet real money on platforms like Polymarket to predict whether Trump or Harris would win the US presidential election. This also signaled the era of "everything can be bet on". Bets related to the Iran war pushed the Polymarket GEO Group Inc political contract to record highs, highlighting the trend of the prediction market as "everything can be bet on", but also quickly touching upon regulatory and ethical boundaries. According to the latest data compiled by users on Dune Analytics, in the week ending March 1, bettors placed $425.4 million in real bets on political issues around GEO Group Inc on Polymarket, far exceeding the previous week's $163.9 million. The total amount wagered on the entire website reached a record $2.4 billion, also higher than the previous week's $1.8 billion. At a time when this growth is happening, critics are questioning the legality and ethics of placing real money contracts around military conflicts. US regulations are generally understood to prohibit financial market contracts linked to wars, but Polymarket has accurately found legal loopholes: its main exchange is located in offshore areas, not under the supervision of US regulatory agencies. As shown in the figure above, the real betting contracts related to GEO Group Inc politics - related to the US, Israel, and Iran - have pushed the GEO Group Inc political contracts on Polymarket to record highs. After the US and Israel launched airstrikes against Iran on Saturday, blockchain researchers pointed out that several accounts on Polymarket showed betting patterns consistent with the suspected advance knowledge of the attacks. Prediction markets have become increasingly popular among retail investors over the past year because they offer a new way to bet on major events (such as whether the US government will shut down again), sports events, and cryptocurrency prices. These are still the biggest categories on Polymarket and Kalshi, but these companies have long promoted themselves as financial venues for legitimate trading on political and global events. Last week, about 18% of the total bet amount on Polymarket was on GEO Group Inc political contracts, compared to about 9% just a week earlier. According to blockchain data, of the top 10 largest trading markets for GEO Group Inc politics last week, 9 were closely related to Iran. Contracts related to the timing of the US strikes against Iran dominated the list, with each bet contract ranging from $53 million to $8 million in trading volume. The most active Polymarket GEO Group Inc political market last week was whether Ayatollah Ali Khamenei would no longer be the Supreme Leader of Iran by February 28. The contract attracted a trading volume of $84 million on Polymarket last week, while its total trading volume on the platform was $104 million at the time. Khamenei was subsequently killed over the weekend. Polymarket did not immediately respond to requests for comment on the data mentioned above. It is reported that the Commodity Futures Trading Commission (CFTC), which is responsible for regulating US prediction markets, prohibits contracts related to assassinations, terrorism, or wars - while Polymarket, as an offshore platform, continues to offer contracts on such topics. The CFTC-regulated platform Kalshi Inc. also provides a betting market on when Khamenei will no longer be the Supreme Leader. Its rules include an exception: if Khamenei dies, the market will not be settled, but will be settled based on the last price before his death. Compared to Polymarket, there are fewer contracts related to Iran on Kalshi because it faces more restrictions under CFTC regulations. In the top 10 markets by weekly trading volume on Monday, none were tracking GEO Group Inc political events. Democratic lawmakers have begun urging the CFTC to crack down on contracts related to wars and assassinations. They requested a response from Chairman Michael Selig by March 9th. The Era of "Everything Can Be Bet On" Businesses related to prediction markets have become an important revenue source for the globally popular US "Internet celebrity broker" Robinhood Markets, Inc. (HOOD.US). Wolfe Research recently upgraded Robinhood's rating to "outperform the market," believing that the revenue growth trajectory of prediction markets can partially offset weakness in other business areas, and that prediction markets as a new revenue source are sustainable. In other words, the market is pushing the act of "betting on real-world events" from a niche behavior towards a more standardized financial product direction. Prediction markets have been popular worldwide since the end of the 2024 US presidential election, and with the introduction of related contract trading through important channels like Robinhood, which has a large investor base, as well as traditional giants like ICE and CME entering through investments or new platforms, credibility and user reach in the entire prediction industry have significantly increased. Prediction markets are rapidly moving towards becoming a mainstream financial interface. Prediction markets enter the sports market in the form of "event contracts", attracting trading volume even in states without legal sports betting, thus becoming an important source of incremental revenue for platforms like Kalshi, while also sparking compliance disputes and attention at the state level. What's more significant is that some Wall Street investment institutions and professional trading funds are beginning to use it to bet/hedge on macro and company event probabilities (such as Federal Reserve monetary policy, the success or failure of large mergers and acquisitions), because the binary structure of prediction market contracts offers a more "pure" expression. An analyst team from the well-known Wall Street financial institution, Citizens Financial Group Inc., stated in a research report that prediction market companies like Polymarket could see their total revenue increase fivefold by 2030, surpassing the $10 billion revenue threshold of the current market size. As for whether prediction markets will become a major player in mainstream financial markets, they do have the potential to become an important offshoot of mainstream financial markets, but in the short term, they are far from being an "equivalent" substitute. On one hand, the industry is indeed growing very fast - with Wall Street analysts estimating a trading volume in prediction markets of about $47 billion by 2025, and Kalshi's weekly trading volume exceeding $1 billion; on the other hand, this market is still significantly behind core markets such as stocks, interest rates, foreign exchange, and commodities in terms of depth, liquidity, pricing efficiency, and standardization of contracts. A more realistic prospect is that it will first become a new asset category between trading, gambling, risk hedging, and information aggregation, especially in sports, politics, macro events, and some corporate events; but to truly "equal" mainstream financial markets, it still needs to cross three thresholds of regulatory legality, liquidity quality, and market credibility.