Chapter 1: What are prediction markets and how do they work?
Who will be the Democratic presidential nominee in 2028? Will the price of gold be at the end of the week? Who will win the World Cup? All of these are relatively benign bets you can make today, but there are other bets that maybe aren't so benign, like will Venezuelan President Nicolas Maduro be removed from office by the end of January?
That well-timed bet was made in the hours before the US captured and extracted Maduro, netting the anonymous investor $400,000. Hello and welcome to USA Today's The Excerpt. I'm Dana Taylor. Today is Wednesday, February 11th, 2026. Are prediction markets democratizing information? As some argue, are we monetizing reality in a way that incentivizes perverse motives?
Chapter 2: What was the significant bet on Nicolas Maduro's ouster?
Here to help me dig into how prediction markets work and the risks they pose both financially and politically is Alex Goldenberg, fellow at Rutgers University. Alex, thank you for joining me. My pleasure. I want to start with a bet that really made the world take notice of political prediction markets, and it's the one that was made on the ouster of Maduro.
What are prediction markets and what happened with this Maduro bet?
Prediction markets work great for a lot of things, election forecasting, technology launches, corporate earnings. But when you apply them to military operations, you can create risks that are fundamentally different. That's what got me writing about this.
We now have, we'll get into more detail on this, I hope, Ukrainian volunteers, Russian military bloggers, and potentially American security clearance holders now converting potentially insider knowledge of military operations into profit through anonymous crypto wallets.
Chapter 3: How do prediction markets impact military operations?
This isn't theoretical anymore. As you mentioned, 2 a.m. local time on January 3rd, U.S. forces captured President Nicolas Maduro in an incredibly complex and dangerous attack, now known as Operation Absolute Resolve. But hours earlier, a newly created PolyMarket account, had invested $30,000 betting on Maduro's exit.
And by that morning, that position had netted roughly $400,000 in profit, which is a 1200% return in less than 24 hours on a military operation. And the timing suggests that the trader had advanced knowledge of this military operation. And this isn't the first time. In October, someone placed a $68,000 bet on the Nobel Peace Prize winner hours before the announcement.
Chapter 4: What are the risks of insider trading in prediction markets?
And while prediction markets theoretically prohibit insider trading, their design creates powerful incentives to monetize non-public information. And the platforms themselves often lack effective enforcement mechanisms, especially those that operate through pseudonymous crypto wallets like PolyMarket, for example.
We likely will never know if the person who made $400,000 on the Maduro operation held a security clearance.
As you said, this wasn't the only national security bet that's caused some concern in political circles. There were some big bets made in November by a group of traders over a battle in eastern Ukraine. What was the bet and why has this alarmed the foreign affairs community?
So in November, someone manipulated the frontline map that Polymarket uses to settle Ukrainian territorial bets. They fabricated Russian advance time precisely to trigger payouts and then erase the evidence after the settlement. But that's not really what alarms me. Someone making money off of military advancements.
Chapter 5: What concerns arise from betting on military outcomes?
What really alarms me is the incentive structure that we've created. Picture this. Polymarket has markets on village level territorial control, specific train stations, tactical movements in Ukraine. And think of Ukrainian soldiers who earn around 500 a month. I think Russian soldiers earn around 2000 a month.
A $5,000 bet, which is entirely possible on these markets, could represent a 10-month salary for a soldier. Now imagine you're an officer making a tactical decision. Do we defend this position or do we fall back? That should purely be a military calculation. But now there's a potential financial dimension that we're introducing.
Chapter 6: How do prediction markets influence public perception?
If you or subordinates can access these markets... There's suddenly a way to profit from outcomes you directly influence. And to be clear, we don't know or have any confirmed cases of Ukrainians or Russian soldiers actually doing this, but that's almost worse. We have no way of knowing. The markets exist. The incentives exist. The capability exists through anonymous crypto wallets.
We're just hoping no one acts on them. This is what economists frequently call an agency problem, a fundamental misalignment between duty and personal incentive. A military commander should answer to civilian leadership and mission objectives.
Chapter 7: What are the mental health implications of gamifying war?
But when there's a financial market on the outcome, we're introducing a competing incentive. I mean, we banned Pete Rose decades ago from baseball for life because he was betting on his own team. The concern was that the incentive structure was incompatible with his role. That's the situation we're creating, not in baseball, but active war zones. The markets are live.
The incentives are incredibly powerful. And we're now, you know, have to assume that duty will always win out over a year's salary.
Taking this one step further, betting on war could incentivize state actors to impact outcomes. Russia and China are clearly paying attention.
Chapter 8: How should the media handle prediction market data?
What are your biggest concerns here?
It's a great question. And look, I can't tell you that Moscow or Beijing are actively exploiting these markets right now. But here's what I can tell you. If I were running a foreign intelligence service, I'd be paying very close attention. These markets are essentially open source signals. You don't need to recruit spies or run risky operations. You just watch for patterns.
When someone places an unusually large bet on low probability events, what traders or what I call high conviction bets, that's a signal. For example, if betting volume suddenly spikes on sensitive military operations that's trading at 15% odds, that's interesting. Someone is betting serious money on something unlikely to happen. Either they're foolish or they know something.
This wouldn't replace traditional asset recruitment, obviously. That's still valuable for different reasons. But in additional intelligence streams, it's just sitting out in the open and it's essentially free. The bigger concern I have is using these markets for active measures or what we call psychological warfare. Here's a scenario that worries me.
A state actor places a $5 million bet that China will invade Taiwan in 30 days. That's pocket change for a nation state, but it could move a prediction market pretty significantly. Market odds could spike. Media coverage follows. Prediction markets show a 70% chance of Taiwan invasion. Does someone know something?
You get public anxiety, potential diplomatic tensions, potential military posturing. all triggered by a bet that costs less than their defense budget's rounding error. This is information warfare on the cheap. Traditional influence operations that I've studied for years, like troll farms, media buys, cost millions and take months to build. This is instant, global, and quite deniable.
And here's the operational problem for our intelligence community. When these markets move, analysts have to assess is this legitimate information or is it manipulation because we can't just ignore the markets because some of those bets might actually reflect insider knowledge.
Adversaries could use these markets to inject noise into our information environment that we can't easily filter out and that should worry us all.
Alex, there are some who argue that insider information is exactly what makes these markets function more efficiently, that prediction markets are all about commodifying people with exceptional access to information. What do these proponents argue?
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