Editor
Traders betting on the probability of a new Iran-US nuclear deal revised their estimates sharply downward after Israel launched a preemptive attack on Iran early Friday. The attack took place overnight from the perspective of predictions market speculators in the Western hemisphere.
Predictions exchanges have flourished this year as the CFTC’s stance on their acceptability has loosened considerably since President Donald Trump took office. Although not technically a gambling product, they are popular with poker players and other gamblers as they enable what is effectively peer-to-peer wagering on virtually any topic. Political markets are particularly popular and provide an up-to-the-minute view on how the (more or less) informed public sees the chances of important events.
Crypto-based exchange Polymarket has been offering a proposition son a new US-Iran nuclear deal since mid-February. It has two with different deadlines: the end of the year, or the end of June.
The perceived chances of a deal before July peaked at 58% in mid-May. Those odds had already been coming down as the deadline approached. Even so, they had been fluctuating around 20% before the attacks and have plummeted to less than 5% in the hours after news of the attack broke.
The full-year market opened at 62% and had come down to just over 50% before the attack. News of Israel’s strikes plunged shares to 22% before a rebound to around 32%.
Meanwhile, Kalshi introduced a new market on a similar proposition, using the end-of-the-year deadline. It debuted at about 35% odds and appears to be stabilizing slightly lower than that. Like at Polymarket, early volatility saw shares trading as high as 44% and as low as 21%.
Politicians, Experts at Odds on Likely Impact
Secretary of State Marco Rubio and President Trump have said the US had no involvement in Israel’s decision to attack. However, Trump also tied the attacks to an ultimatum he had given Iran in a post on his social media platform Truth Social.
Two months ago I gave Iran a 60 day ultimatum to “make a deal.” They should have done it! Today is day 61. I told them what to do, but they just couldn’t get there. Now they have, perhaps, a second chance!
Trump appears to be hoping that the attacks will give the US leverage in the negotiations. However, some experts say the violence will diminish the chances of a deal. Ellie Geranmayeh, deputy head of the Middle East and North Africa program at the European Council on Foreign Relations, believes that scuttling the deal is a deliberate part of Israel’s strategy.
She told Al-Jazeera:
While some Israeli officials argue that these attacks aimed to strengthen the US leverage in the diplomatic path, it is clear their timing and large-scale nature was intended to completely derail talks. It is highly unlikely that in these conditions, Iran will proceed with the Omani-mediated talks scheduled for Sunday. This official track may now be paused while the military confrontation between Israel and Iran plays itself out.
The response of Polymarket bettors suggests that at least in the short term, they’re inclined to call Trump’s bluff.
Trading Lines Also Examine Possibility of Retaliation
Aside from the nuclear talks, Kalshi is mostly staying out of anything to do with the Iran-Israel conflict. The only other related contract on that platform is a short-term one asking how many times Trump will post about Iran on Truth Social today. Currently, that over/under is at 4.5.
Polymarket, on the other hand, is less shy about war. Unlike Kalshi, it is not technically legal in the US.
Its traders give a 95% chance of a retaliatory strike by Iran before the end of the month, 90% by Monday, and a 79% chance by the end of the day Friday. Iran has reportedly launched drones, but those on the No side have an out. Per the terms of the contract, the market will only resolve to Yes if the drones successfully enter Israeli airspace without being intercepted first.
Meanwhile, Polymarket bettors are rating it a 39% chance that the US takes direct military action against Iran before the end of the month, and 45% before August. They only give Iran and Israel a 19% chance of ending the conflict within a week.
There are roughly 30 propositions related to Iran for Polymarket users to bet on in total.
