In a new report from the Jerusalem Post, it has come to attention that a civilian and an IDF serviceman have been arrested for exploiting classified military information to place a certain wager on the platform Polymarket. According to details from Haaretz, the IDF reservist and civilian allegedly used insider knowledge of security developments—possibly tied to Israeli operations against Iran in June 2025—to bet on prediction markets related to those events, profiting from outcomes they knew in advance. This case highlights a growing intersection between decentralised finance, gambling-like platforms, and national security risks.
Polymarket is a blockchain-based prediction market platform where users can bet on the outcomes of real-world events using cryptocurrency, typically USDC (a stablecoin pegged to the U.S. dollar). It functions like a decentralised betting exchange: participants buy “yes” or “no” shares in markets predicting events such as election results, sports scores, cryptocurrency price movements, geopolitical incidents, or even niche topics like celebrity actions or conspiracy theories. The platform aggregates crowd wisdom to assign probabilities to these outcomes, with share prices fluctuating based on trading activity. At the event’s resolution, winners redeem shares for $1 each if correct, while losers get nothing—effectively turning it into a high-stakes forecasting tool. Founded in 2020 and operating globally, Polymarket’s U.S. arm is regulated by the Commodity Futures Trading Commission (CFTC) as a Designated Contract Market, but its international operations are not, allowing broader access without the same oversight.
Polymarket is considered controversial for several reasons. First, it blurs the line between informed speculation and gambling, raising concerns about addiction and financial losses, especially since it deals in volatile crypto assets. Critics argue it incentivises market manipulation, where influential users or groups could spread misinformation to sway outcomes and profit. Regulatory scrutiny has intensified, particularly around political betting markets—such as U.S. elections—which some view as undermining democratic processes by commodifying them. For instance, in 2024, Polymarket faced backlash and temporary restrictions in certain jurisdictions for allowing bets on sensitive topics like war escalations or assassinations. Additionally, its decentralised nature makes it hard to enforce age restrictions, tax reporting, or anti-money-laundering rules, appealing to users seeking anonymity but alarming governments worried about illicit finance.
This incident opens an entire new dimension when it comes to risks of confidential governmental intelligence and military intel. By allowing platforms such as Polymarket to thrive, it increases the chance of information sharing done by personnel in the governmental, intelligence, and military branches to share this classified intel with third parties in order to place insider trading bets and rake in huge amounts of profits. In traditional financial markets, insider trading is illegal and heavily policed, but prediction markets like Polymarket operate in a grey area, often outside full regulatory reach, making it easier for insiders to monetise secrets without immediate detection. For example, if a military officer knows about an impending strike or diplomatic shift, they could anonymously bet on related markets, potentially earning massive returns—amplifying the temptation to leak info.
Of course, it risks falling into the hands of the wrong people, completely compromising classified intel apart from breaking the law itself. Leaks could cascade: a serviceman might share details with a betting partner, who then disseminates it further, inadvertently or deliberately exposing it to adversaries like foreign intelligence agencies. In this Israeli case, the bets reportedly involved security events, which could have signalled operational plans to hostile actors monitoring the platform’s odds. This not only violates secrecy oaths and national laws but erodes trust within institutions, as seen in past espionage scandals where personal gain led to broader compromises.
It shows how yet again new developments such as these create entire new threats to government branches when it comes to upholding integrity and safety. Emerging technologies like blockchain and prediction markets democratise access to “futures” betting but also democratise risks, turning classified knowledge into a commodity. Governments may need to adapt with stricter monitoring of employee financial activities, international cooperation to regulate such platforms, or even bans on certain markets. Without proactive measures, these tools could proliferate insider threats, where the allure of quick profits outweighs loyalty, ultimately jeopardising operations and lives.
