Polymarket Stirs Controversy by Refusing to Settle Venezuela Invasion Prediction Market

Prediction markets face their first major credibility test—and Polymarket just flunked.

Venezuela bet turns into a showdown

The platform is refusing to settle a high-stakes contract on whether Venezuela would face foreign military intervention by 2026. Traders cry foul as their 'free market' suddenly looks... less free.

Active markets meet passive resistance

Polymarket claims unresolved geopolitical ambiguity prevents settlement—conveniently ignoring that ambiguity is exactly what prediction markets exist to price. Some suspect the real ambiguity lies in their risk management.

Another 'decentralized' platform learns the hard way that when real money's at stake, someone always wants to be the house.

Polymarket holds $10.5 million worth of bets on invasions

According to the New York Post, Polymarket has seen more than $10.5 million wagered on invasion-related contracts this year alone. Most of that volume was concentrated on the January 31 deadline, with more bets placed on March and December expirations, Cryptopolitan found. 

On its website, Polymarket said the contract refers specifically to “US military operations intended to establish control,” and that “President Trump’s statement to ‘run’ Venezuela while referencing ongoing talks with the Venezuelan government does not alone qualify the snatch-and-extract mission to capture Maduro as an invasion.”

The explanation failed to calm traders, many of whom are adamant that the action fits the reasonable understanding of an invasion. Users flooded the platform’s discussion forums, bashing Polymarket for “moving goalposts” and trying to cover up facts.

“So it’s not an invasion because they did it quickly and not many people died?” one bettor wrote on Polymarket’s site. A trader using the pseudonym Skinner posted on the forum that “Polymarket has descended into sheer arbitrariness.”  

“Words are redefined at will, detached from any recognised meaning, and facts are simply ignored. That a military incursion, the kidnapping of a head of state, and the takeover of a country are not classified as an invasion is plainly absurd.”

Polymarket user accused of insider trading

The dispute also led to chatter about the timing and scale of some of the Venezuela-related wagers, which were compared to a separate controversy last year when a trader correctly bet on the winner of the Nobel Peace Prize.

The anonymous account that won over $400,000 was created on December 26, and in the days that followed, it placed several bets in four contracts on US actions in Venezuela. When the user wagered more than $32,000 that Maduro WOULD be removed from power by the end of January, the “yes” outcome was priced at just a 7% probability.

Yet, Polymarket’s chief executive, Shayne Coplan, has previously asserted that insider trading might be beneficial to the public. “What’s cool about Polymarket is that it creates this financial incentive for people to go and divulge the information to the market,” Coplan said at an Axios Business event last year.

The platform’s competitor, Kalshi, on the other hand, bars insider participation and prohibits government officials from trading on contracts in their areas of influence. According to Kalshi’s rules, a government official involved in US decision-making would have been blocked from making a trade linked to the Maduro operation. 

“Kalshi explicitly prohibits insider trading of any form, including government employees trading on prediction markets related to government activity,” spokeswoman Elisabeth Diana told reporters. “We’re looking at the specifics of the bill, but we already ban the activity it cites and are in support of means to prevent this type of activity.”

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