Prediction Markets React to Heightened US Foreign Policy Activity

Prediction market activity has accelerated following President Donald Trump's raid on Venezuela, with traders placing larger bets on further geopolitical actions by the US administration.

Prediction market apps that allow users to wager on political outcomes saw increased volume as investors reacted to signs that the White House had embraced faster and more forceful international interventions. 

Market participants interpreted the operation as evidence that the administration was increasingly willing to use military power as a policy tool. This has prompted speculation about where attention could shift next.

Analysts assessing the trend described the administration's approach as more assertive compared to Trump's first term, with military action viewed as a viable option rather than a last resort. That assessment coincided with sharp moves on Kalshi, where odds tied to future US territorial or strategic actions climbed within days. 

Bets that the US would retake control of the Panama Canal before early 2029 rose above 35%, up from 30% the prior week, after Trump reiterated that he would not rule out force to secure the shipping route.

Markets tied to Greenland also moved rapidly. 

The probability that the US would take control of any part of the territory increased to 38% by Tuesday, having spiked above 46% over the weekend, while a separate market predicting a purchase of part of the island traded near 25%. Combined wagering on the Greenland-related questions has so far generated $2.5 million. 

Speculation also extended beyond territorial issues. On Kalshi, traders pushed the likelihood that Iranian Supreme Leader Ali Khamenei would leave office before next year to roughly 54%.

Suspicious Venezuela activity draws scrutiny

The surge in geopolitical betting has also intensified scrutiny on how prediction markets operate, particularly after a wager linked to Venezuela generated nearly half a million dollars in profit. 

On Polymarket, bets that Venezuelan President Nicolás Maduro would be removed from power by the end of January rose sharply in the hours before Trump publicly confirmed that Maduro had been captured. One account, created only weeks earlier, placed four Venezuela-related positions and turned a $32,537 stake into more than $436,000.

Market data showed the odds of Maduro's exit at around 6.5% on the afternoon of Jan. 2, before climbing to 11% late that night. They then jumped again in the early hours of the day after, shortly before Trump disclosed the operation on social media. 

Some traders reacted immediately before the news, indicating that they were reassessing the situation ahead of any public announcement. The account owner was not identified.

Some other trading accounts also accumulated tens of thousands of dollars in a similar manner. Market watchdogs criticized the action, claiming that the trade indicated the use of non-public information. 

The controversy has drawn political attention, with Congressman Ritchie Torres introducing legislation that would prohibit government employees from trading on prediction markets when they possess information related to a wager that isn't publicly available.