Israelis charged with using classified information to bet on Polymarket

TEL AVIV — Two Israelis have been charged in connection with the suspected use of classified information to place bets on the prediction platform Polymarket, authorities said Thursday.

The suspects, an army reservist and a civilian, were arrested on suspicion of placing bets on Polymarket “regarding the occurrence of military operations, based on classified information to which the reservists were exposed as part of their military duties,” Israel’s defense ministry, police and the Shin Bet domestic security agency said in a joint statement.

Israeli authorities did not elaborate on what the bets related to, but the Israeli Defense Forces stressed that “no operational harm was caused in this specific incident.”

The suspects were arrested following an investigation that authorities said had found sufficient evidence to indict them for “serious security offenses” as well as bribery and obstruction of justice.

Neither indicted suspect has been publicly identified. A lawyer for the reservist did not immediately respond to a request for comment from NBC News. It was not immediately clear if the other defendant has legal representation.

“The defense establishment emphasizes that engaging in such betting activities, based on secret and classified information, poses a substantial security risk to IDF operations and to the security of the state,” the defense ministry said in the statement.

A spokesperson for the IDF said in a statement: “The IDF views with utmost severity any act that endangers the security of the state, particularly the use of highly classified information for the purpose of personal gain.”

The IDF statement called it a “grave ethical failure and a clear crossing of a red line,” and added that disciplinary action would be taken against anyone found guilty of such crimes. “In response to the incident, measures have been taken and procedures will be reinforced across all IDF units to prevent similar cases from recurring,” it said.

Polymarket allows users to buy and sell shares on financial exchanges representing potential future outcomes, which are priced between 0.00 and 1.00 USDC, a cryptocurrency pegged to the value of the dollar. The platforms pay out depending on the outcome, but users are trading with each other and not against “the house” as with a traditional sportsbook.

Polymarket has multiple ongoing bets related to foreign policy and military action, including many relating to Israel.

On one titled “US strikes Iran by…?” users have bet the equivalent of $239 million.

Another, titled “Will Israel strike Gaza on…?” which expires on Feb. 28 has had the equivalent of more than $1.4 million in bets.

One Polymarket gambler made more than $400,000 last month betting that the U.S. military would depose President Nicolás Maduro of Venezuela.

U.S. users were previously banned from Polymarket and some have called for it to be regulated, amid broader concerns that prediction markets could be used to profit from access to classified information. Congressman Ritchie Torres, D-N.Y. introduced legislation last month to crack down on public officials making money from prediction platforms.

Polymarket did not immediately respond to a request for comment from NBC News.

Omer Bekin reported from Tel Aviv, and Patrick Smith from London.