The online prediction market Polymarket has sparked significant controversy by announcing it will not yet pay out on millions of dollars in wagers concerning a potential US invasion of Venezuela. This decision comes despite the dramatic capture of the country's president, Nicolás Maduro, by US forces last Saturday.
Betting Market in Uproar Over Unsettled Contracts
Traders had placed more than $10.5 million in bets on the likelihood of an American invasion this year, with the majority focused on a deadline of 31 January. The remainder were spread across contracts for the end of March and December. The market's activity surged last Friday when an anonymous trader invested $30,000 on the specific outcome of 'Maduro out by 31 January 2026'. Following the news of Maduro's capture on Saturday morning, that position appeared to show paper profits exceeding $436,000.
However, by Wednesday morning, the probability priced into the market for the question "Will the US invade Venezuela by 31 January?" had plummeted below 5%. This sharp drop occurred after Polymarket declared it would not settle the contract, arguing that the military operation to apprehend Maduro did not meet its criteria for an "invasion".
Platform's Definition Sparks Trader Fury
On its website, Polymarket clarifies that the bet specifically refers to "US military operations intended to establish control." The platform stated that President Trump's comments about the US intending to "run" Venezuela, made in the context of ongoing talks, did not alone qualify the mission to capture Maduro as an invasion.
This interpretation has incensed many users on the platform. One trader, using the name Skinner, posted: "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."
Rising Profile and Political Connections
The dispute highlights the growing influence and inherent complexities of prediction markets, which allow individuals to place binary bets on future events. Polymarket, which only received regulatory approval to operate in the US last year, is among several such platforms gaining popularity.
Notably, the platform has connections to political figures. Donald Trump Jr, the eldest son of the former president, has taken on advisory roles at both Polymarket and a competing platform, Kalshi. The platform was approached for further comment on the ongoing situation.
The controversy leaves the status of the $10.5 million in wagers in limbo, raising serious questions about contract definitions and settlement protocols in the rapidly evolving world of event-driven betting.
