Prediction markets, pardons spark questions over who's profiting from Trump's presidency

William Brangham:

The Pentagon today is strongly denying a report by The Financial Times that Defense Secretary Pete Hegseth's stockbroker was seeking to make large investments in major defense companies in the days right before the U.S. and Israel first struck Iran.

That report is raising yet more concern about the many people in and around the Trump administration who seem to be profiting in unusual ways.

White House correspondent Liz Landers takes a closer look.

Liz Landers:

Early last week, as the United States and Iran continued to exchange strikes in the Middle East, there was a spike in the crude oil futures trading volume around 6:49 a.m. Eastern time. A few minutes later, at 7:05 a.m., the president posted on his social media platform that he was suspending strikes on Iranian power plants and energy infrastructure for five days.

The stock market opened up and oil prices went down. A combined $800 million in trades was made. The timing of the market movement could be coincidental, but it produced a windfall all the same. And traders aren't just getting rich in traditional marketplaces.

Polymarket, a prediction marketplace where individuals can bet on anything from sports to politics, has seen several users bet specifically on U.S. military action related to Iran and rake in money. Before the president's latest announcement claiming the U.S. and Iran were actively engaged in productive talks, several newly created accounts bet nearly $160,000 that a cease-fire will happen by March 31 or April 15.

After the president's comments, the value of those bets doubled and stand to pay out to $1 million if the cease-fire happens by April 15. Who's behind these bets? Polymarket and other online prediction market sites like Kalshi allow users to place bets anonymously so the identity of the bettor remains unknown.

But potentially lucrative payouts like these have raised concerns about the possibility of insider trading, says David Hill, a journalist who writes about gambling for "Rolling Stone" and hosts the podcast "American Gambler Book Club."

David Hill, American Gambler Substack:

I think that it's right for us to assume that there is a lot of insider trading that goes on prediction markets, just as there's a lot of insider trading that goes on in the stock market. You know, lots of people know the outcomes of these things prior to the public knowing them. And so some people are going to be opportunistic about that and take advantage of it.

Liz Landers:

Polymarket, which calls itself the world's largest prediction market, announced new rules last week clarifying three categories of prohibited insider trading conduct, banning trading that involves stolen confidential information, illegal tips, and trading by people who can influence outcomes.

They even specifically give an example about military members betting on military operations, advising that's banned. It's raising questions about the morality of betting on these actions, which inevitably involve life-or-death situations.

David Hill:

I personally would not want to make a bet on whether or not somebody would live or die.

I think that one of the things that's a concern here is that, if there is a market on something like death, that there is sort of moral hazard involved, right, and that people shouldn't be allowed to wager on predicting somebody's death, not just because it's moral, but also because there may be -- that it creates these sort of perverse incentives, and that people's lives are involved and are at stake.

Liz Landers:

Kalshi told us that government employees are not permitted to place predictions on geopolitical markets and said it does not comment on potential investigations. Polymarket did not respond to questions from PBS News.

There are at least eight bills in Congress seeking to regulate prediction markets, including a bipartisan House bill that would bar elected government officials, senior federal staffers and their families from trading in prediction markets.

But these platforms aren't the only way that people are profiting off of politics these days. For others with ties to the president or who claim to have connections to him, there's another lucrative business opportunity that's emerged, lobbying for presidential pardons.

Trump's prolific use of his clemency powers has been controversial from the beginning.

President Donald Trump:

We hope they come out tonight, frankly.

Liz Landers:

Hours after he was sworn in for a second term, he pardoned more than 1,500 defendants involved in the January 6 Capitol attack. Dozens of other high-profile pardons have followed, involving political figures, business leaders and people with personal connections to the president or his allies.

And lobbyists have stepped in to help facilitate who can get through to the administration, earning millions.

Ken Vogel is a reporter for The New York Times.

Ken Vogel, The New York Times:

In the first year of Trump 2.0, we saw $5.2 million in lobbying fees disclosed for pardon-related or clemency-related lobbying efforts. And that was eight times more than what we saw in the final year of the Biden administration.

Liz Landers:

Vogel says this has created a sort of pay-for-play mentality during the Trump administration, where people with money and connections can skip to the front of the pardon line.

Ken Vogel:

It's created this sort of pardon industrial complex that in some ways seems to turn on its head the idea that the people who are most deserving All right,e the ones who are going to get clemency, and instead sort of reward people who either have connections or the ability to pay people who have connections to get directly to President Trump.

Liz Landers:

And while President Trump in his speeches says attacking fraud is a major priority...

President Donald Trump:

We're cracking down on the Somali scams, ending the brazen and shameless theft of taxpayer dollars.

(Cheering)

Liz Landers:

... his decisions about who gets a pardon seem to be at odds with that. More than 50 of the pardons and commutations he has made in his second term are for fraud. White-collar offenses such as money laundering, bank fraud and wire fraud are among the most frequent crimes he has wiped clean.

In a statement, the White House press secretary, Karoline Leavitt, said -- quote -- "President Trump exercises his constitutional authority to issue pardons and commutations at his discretion. Anyone spending money to lobby for pardons is foolishly wasting their money. The Trump administration has a robust pardon review process, which includes White House counsel, the Department of Justice and ultimately the president himself as the final decider."

Many of the people granted clemency by Trump had their financial penalties and restitution forgiven, totaling tens of millions of dollars. But for their victims:

Ken Vogel:

They're appalled. To them, this is sort of an, like, insult to injury. And these pardons and in some cases even the commutations wipe away those obligations, those financial obligations. So this is sort of taking money out of the victims' pockets, or at least stopping an avenue that might otherwise result in them getting at least some compensation for the financial losses that they have incurred at the hands of these people who have gotten pardons.

Liz Landers:

For people in the White House orbit, there is potentially big money to be made trading in the currency of access to either information or to the ear of the president.

For the "PBS News Hour," I'm Liz Landers.