Bets on the removal of Iran’s Supreme Leader Ayatollah Ali Khamenei have raised concerns about prediction markets like Polymarket and Kalshi, leading U.S. lawmakers to call for a ban on wagers related to military actions that could benefit individuals with privileged information.
The recent Israeli air strikes in Tehran resulting in Khamenei’s death prompted scrutiny of bets made both before the attacks and earlier in January. This has reignited debates on the legality and ethical implications of such trades, including the risk of insider trading. Polymarket’s website showed hefty sums of $529 million wagered on attack timing contracts and $150 million on Khamenei’s removal as supreme leader.
Bubblemaps reported that six accounts profited $1.2 million from Polymarket bets made just before the weekend’s raids, with Kalshi also running a market on the prospect of Khamenei’s ousting.
Democratic Senator Chris Murphy criticized the legality of such actions following revelations of potential profiteering by individuals linked to President Trump. In response, he announced plans to introduce legislation to outlaw these practices. The White House, represented by spokesperson Davis Ingle, emphasized that decisions are made in the best interests of the American people.
Another Democratic Representative, Mike Levin, highlighted a Polymarket bet placed shortly before the Iran strikes, calling for transparency and oversight to prevent profiting from sensitive information. This comes after concerns raised by Democratic senators in February about the breach of U.S. regulations and the potential disclosure of classified data through prediction markets.
While Polymarket has emphasized the crowd-sourced accuracy of its forecasts, Kalshi clarified that it does not allow bets directly linked to death. CEO Tarek Mansour stated that the company did not profit from the Khamenei market and refunded fees to users, highlighting their regulatory compliance and measures against insider trading.
Prediction markets, which have surged in popularity since the 2024 U.S. election, offer tradable contracts on various real-world events. U.S. laws prohibit bets contrary to public interests, especially those involving war or assassination. The regulatory status of these platforms remains uncertain, with the Commodity Futures Trading Commission planning to establish federal oversight to address these concerns.
Despite the growing global trading volume in prediction markets, estimated at $47 billion last year, traditional financial institutions are increasingly exploring partnerships in this sector. For instance, the New York Stock Exchange’s parent company has invested in Polymarket, while Plus500 recently introduced prediction markets on its U.S. platform through collaboration with Kalshi.
