The recent killing of Iran’s Supreme Leader Ayatollah Ali Khamenei in Israeli air strikes over Tehran has prompted intense attention on US prediction markets. Platforms such as Polymarket and Kalshi, which allow users to trade contracts on real-world events, came under scrutiny after wagers were reportedly placed on his removal. Critics warn these markets may create ethical and legal risks by potentially enabling insiders to profit from sensitive events.
High Stakes and Political Alarm
A Reuters review of Polymarket data found that $529 million was bet on contracts linked to the timing of attacks, and $150 million was staked on bets predicting Khamenei’s ouster. Analytics firm Bubblemaps reported that six accounts earned $1.2 million from wagers placed in the hours before the strikes. Kalshi similarly offered a market on “Khamenei out.”
Democratic Senator Chris Murphy expressed shock on X: “It’s insane this is legal. People around Trump are profiting off war and death. I’m introducing legislation ASAP to ban this.” Representative Mike Levin also criticized the activity, writing, “Prediction markets cannot be a vehicle for profiting off advance knowledge of military action. We need answers, transparency, and oversight.”
White House spokesman Davis Ingle pushed back, asserting: “The only special interest guiding the Trump administration’s decision-making is the best interest of the American people.”
Concerns extend beyond taste, as markets that pay out on coups, wars, or leadership deaths could attract participants with privileged information or those close to decision-makers, raising the specter of insider trading.
Platforms Respond to Controversy
Polymarket defends prediction markets as tools that “harness the wisdom of crowds to create accurate, unbiased forecasts.” Kalshi clarified it prohibits wagers directly tied to death and refunded fees on the Khamenei market: “We included every precaution on this market to make sure people could not trade on the outcome of death.”CEO Tarek Mansour noted Kalshi did not profit.
Supporters argue these platforms provide real-time insight during crises, sometimes surfacing consensus faster than polls or news coverage, though ethical concerns persist.
Legal Ambiguity and Growing Oversight
Prediction markets gained attention during the 2024 US election for their predictive accuracy. They allow yes-or-no contracts on politics, sports, and economics, with prices reflecting outcome likelihood.
US law prohibits wagers “contrary to the public interest,” which can include war or assassination, and trading on nonpublic information may be illegal depending on circumstances. The CFTC lost a bid to ban election-related bets but plans to establish a federal regulatory framework.
Congressman Mick Mulvaney’s group, Gambling Is Not Investing, urges stricter compliance: “Rebranding sports wagering as ‘trading’ or ‘investing’ or ‘predicting’ misleads consumers, undermines responsible gaming protections, and weakens the state and tribal systems built to protect the public and fund vital community services.”
As scrutiny grows, platforms and lawmakers face pressure to clarify permissible activity, balancing predictive insights with ethical and legal responsibility. The Khamenei wagers illustrate risks when prediction markets intersect with high-stakes international events.
Source:
“Prediction market bets on Iran strikes stoke insider trading, ethics scrutiny”, reuters.com, March 2, 2026
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