SINGAPORE – Online prediction markets are facing intense examination following millions of dollars in wagers placed on U.S. military strikes against Iran and bets regarding the removal of Ayatollah Ali Khamenei from his leadership position.
Khamenei died during Israeli military operations over the weekend.
Betting odds shifted dramatically as reports of his death spread, with analysts highlighting a surge of wagers placed on his removal both immediately prior to the strikes and earlier in January. Legal experts are now questioning whether these markets operate within the law.
Approximately $529 million was wagered across multiple Polymarket contracts related to attack timing, with successful bettors who predicted Saturday as the strike date receiving payouts. An additional $150 million was placed across two contested contracts concerning Khamenei’s removal as Iran’s supreme leader.
Data analysis company Bubblemaps reported on social media platform X that six user accounts generated $1.2 million in profits from Polymarket wagers funded just hours before Saturday’s military operations. Meanwhile, Polysights, a separate analytics company, had previously identified unusual purchasing activity in mid-January from newly created accounts with minimal transaction history, focusing on Iran-related contracts and specifically Polymarket bets predicting “Khamenei out” before March ended.
Polymarket did not respond to email requests for comment. The platform’s “Khamenei out” contracts are currently in a “debate period” following disputes from token holders regarding the outcome resolution.
Competing platform Kalshi also operated a “Khamenei out” market but ultimately refunded trader fees and returned payments based on the final trading price before his death, according to the company’s CEO who used social media to justify the firm’s approach to these wagers.
“When there are markets where potential outcomes involve death, we design the rules to prevent people from profiting from death. That is what we did here,” Kalshi CEO Tarek Mansour stated on X.
REGULATORY CONCERNS
Prediction markets provide tradeable contracts with yes-or-no outcomes, enabling users to place bets on various real-world events spanning sports, politics, and economic matters. Wager prices fluctuate between zero and 100 cents based on trading activity, typically paying $1 to winning bettors once results are verified.
Federal regulations prohibit betting that conflicts with public interest, potentially including warfare or political assassinations. Last month, six Democratic senators expressed concerns to the Commodity Futures Trading Commission (CFTC) that prediction markets may violate existing regulations.
“It’s insane this is legal… I’m introducing legislation ASAP to ban this,” Connecticut Democratic Senator Chris Murphy posted on X Sunday, responding to Bubblemaps’ analysis of Polymarket activity. Murphy was not among the six Democrats who signed the previous letter to regulators.
These betting platforms gained massive popularity following the 2024 U.S. presidential election, when their real-time probability calculations proved more reliable than traditional polling in forecasting Donald Trump’s electoral success.
Global prediction market trading volume reached $47 billion last year, according to Clear Street brokerage analysts, representing a betting surge that’s drawing both legal challenges and significant Wall Street interest.
ICE, which owns the New York Stock Exchange, has invested $2 billion in Polymarket, while trading platform Plus500 launched prediction markets on its U.S. consumer platform last month through a Kalshi partnership.
These platforms have also encountered insider trading allegations and operate in uncertain regulatory territory, with prediction market operators arguing they should fall under CFTC oversight rather than state gambling regulators.
In January, an unidentified trader earned approximately $410,000 in profits after betting on Venezuelan President Nicolas Maduro’s removal from office.
