As bombs fell in the middle east this weekend, traders on prediction markets such as Polymarket and Kalshi saw windfall gains on bets ranging from the date of the United States attack to the killing of Iran’s Supreme Leader Ayatollah Ali Khamenei.
Trades on reached $529 million, while Kalshi recorded $36 million in bets regarding a regime change in Iran following the death of Khamenei. Analysts at Bubblemaps SA found that six accounts made roughly $1 million in profits by betting on the exact date of the attack, 28 February.
Analytics firm Polysights said contracts tied to the potential overthrow of Iran’s supreme leader implied a 40% likelihood, but its data showed that 90% of accounts flagged for alleged supported the contract.
Comments on the Bubblemaps post ranged from jokes such as: “Another day, another insider trading on prediction markets”, “Insiders, insiders everywhere (make crime great again)”, and “I’m tired boss”.
To more pronounced outrage and call for action. One user wrote: “How is this legal let alone ethical?”, “These prediction markets need to be shut down. The 2006 UIGEA law used to show down e-poker should be extended to apply to the Sports Books like Draft Kings and Prediction Markets like .”
Kalshi shuts trade, reimburses losses
With the bets on US attack and Khamenei’s death pulling millions, Kalshi issued clarifications on social media and then shut trading later. Tarek Mansour, co-founder and CEO of also promised to reimburse all fees from this market — a move that cost the company about $2.2 million, Bloomberg report adding citing a source.
A spokesperson for Kalshi told the publication, “Our rules were clear from the beginning, we never changed them, and we settled based on the rules. We reimbursed all fees and net losses because we thought the UX could have been clearer for users.”
Polymarket didn’t immediately reply to a request for comment.
Are prediction markets rigged? Critics slam alleged insider trading
But the bucks have now attracted criticism over rigging and insider trading, as some accounts made bank on information that seemed suspiciously accurate. Notably, regular prohibit contracts tied to assassination, terrorism and war.
Largely left unregulated, the prediction markets have little to no oversight on unfair practices. And tracking patterns showed that some newly created accounts placed only specific bets — sometimes hours before they happened — and made big money.
In a bid to rein in the situation, Kalshi said it would settle the Khamenei contract based on last offered price, instead of binary win, if he died. The bet attracted over $50 million in volume, as per a Bloomberg report.
The platform, which is regulated by the US Commodity Futures Trading Commission () told the publication it does not offer markets that settle on death.
Senator Chris Murphy, a Connecticut Democrat over the weekend said he is drafting legislation to ban what he called “corrupt and destabilizing prediction markets, where insiders who know the outcome, especially in government, can rig the game to favor certain bets.”
In a post on X, the Coalition for (the industry trade group, which includes Kalshi as a member), responded to Murphy saying that “contracts involving death have no place on American exchanges.” Days later, one of its members had to effectively halt a contract because its subject was killed.
About Polymarket and Kalshi
Kalshi was established by financial analysts Mansour and Luana Lopes Lara in 2018 and has received funding from venture capital (VC) firms Sequoia, , and Y Combinator, among others. It has been valued at $11 billion and has struck a deal with Tradeweb Markets Inc.
Polymarket was founded by CEO Shayne Coplan and has investment from a number of VC funds, including Intercontinental Exchange (ICE), the parent company of the New York Stock Exchange () and Trump Jr’s 1789 Capital. It has been valued at $9 billion and operates offshore, largely outside US regulatory oversight.
These platforms together handled tens of billions in combined volume last year.