Market speculation over Iran attacks prompts insider trading allegations
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Bets placed on the ouster of Iran’s supreme leader Ayatollah Ali Khamenei drew scrutiny from prediction markets such as Polymarket and Kalishi on Monday, prompting Democratic US lawmakers to call for outlawing bets on military action that could enrich officials with inside knowledge.
Khamenei was killed in Israeli air strikes on Iran’s capital Tehran over the weekend. US lawmakers and analysts were betting on his removal in January and just before the attacks, raising long-standing concerns over the legality and ethics of such trades and the possibility of insider trading.
According to a Reuters review of Polymarket’s website, US$529 million was wagered on a series of contracts linked to the timing of the attacks and US$150 million was wagered on contracts to remove Khamenei as supreme leader.
Analytics firm BubbleMaps said on X that six accounts made profits of $1.2 million from Polymarket bets just hours before Saturday’s raid. Rival Kalshi also ran a bazaar on “Khamenei out”.
“This is crazy, this is legal,” Democratic Senator Chris Murphy said on Sunday X in response to BubbleMaps’ post. He also said, without providing evidence, that people around President Donald Trump were taking advantage of the conflict. “I am introducing legislation as soon as possible to ban this.”
“The only special interest guiding the Trump administration’s decision-making is the best interest of the American people,” White House spokesman Davis Ingle said in an email.
California Representative Mike Levin, a Democrat, also used an
“Prediction markets cannot be a means of profiting from advance knowledge of military action. We need answers, transparency, and oversight,” he wrote.
On February 23, Democratic senators raised concerns that prediction markets violated US regulations, and incentives for instigating conflict and disclosing classified information after a mysterious trader made a profit of nearly $410,000 betting on the removal of Venezuelan President Nicolas Maduro.
Polymarket did not immediately respond to a request for comment, but has argued that prediction markets use the wisdom of the crowd to make accurate, unbiased forecasts.
Kalshi said it does not allow bets directly linked to death. CEO Tarek Mansour said that the company made no profit in Khamenei Market after returning the fees to users. Kalshi is a regulated platform and says it places restrictions on insiders.
the current20:55When betting odds hit the news
And prediction markets, where people bet real money on real-world events, are moving into the news themselves. CNN and CNBC have struck deals with a company called Kalshi, opening up the possibility of betting on coverage of politics, the economy and even war. Reporter Danny Funt explains why this concerns journalists and ethicists, the risks of conflicts of interest and insider trading, and what happens to public trust when news becomes something you can bet on.
legal question
Prediction markets have exploded in popularity since the 2024 US election, when their real-time probabilities proved more accurate than polling in predicting Donald Trump’s victory.
They offer tradable yes-or-no contracts that allow users to bet on a wide range of real-world events from sports to politics and the economy. The cost of bets fluctuates between zero and 100 cents, and is usually paid out when the result is confirmed.
US law prohibits wagering contrary to the public interest, which may involve or be related to war or assassination. Trading on non-public information may be illegal, depending on the market, the nature of the information, and who is trading it.
Platforms have developed into a regulatory gray area. The Commodity Futures Trading Commission, which oversees most listed derivatives trading, lost a court battle to ban its bets on the outcome of the US elections.
The CFTC has since said it believes prediction markets are within its scope and plans to create a federal framework to oversee them.
A CFTC spokesperson did not respond to a request for comment Monday.
Global trading volume in prediction markets last year was $47 billion, according to analysts at brokerage Clear Street, which attracted the attention of traditional Wall Street firms eager to get a piece of the action.
New York Stock Exchange parent ICE has taken a $2 billion stake in Polymarket, while trading platform Plus500 last month launched a prediction market on its US retail interface through a partnership with Kalshi.
