Prediction market platforms like Kalshi andPolymarket are facing pressure after users placed larger bets on the events connected to the U.S. strikes on Iran, which include contracts linked to the death of Iran’s Supreme Leader, Ali Khamenei. According to the reports, more than $529 million was traded on the Polymarket contracts related to the timing of the strikes. Kalshi’s market is asking whether Khamenei has generated over $50 million in trading volume.
Lawmakers Demand Regulatory Actions
Six Democratic senators have urged the Commodity Futures Trading Commission (CFTC) to ban prediction contracts that are linked to or correlate with a person’s death. In a letter to CFTC Chairman Michael Selig, the senators argued that such markets pose a serious ethical and national security risk.
Tarek Mansour, Kalshi CEO, defended the platform, stating that Kalshi does not list contracts directly tied to death and designs rules to prevent users from profiting from someone’s death. However, confusion emerged over how the Khamenei contract was settled. Under Kalshi’s official rules filed with the CFTC, which are to be settled at the last traded price before Khamenei’s death.
Kalshi later admitted the wording was unclear. The company announced it would refund all the trading fees from the market and fully reimburse traders who placed bets after Khamenei’s death.
Polymarket, which operates outside U.S. regulations and only requires a crypto wallet to trade. Blockchain analytics firm Bubblemaos reported that six newly created accounts made about $1 million in profit by correctly betting on the strike date. Some of these bets were placed just hours before the attack occurred. This debate highlights how prediction markets should be regulated. Kalshi operates under U.S. oversight by the CFTC, while Polymarket operates offshore with fewer restrictions.
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