By Joseph Adinolfi
Kalshi also faces a controversy surrounding its handling of a market tied to whether Iran’s supreme leader would remain in his position
Traders flocked to prediction markets to place bets this weekend as global markets were closed.
This weekend was a big one for prediction markets like Polymarket and Kalshi, but allegations of insider trading and a controversy surrounding the handling of one particularly sensitive market have set off a firestorm of criticism.
With global markets closed, investors around the world turned to prediction markets, and crypto-based decentralized exchanges like Hyperliquid, to hedge risk or speculate on the outcome and market impact of U.S. and Israeli strikes on Iran. Those attacks continued on Sunday. Iran has also retaliating against U.S. assets and allies in the region.
See: Here’s where traders expect crude-oil prices to open after this weekend’s attack on Iran
As tensions mounted in the days ahead of the attacks, traders flocked to both prediction markets to place bets on an expected conflict with Iran. Some markets tied to an expected conflict, like whether Iran’s Ayatollah Khamenei would soon be out as leader, proved particularly popular, and were promoted by both Kalshi and Polymarket.
On Saturday, allegations were raised by some on social-media platforms like X that insiders had apparently used prediction markets to profit from advanced knowledge of the strikes. Similar claims were raised following the U.S. strike on Venezuela that led to the capture of Nicolas Maduro.
“It’s insane this is legal. People around Trump are profiting off war and death. I’m introducing legislation ASAP to ban this,” said Connecticut Sen. Chris Murphy, in a post on X responding to some of these claims.
Murphy also shared another X post from Democratic Rep. Mike Levin, which showed that a Polymarket account called “Magamyman” made $515,000 in a single day betting that the U.S. would strike Iran.
Arizona Sen. Ruben Gallego also commented on Levin’s post: “Insider trading in broad daylight. This should be illegal no question. Pricks like this are cashing in on our service members dying. Disgusting and immoral,” he said. Three U.S. service members have been killed in action since the strikes began, and five more were seriously wounded, the U.S. military said on Sunday.
The White House didn’t respond to a request for comment from MarketWatch. But a White House spokesman told the Wall Street Journal that “the only special interest guiding the Trump administration’s decision-making is the best interest of the American people.”
Prosecutions for insider betting on international conflicts have already started in some jurisdictions. Earlier this month, Israel arrested army reservists for using sensitive information to place bets on strikes against Iran.
Meanwhile, Kalshi faced a controversy tied to its promotion and handling of a market tied to the fate of Iran’s supreme leader, Ayatollah Ali Khamenei. Khamenei was killed in the U.S. and Israeli strikes, Iranian state media confirmed on Saturday.
Kalshi is regulated by the Commodity Futures Trading Commission and says it doesn’t permit bets on wars or assassinations. However, some suggested the market on whether Khamenei would soon be “out” was effectively that.
“So this is more or less offering a proxy market on assassination,” said Amanda Fischer, former chief of staff at the Securities and Exchange Commission, in a post on X.
Late Saturday, Kalshi CEO Tarek Mansour defended his platform’s decision to host these markets. In a post on X, he said all fees would be refunded to users who participated in these markets, and that positions from before his death would be cashed out at the last-traded price. Some users groused on X about feeling cheated by the decision.
MarketWatch reached out to Kalshi and Polymarket for comment on Sunday, but didn’t receive a response. Polymarket has a data partnership with Dow Jones, the publisher of MarketWatch.
-Joseph Adinolfi
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
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03-01-26 1551ET
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