Lawmakers call for ban on prediction markets involving insider trading on military actions
Traders made millions betting on Iran events, with one user winning nearly $600,000
Concerns grow over ethical implications of betting on death and military outcomes
Kalshi implements "death carveout" to prevent direct profiting from assassination
Prediction markets face increased scrutiny from regulators
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Democratic Senators Chris Murphy and Ruben Gallego are raising concerns about potential insider trading in prediction markets following millions of dollars in wagers on the fate of Iranian Supreme Leader Ayatollah Ali Khamenei and timing of U.S. military strikes in Iran in March 2026, after one trader made nearly $600,000 on strike timing predictions and six suspected insiders reportedly profited $1.2 million from bets placed hours before President Trump announced the strikes that killed Khamenei. The controversy erupted as prediction market platforms Kalshi and Polymarket saw massive trading volumes, with a single Polymarket contract drawing $4 million in bets on whether the U.S. or Israel would strike Iran first, while contracts on Khamenei's ouster generated over $113 million combined across both platforms.
Lawmakers have expressed outrage at what Senator Murphy described as "insider trading in broad daylight," with the Connecticut Democrat vowing to introduce legislation to ban such practices, while Senator Gallego questioned the ethics of allowing people to profit from war and death. The scrutiny intensified after blockchain analytics firm Bubblemaps revealed that six suspected traders made $1.2 million by betting on a U.S. strike on Iran just hours before it was announced, with one individual turning a $26,000 wager into more than $200,000. Meanwhile, critics argue that contracts on Khamenei's ouster effectively function as assassination markets, with Amanda Fischer of Better Markets labeling them "more or less offering a proxy market on assassination."
In response to the growing concerns, Kalshi implemented a "death carveout" for its Khamenei contract, stating that if the leader is removed due to death, the market will resolve based on the last traded price before his demise. The company emphasized that it does not allow bets on the death of public figures and doesn't offer markets on military strikes, citing their illegality under the Commodities Exchange Act. Meanwhile, six senators have sent a letter to the Commodity Futures Trading Commission requesting a categorical prohibition of contracts that resolve upon or correlate to an individual's death, giving the agency until March 9 to respond. The Coalition for Prediction Markets has agreed that "contracts involving death have no place on American exchanges," while Kalshi has already suspended and fined users for insider trading, including an employee of popular YouTuber MrBeast.
🏷️ Themes
Insider Trading, Prediction Markets, Military Betting, Ethics of Speculation
Ali Hosseini Khamenei (born 19 April 1939) is an Iranian cleric and politician who has served as the second supreme leader of Iran since 1989. He previously served as the third president of Iran from 1981 to 1989. His tenure as supreme leader, spanning 36 years, makes him the longest-serving head of...
Kalshi Inc. is a web-based prediction market platform based in Manhattan, New York City. Launched in July 2021, the platform is used primarily for traditional sports betting, which constitutes more than 90% of the activity on the site and 89% of the site's revenue in 2025.
Polymarket is a global cryptocurrency-based prediction market, headquartered in Manhattan, New York City. Launched in 2020, it offers a platform where individuals can place bets on future outcomes, including sports matches, economic indicators, weather patterns, awards, and political and legislative...
Christopher Scott Murphy (born August 3, 1973) is an American lawyer, author, and politician serving since 2013 as the junior United States senator from Connecticut. A member of the Democratic Party, he served from 2007 to 2013 in the United States House of Representatives, representing Connecticut...
MoneyWatch Prediction markets draw scrutiny over Iran bets: "Insider trading in broad daylight," senator says By Mary Cunningham Mary Cunningham Reporter, MoneyWatch Mary Cunningham is a reporter for CBS MoneyWatch. She previously worked at "60 Minutes," CBSNews.com and CBS News 24/7 as part of the CBS News Associate Program. Read Full Bio Mary Cunningham Updated on: March 2, 2026 / 4:46 PM EST / CBS News Add CBS News on Google Wagers on popular prediction markets tied to the fate of Iranian Supreme Leader Ayatollah Ali Khamenei and the timing of U.S. military strikes in the country are drawing scrutiny over possible insider trading and the ethics of betting on death. Users of Kalshi and Polymarket have flocked to the platforms in recent weeks to wager millions on potential actions involving Iran. For instance, one Polymarket contract from January drew $4 million in bets on whether the U.S. or Israel would strike Iran first. Wagers about Iran have translated to windfalls for some users. One trader, under the account name " Magamyman ," made nearly $600,000 on the timing of U.S. and Israeli strikes on Iran, according to data from Polymarket. The timing of these bets is prompting some lawmakers to question whether the wagers were made based on inside information, with Sen. Chris Murphy, a Democrat from Connecticut, vowing to introduce legislation to curb such practices. At the same time, ethical concerns are growing over allowing users to speculate on certain issues. President Trump announced that Khamenei was killed in U.S. and Israel-led strikes on Saturday. Iranian officials confirmed his death later that day. "It's insane this is legal" Concerns over possible insider trading surfaced after Polymarket users placed bets on the timing of U.S. strikes on Iran. Traders wagered over half a million dollars on the platform's contract entitled "US strikes Iran by...?". Scrutiny escalated after Bubblemaps, a blockchain analytics firm, posted on X that "six suspected insider...
