A digital gambler known as "Magamyman" reportedly earned $600,000 by betting on U.S. military actions against Iranian leadership. This incident is part of a larger trend, as significant sums of money flowed into prediction markets associated with potential strikes on Iran and the status of Ayatollah Ali Khamenei.
Prior to the U.S.-led strikes on Iran, multiple reports indicated a notable increase in what some analysts describe as "suspiciously timed bets." According to Bubblemaps, a blockchain analytics firm, six individuals were identified as suspected insiders who collectively profited $1.2 million on the prediction market platform Polymarket just hours before the conflict escalated. The trade volume surrounding Khamenei's fate exceeded $55 million on Kalshi and $58 million on Polymarket.
In the wake of these events, Kalshi faced scrutiny for voiding certain trades connected to Khamenei's potential death, citing a "death carveout" rule that prohibits profit from death-related contracts. Instead of settling these contracts at their full value, Kalshi determined payouts based on the last traded price before Khamenei's death was confirmed. Kalshi co-founder Tarek Mansour acknowledged traders' frustrations and stated that the exchange would improve the clarity of its rules regarding similar markets in the future.
The juxtaposition of gambling on war and potential insider trading has prompted concerns among lawmakers, with Senate Minority Leader Adam Schiff calling for the Commodity Futures Trading Commission to consider banning such contracts. This isn't the first instance of prediction markets facing allegations of insider trading, as Kalshi previously suspended users for trading on nonpublic information.