Millions Wagered on Iran Conflict as Lawmakers Question Legality of War Betting
As global tensions escalated following U.S. and Israeli strikes on Iran, online prediction markets saw a surge in high-stakes betting — prompting concern from lawmakers and ethics watchdogs.
Over the weekend, military operations by the United States and Israel reportedly killed Iran’s Supreme Leader, Ali Khamenei. In the immediate aftermath, users flocked to platforms including Polymarket and Kalshi, wagering on everything from the timing of the strikes to the prospect of regime change in Tehran.
Hundreds of Millions Traded
According to Reuters, approximately $529 million was traded on Polymarket in contracts related to when the U.S. and Israel would strike Iran. An additional $150 million was wagered on whether Khamenei would be removed from power by the end of March.
Kalshi reported $36 million in bets on the possibility of regime change in Iran, while Polymarket saw $31 million traded on whether Khamenei would remain in power through March 31.
Analytics groups tracking blockchain transactions said six newly created accounts earned roughly $1.2 million by correctly predicting that strikes would begin on Feb. 28 — the day the attacks were launched. Most of those accounts were reportedly created just hours before the military action began, raising questions about whether some traders may have had advance knowledge.
Lawmakers Raise Concerns
The timing of the bets has drawn criticism from U.S. lawmakers.
Sen. Chris Murphy called the situation “insane” and said he plans to introduce legislation aimed at banning this type of geopolitical betting.
Rep. Mike Levin also voiced concern, writing that “prediction markets cannot be a vehicle for profiting off advance knowledge of military action,” and calling for greater transparency.
Legal Gray Area
In the United States, traditional gambling laws generally prohibit contracts directly tied to acts of war, violence or assassination. However, prediction markets often operate online and, in some cases, offshore. They are regulated differently from conventional sportsbooks and casinos, placing them in what critics describe as a legal gray area.
Kalshi CEO Tarek Mansour defended his company’s policies, saying the platform does not allow contracts “directly tied to death” and that safeguards are in place to prevent users from profiting from loss of life. He added that Kalshi refunded certain fees and adjusted payouts related to markets connected to Khamenei’s reported death.
Polymarket has not publicly commented on the controversy.
Ethics Debate Intensifies
Beyond legality, the episode has sparked a broader ethical debate about whether financial speculation on military conflict crosses a moral line — especially if traders appear to benefit from inside information.
As geopolitical tensions continue, lawmakers are signaling that prediction markets could face increased scrutiny in Washington, with potential regulatory changes on the horizon.
