Prediction Markets Draw Scrutiny as Users Earn Millions of Dollars on Bets Placed in Lead-Up to American Strikes on Iran

America’s most popular prediction markets, Kalshi and Polymarket, are drawing scrutiny after it was shown that users made hundreds of thousands, if not millions, of dollars on bets related to the American strikes on Iran and the results of the attack. Several members of Congress say the incidents must be investigated. For more than a year, professional bettors and other online sleuths have found countless suspicious trades across prediction markets, the cryptocurrency space, and in the stock market ahead of President Trump’s policy shifts. Last year, one crypto shortseller made $160 million in a single day off of well-time trades placed in the hour before Mr. Trump threatened the People’s Republic of China with a 100 percent tariff. On Saturday night — less than 24 hours after the first American and Israeli bombs hit targets in Iran — Congressman Mike Levin pointed out that similarly shady trading had been going on ahead of the strikes. “It appears that a Polymarket account called ‘Magamyman’ made $515,000 in a single day betting on last night’s U.S. strike on Iran, with the first trade placed 71 minutes before the news broke publicly,” Mr. Levin wrote on X. The account lists dozens of bets made by the user over the course of the last several months. Until Sunday, “Magamyman” was making a few thousand dollars here and there betting on other geopolitical issues related to the Middle East, including whether or not Iran would strike Israel, or whether Israel would invade Syria. The $515,000 payout on Saturday came as a result of those bets being placed in the minutes leading up to bombs landing in Iranian territory. Those questions that led to the payout on Polymarket included whether the U.S. would strike Iran by Sunday and if Israel would launch an attack. “When this person bought in, the market had this at a 17 percent probability. They turned roughly $87,000 into over half a million dollars overnight,” Mr. Levin wrote Saturday night. “Prediction markets cannot be a vehicle for profiting off advance knowledge of military action. We need answers, transparency, and oversight.”Mr. Levin noted that prediction markets like Polymarket and Kalsh have ingratiated themselves with the Trump administration at an impressive speed. Before Mr. Trump even returned to the White House, Kalshi announced that the president’s son, Donald Trump Jr., would be a paid “strategic advisor” to bring “a fresh perspective to Kalshi.” In a press release, the company noted his “business experience and influence.”Polymarket then followed suit, bringing Mr. Trump on as an unpaid advisor for the prediction market platform last summer. The younger Mr. Trump is an investor in the firm. Across the two prediction market platforms, hundreds of millions of dollars have been bet on certain outcomes. On Polymarket, the question of whether or not the U.S. would strike Iran saw $529 million in bets placed on potential results. For Kalshi, however, the Iranian conflict has not come without a reputational cost for the firm. Beyond Mr. Levin’s criticism of the prediction market, Kalshi’s own users are revolting over how leadership at the company is handling one market — the question of whether or not Ali Khamenei, who was killed Saturday, would be removed from his position as Iran’s Supreme Leader. The way Kalshi’s prediction market works is users buy into binary contracts, meaning they can place money on the question of whether or not a certain event will take place. Users, for example, can enter into a “yes” contract with Kalshi to bet that Khamenei would be removed by a certain date. On Saturday, the odds that he would no longer be in his position by April 1 sat at just about 40 percent. Once reports of his death began circulating, those odds shot up to 60 percent, meaning those users could sell their “yes” contract at a higher price, therefore making a profit. Kalshi, however, decided to shut the market down as a result of Khamenei’s death. The firm’s co-founder said Saturday that Khamenei’s demise was not an outcome worthy of bettors getting a payout because the company does not allow users to bet on another person’s death. “We don’t list markets directly tied to death,” the company’s co-founder Tarek Mansour, wrote on X Saturday. “When there are markets where potential outcomes involve death, we design the rules to prevent people from profiting from death. That is what we did here.”

Prediction Markets Draw Scrutiny as Users Earn Millions of Dollars on Bets Placed in Lead-Up to American Strikes on Iran

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