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2d ago

Prediction Markets Face Scrutiny After Big Payouts on Iran Strike Bets

Freshly funded wallets with precisely timed wagers have prompted senators to urge the CFTC to rein in death‑linked contracts.

Two men on a motorcycle decorated with a picture of the late Iranian Supreme Leader Ayatollah Ali Khamenei ride ahead a group of government supporters near Khamenei's residency in Tehran, Iran, Sunday, March 1, 2026, in the aftermath of his confirmed death in U.S. and Israeli strikes.
A protester holds an image of Iran's Supreme Leader Ayatollah Ali Khamenei as supporters of Iraqi Shi'ite armed groups attempt to move toward the U.S. embassy located in Baghdad's Green Zone, while riot police deploy to block their advance, following the Israel and U.S. strikes on Iran and the killing of Iran’s Supreme Leader, in Baghdad, Iraq, March 1, 2026. REUTERS/Ahmed Saad
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Overview

  • Roughly $529 million traded on Polymarket contracts tied to the timing of U.S.-Israel strikes on Iran, with the Feb. 28 date resolving to yes.
  • Blockchain firm Bubblemaps said six newly created wallets, funded within hours of the raids, collectively profited about $1.0–$1.2 million by betting on a Feb. 28 strike.
  • Kalshi handled its Khamenei "out" market by reimbursing fees and settling positions at the last traded price before his death, after user disputes over the posted rule language.
  • Analytics group Polysights earlier flagged unusual January buying by new wallets in Khamenei-related markets, and Polymarket’s Khamenei contracts entered a debate period after resolution was challenged.
  • Six Democratic senators pressed the CFTC to ban contracts that resolve on or correlate to death, while Polymarket publicly defended such markets as crowd-driven forecasting tools.