Attacks on Iran spark more insider trading fears across prediction market platforms
Polymarket saw trading volume of over $500m on its “US strikes Iran” market, with six users making more than $1.2m in total, while Kalshi small print sparks social media backlash
Trading activity regarding the US and Israeli strikes on Iran have stoked further fears of insider trading across prediction market platforms.
On Saturday, February 28, a coordinated attack by the US and Israel on several Iranian locations led to the death of the country’s leader Ayatollah Ali Khamenei.
Prediction markets platform Polymarket first created its “US strikes Iran by…?” market on 22 December 2025.
The platform’s rules pertaining to the market stated: “This market will resolve to ‘Yes’ if the US initiates a drone, missile or air strike on Iranian soil or any official Iranian embassy or consulate between the time of this market’s creation and the listed date (ET). Otherwise, this market will resolve to ‘No’.
“For the purposes of this market, a qualifying ‘strike’ is defined as the use of aerial bombs, drones or missiles (including cruise or ballistic missiles) launched by US military forces that impact Iranian ground territory or any official Iranian embassy or consulate (eg if a weapons depot on Iranian soil is hit by an US missile, this market will resolve to ‘Yes’).”
Polymarket’s data showed that the market received trading volume of more than $529m.
Analytics firm Bubblemaps revealed six Polymarket traders had made a combined profit of $1.2m as a result of the strikes.
The firm noted the majority of the wallets used to place the trades were funded in the 24 hours prior to the attack.
Furthermore, most of the trades were for February 28 specifically, with many trades on the ‘yes’ option placed just hours before the strike.
Similar fears of insider trading were sparked on Polymarket’s platform earlier this year following the arrest of Venezuela president Nicolás Maduro.
Around $57m was staked on the exchange in trades related to Maduro, with one iuser making over $400,000 profit after betting $32,537 on the president being ousted by a certain date.
This led to proposals for new legislation restricting government officials from participating in prediction markets trades.
The case was later cited by the American Gaming Association and Indian Gaming Association when they wrote a joint letter to the US Congress calling for an intervention into the growth of prediction markets.
Terms and conditions
Rival prediction markets platform Kalshi endured its own controversy related to Khamenei’s death over the weekend.
The platform declined to payout on any trades relating to Khamenei being ousted from office by a certain date.
Kalshi CEO Tarek Mansour took to X to clarify the company’s position, confirming it wouldn’t pay out on any markets related to the leader’s or any individual’s death.
The firm reimbursed all trades related to the market, paying users out on the last-traded price before his passing.
As per Mansour’s post, any customers who held a position from after Khamenei died will be fully reimbursed from their cost of entry.
The CEO said: “We don’t list markets directly tied to death. 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.
“I know some of you disagree and prefer that we list these markets without a death carveout because it keeps the rules simple and because many traditional markets, like oil futures, can be proxy markets for war and death.
“But we believe that’s different than having a market directly settling on someone’s death, which is not allowed for US regulated entities.”
Last month, Kalshi announced a series of measures to help quash any fears of market abuse on its platform.
These included the formation of an independent surveillance advisory committee, the appointment of Robert DeNault as its head of enforcement, and a partnership with trade surveillance technology provider Solidus Labs.
Kalshi also partnered with the US Treasury’s former under secretary for terrorism and financial intelligence Brian Nelson, who will advise Kalshi on matters of market integrity, trading surveillance and financial compliance.
Speaking on a panel at the Blockchain Applications Stanford Summit, former Commidity Futures Trading Commission commissioner Caroline Pham said that prediction markets are “100% heading for the Supreme Court”.
The sentiment was echoed by PENN Entertainment CEO Jay Snowden during the oeprator’s Q4 analyst call last week.
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