TLDR
- Polymarket bettors put the chance of Iran’s regime collapsing by March 31 at just over 20%, down from 40% after Khamenei was killed
- A trader turned a $23,000 bet into a $120,000 profit by betting on Khamenei’s removal hours before the U.S.-Israel strike
- Polymarket’s own social media has flagged over two dozen suspicious trades on its platform
- An Israeli military reservist was arrested for allegedly using classified information to trade on Polymarket
- Kalshi bans insider trading in its rulebook; Polymarket does not
Prediction markets Polymarket and Kalshi are under growing scrutiny after a series of well-timed trades surrounding the U.S. and Israeli strike on Iran, which killed Supreme Leader Ayatollah Ali Khamenei.
Hours before the attack, one trader placed a $23,000 bet that Khamenei would be removed from power by March 31. When President Trump confirmed Khamenei’s death, that bet paid out $120,000.
The trade quickly drew attention online and in the press. It is the latest in a string of suspicious bets that have raised questions about whether insiders are using classified information to profit on the platforms.
Polymarket’s own social media account has flagged more than two dozen such trades over time. One post called out a $68,000 bet on Kevin Hassett becoming Federal Reserve chair, placed by a new anonymous account. The post suggested the trader may have had inside knowledge. In the end, Hassett did not get the job. About half of the flagged bets paid off, according to a Barron’s review.
A Pattern of Suspicious Trades
The pattern goes back further. In early January, a trader placed a $30,000 bet on Venezuelan President Nicolás Maduro being removed from power, hours before U.S. forces captured him. The bet paid out $400,000.
That trade led U.S. Representative Ritchie Torres to introduce a bill that would bar federal workers from trading on prediction markets.
Then last month, an Israeli Defense Forces reservist was arrested and charged for allegedly trading on Polymarket using classified military information. Israeli police said the trades posed a “real security risk” to state operations.
Kalshi also suspended two accounts last week. One belonged to a former California gubernatorial candidate who bet on himself to win. The other was an employee of YouTube star MrBeast who traded contracts tied to his employer’s videos. The Commodity Futures Trading Commission said both cases were potential violations of insider trading law.
How the Two Platforms Differ
Kalshi’s rulebook explicitly bans insider trading. Polymarket’s does not.
Polymarket CEO Shayne Coplan told 60 Minutes in November that insider trading is “sort of an inevitability” on prediction markets and argued it brings benefits to the platform.
Edward Ridgely, a CEO who builds software for prediction-market traders, said there are clear cases where “insiders are obviously shaping the market.”
On the Iran outcome specifically, Polymarket trading volume in the regime-collapse contract has topped $14 million. Bettors currently place a 42% chance of the Iranian regime falling by June 30, and 50% by year-end.
The Coalition for Prediction Markets, a trade group that includes Kalshi but not Polymarket, ran a full-page Washington Post ad in January stating that regulated prediction markets already ban insider trading.
