An account trading under the username “Magamyman” earned more than $553,000 on the prediction market Polymarket by betting that Iran’s Supreme Leader, Ayatollah Ali Khamenei, would be out of power shortly before an Israeli strike killed him on Saturday.
The trades intensified scrutiny of prediction markets, with critics and some members of Congress warning the platforms can enable people with access to classified information to profit from lethal military actions. On Polymarket alone, roughly half a billion dollars was wagered on the timing of U.S. strikes on Iran.
Sen. Chris Murphy (D-Conn.) criticized the activity on X, saying “It’s insane this is legal” and alleging people close to former President Trump were profiting from war and death; he said he plans to introduce legislation to ban such markets. The White House denied that anyone in Trump’s circle was behind the trades.
Still, the Trump family has ties to Polymarket: Donald Trump Jr. is an adviser to the company, and his venture firm 1789 Capital invested millions. The Trump administration also dropped two federal investigations into Polymarket that had been opened by the Biden administration.
This episode follows prior suspicious activity on prediction markets. In January, an anonymous trader made large gains ahead of the arrest of Venezuelan leader Nicolás Maduro, and Israeli authorities charged two people in connection with using classified information to bet on Polymarket during last summer’s clashes with Iran.
Many of the trades tied to Khamenei’s removal occurred on Polymarket’s overseas exchange, placing them beyond direct reach of U.S. regulators. Polymarket has received approval to open a U.S.-based platform but has not fully launched it; many American users access the overseas site via virtual private networks.
Most prediction markets are regulated by the Commodity Futures Trading Commission, which treats them as futures contracts rather than gambling. U.S. commodity trading laws, however, prohibit making trades that profit from death or war because they create financial incentives tied to violence and human suffering.
How platforms handle markets tied to death has diverged. Kalshi, another major prediction market, ran a market on when Khamenei would be out that drew more than $54 million in trades. When his death was confirmed, Kalshi paused trading and later said it would refund fees and issue partial refunds based on the last traded price before confirmation. CEO Tarek Mansour said the company does not list markets directly tied to death and designs rules to prevent people profiting from it.
Kalshi’s action angered many traders, who felt misled after the company had promoted the market. Some users called the decision a “scam” and criticized what they saw as compliance-driven reversals of market outcomes.
Amanda Fischer, a former Securities and Exchange Commission official now at the reform group Better Markets, urged Congressional action to stop “perverse incentives and chaos caused by betting on death and destruction.” She argued that prediction markets enabling bets tied to war or assassination should not exist and that the controversy over how Khamenei-related wagers were resolved highlights the need for clearer rules.
