A user known as “Magamyman” reportedly earned more than $553,000 on the prediction market Polymarket by wagering that Iran’s Supreme Leader, Ayatollah Ali Khamenei, would soon be out of power — a prediction that was resolved shortly before an Israeli strike killed him on Saturday. The sizable win has intensified scrutiny of prediction markets and renewed concerns that such platforms can allow people with access to sensitive information to profit from violence or military action.
Polymarket was also the venue for roughly half a billion dollars in wagers tied to the timing of potential U.S. strikes on Iran, highlighting how much money has flowed through these sites. Critics and some lawmakers say that creates dangerous incentives and opportunities for abuse. Sen. Chris Murphy (D-Conn.) criticized the trading on X, calling it “It’s insane this is legal,” and accused individuals close to former President Trump of profiting from war and death. Murphy said he plans to introduce legislation to ban such markets. The White House denied that anyone in Trump’s circle was responsible for the trades.
Still, the Trump family has business ties to Polymarket: Donald Trump Jr. is listed as an adviser to the company, and his venture firm 1789 Capital has made multi-million-dollar investments. The previous administration also dropped two federal investigations into Polymarket that had been initiated under the Biden administration.
This episode follows earlier incidents that raised red flags about 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 for allegedly using classified information to place bets on Polymarket during last summer’s clashes with Iran.
Many of the trades related to Khamenei’s potential removal were executed on Polymarket’s overseas exchange, which places them largely beyond the direct reach of U.S. regulators. Polymarket has received approval to open a U.S.-based platform but has not fully launched it; in the meantime, many American users access the offshore site through virtual private networks.
Most prediction markets fall under the Commodity Futures Trading Commission, which treats these wagers as futures contracts rather than as traditional gambling. U.S. commodity trading laws, however, bar trades that effectively let people profit from death or war, on the grounds that such arrangements create financial incentives tied to violence and human suffering.
Platforms have taken different approaches when markets touch on death. Kalshi, another major prediction market, ran a market on when Khamenei would be “out” that attracted more than $54 million in trades. When his death was confirmed, Kalshi paused trading and said it would refund fees and issue partial refunds based on the last traded price before confirmation. CEO Tarek Mansour said the company avoids listing markets explicitly tied to death and designs rules to limit ways people could profit from it.
Kalshi’s decision frustrated many traders, some of whom accused the company of misleading users after it had promoted the market. Users called the reversal a “scam” and criticized what they saw as a compliance-driven change to promised outcomes.
Amanda Fischer, a former Securities and Exchange Commission official now at the reform group Better Markets, urged Congressional action to stop the “perverse incentives and chaos caused by betting on death and destruction.” She argued that prediction markets enabling wagers tied to war or assassination should be prohibited and said the controversy over how Khamenei-related bets were handled underscores the need for clearer rules and stronger oversight.