By Kevin T. Dugan and Krystal Hur
Before U.S. and Israeli missiles struck Tehran, users of Kalshi and Polymarket placed short-term wagers that Iran's Supreme Leader, the Ayatollah Ali Khamenei, would be out of power.
Now, those bets are under scrutiny after the killing of Khamenei. Some U.S. lawmakers have raised questions about whether the markets should be allowed, and if some anonymous traders had inside information ahead of the strikes. Meanwhile, some users complained about how their bets were resolved.
"It's insane this is legal," Sen. Chris Murphy (D., Conn.) wrote in a post on X. "I'm introducing legislation ASAP to ban this." Murphy alleged that people around President Trump were "profiting off war and death." Asked for comment, White House spokesman Davis Ingle said, "the only special interest guiding the Trump administration's decision-making is the best interest of the American people."
The trades took place on both Kalshi and Polymarket, the two largest prediction markets. Kalshi, which is a U.S.-regulated entity, doesn't allow bets on wars or assassinations. There, users were offered the chance to bet on Khamenei being "out as Supreme Leader." On X, Kalshi Chief Executive Tarek Mansour promoted the market on Khamenei through his personal account.
Polymarket offered a market with similar wording, which it promoted at the top of its website. Bettors on the platform could also speculate on the date of a strike, with Feb. 28 as one option. Polymarket's offshore, unregulated marketplaces aren't subject to the same rules as Kalshi.
"So this is more or less offering a proxy market on assassination," Amanda Fischer, a former chief of staff at the Securities and Exchange Commission, wrote on X, in a message quote-tweeting Kalshi's promotion of the Khamenei market.
Kalshi and Polymarket said bets such as the ones regarding Khamenei's fate play an important role. "The promise of prediction markets is to harness the wisdom of the crowd to create accurate, unbiased forecasts for the most important events to society," Polymarket said in a note on its site.
Kalshi's Mansour compared the Khamenei market to oil futures, which he said could also serve as a proxy during wartime. "We believe that's different than having a market directly settling on someone's death," he wrote on X.
Polymarket has a data partnership with Dow Jones, the publisher of The Wall Street Journal.
War markets have been a particularly sensitive topic for prediction markets, given that information about strikes against foreign adversaries could rely on highly classified information, and those bets could put lives in danger.
Earlier this month, Israel arrested army reservists for using sensitive information to place bets on other strikes against the Islamic nation. The month before that, an anonymous trader made $400,000 by betting on the downfall of Venezuela's leader, Nicolás Maduro.
As for the situation in Iran, crypto-analytics firm Bubblemaps said it found what it called "six suspected insiders" who had made $1.2 million wagering on a U.S. strike through Polymarket. Most of them bet on a strike by Feb. 28, which turned out to be the exact date of the operation, the firm said. One such user bet $26,000 and won over $200,000, a return upwards of 657%.
Days before the Iran strike, a group of senators, including Sen. Adam Schiff (D., Calif.) urged the Commodity Futures Trading Commission to "prohibit any contract that resolves upon or closely correlates to an individual's death." The CFTC already prohibits contracts that involve terrorism, war or assassination.
The markets on Khamenei had long predated the Feb. 28 strike. Polymarket started taking odds in December on whether the Iranian leader would be out by April. Kalshi's market differed slightly, with users able to take bets on whether he would be out by September, July, or April.
For most of this year, these bets were long-shots. On Polymarket, for example, the odds of Khamenei leaving never breached 50%. Then, at about midnight -- just a few hours before the first coordinated attacks across Iran -- odds started rising sharply, from under 25% to more than 50%. For the rest of the morning, as rumors spread on social media that Khamenei was killed, the odds mainly kept going up.
As news of the strikes unfolded early Saturday in the U.S., it became clear that Khamenei was a target, but his fate wasn't known. Then, at 4:37 p.m. Eastern Time, Trump declared on Truth Social that Khamenei was dead.
A different kind of chaos ensued online, with users unclear on when, or if, they would receive payouts. Kalshi had posted midday Saturday on X that if Khamenei died, "the market will resolve based on the last traded price prior to confirmed reporting of death." A couple of hours after Trump's Truth Social post, Kalshi wrote that if the last-traded price were "unclear," its committee for reviewing outcomes would determine a "fair value."
The company added a note to its website stating that the market has been paused pending "further review of the situation," though it appeared that users could still place bets Saturday evening. Iran state television confirmed Khamenei's death hours after Trump first announced it.
Users flooded the comment section of Kalshi's site for the Khamenei market with complaints, demanding that it resolve the market to a "yes" after Trump declared on Truth Social that Khamenei was dead.
"I bet his ass was going to be dead before March a week or two ago," one user commented. "I want my f*cking money."
At 8:49 p.m. ET, Kalshi's Mansour posted on X that the company is refunding users all fees collected from the Khamenei market and will make payments based on the last-traded price before Khamenei's death. On Sunday morning, Mansour stated that users who placed bets after Khamenei's death will be refunded the difference between the price at which they bought the contract and the last-traded price before Khamenei's death. The reimbursements cost Kalshi $2.2 million, according to a person familiar with the matter.
Kalshi is defining the moment of Khamenei's death as a minute before the U.S. and Israel's military operation began, according to the person. Mansour's clarifications did little to appease traders, with some claiming they lost money despite betting that Khamenei would be out of power.
It isn't clear whether regulators will weigh in on the bets. Regulated U.S. prediction markets are overseen by the CFTC, which can ban certain contracts they deem against public interest. The agency didn't respond to requests for comment.
Write to Kevin T. Dugan at kevin.dugan@wsj.com and Krystal Hur at krystal.hur@wsj.com
(END) Dow Jones Newswires
March 01, 2026 14:42 ET (19:42 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
