The joint U.S. and Israeli attack on Iran has sparked a political backlash, with critics across the aisle questioning the White House’s unilateral military action.
But attention has also been focused on those profiting from the crisis in Washington through prediction market platforms Karsi and Polymarket, where traders bet on the outcome of conflicts and high-stakes geopolitical events.
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Concerns about insider trading were heightened last weekend when a Polymarket user known as “Magami Man” reportedly made more than $500,000 in one day betting on a U.S. and Israeli attack that would oust Iran’s supreme leader Ayatollah Khamenei.
California Democratic Rep. Mike Levin highlighted on social media platform
Other users named Planktonbet, Dicedicedice and nothingeverhappens911 also placed bets on the possibility of a U.S. attack within 24 hours of the attack, according to data compiled by analytics firm Bubble Map. All accounts were opened in February and bet exclusively on Iran.
This mirrors past incidents that horrified lawmakers amid concerns about possible war profiteering and insider trading.
Red flags were raised, for example, when one trader made a profit by predicting the abduction of former Venezuelan President Nicolás Maduro hours before it occurred, and another made a profit of $50,000 before opposition leader Maria Colina Machado won the Nobel Peace Prize.
Polymarket, which operates using cryptocurrencies and allows anonymous users, has faced intense scrutiny for this reason. Calsi is the only US-regulated prediction market that requires user identity verification and is supervised by the Commodity Futures Trading Commission (CFTC).
Prediction markets allow people to buy and sell “stocks” based on real-world events such as elections, sports, and geopolitical developments. Stock prices, like stocks, fluctuate depending on the perceived likelihood of an outcome, but each contract has an end date once the event ends, and the Iran attack position says the US will attack Iran by February 28, 2026, similar to gambling or sports betting. However, trading these results is similar to trading futures on a commodity such as oil.
“The core issue here is: should we gamble in our democracy, or should we create futures markets? Should we do this about geopolitics and war? Sports are entertainment, you bet on something, but the rule of law, civil It’s a very different story when you talk about the integrity of sovereignty, the personal safety of people,” Ryan Kirkley, CEO of Global Settlement, a company that builds institutional blockchain payments infrastructure, told Al Jazeera.
“We need to take a step back and look beyond just the political implications and the Democratic versus Republican debate and evaluate whether this is a good thing for society.”
bipartisan backlash
Recent deals have prompted calls for reform.
On the right, former White House Office of Management and Budget Director Mick Mulvaney, who served in President Donald Trump’s first administration, launched a coalition called Gambling Is Not an Investment earlier this week, advocating for regulation of prediction markets similar to state-level gambling rules, including licensing, age limits and taxes.
Mulvaney previously supported legalizing sports betting in South Carolina while representing the state in the House of Representatives, but did not respond to Al Jazeera’s request for comment.
Gov. Spencer Cox of Utah, where sports betting is illegal, called for a complete ban on prediction markets.
“Rebranding gambling as a financial product does not diminish the harm it causes,” he wrote about X, and in another post called it “gambling, pure and simple.”
Cox’s position echoes that of former New Jersey Gov. Chris Christie, who called for state-level regulation and for betting markets to be regulated in the same way as sports betting companies. Sports betting is legal in some form in 40 states and Washington, DC.
Christie has long been an advocate of legal sports betting and has expressed concerns about the classification of prediction markets. His position comes as the association joins the U.S. Gambling Association as an advisor, pushing for greater oversight of prediction markets.
Leftist Sen. Chris Murphy (D) criticized Polymarket’s dealings with Iran as “insane” and promised to introduce legislation “immediately to ban them.”
Murphy was already working on a bill that would ban the industry entirely.
“I am working on legislation that would ban corrupt and unstable prediction markets where insiders (especially governments) who know the outcome can manipulate the game in favor of certain bets,” Murphy said in a post on X just the day before.
Murphy’s office did not respond to Al Jazeera’s request for further details.
In February, a group of 21 Democratic senators led by California Sen. Adam Schiff wrote a letter to CFTC Chairman Mike Selig calling for stronger regulation of the industry.
“The real-world implications are already clear: Prediction market platforms offer contracts that mirror sportsbook wagers and, in some cases, contracts related to war and armed conflict. These products circumvent national and tribal consumer protections, generate no public revenue, and undermine sovereign regulatory regimes,” the letter said.
Ahead of the 2024 U.S. presidential election, Al Jazeera reported that there were more than 1,300 public comments opposing Mr. Kalsi’s request for an election contract deal.
“This is utter insanity. By encouraging and rewarding interference in the political process for financial gain, it will contribute significantly to the continued deterioration of the democracy we cling to,” Ken Bell wrote in a comment at the time.
But there are concerns, especially about how platforms like Polymarket will be regulated. Polymarket technically does not allow US users to trade on its platform. Americans can observe the market, but they cannot actively participate.
“Polymarket theoretically no longer exists in the United States. It is not actually operating in the United States, it is operating abroad. It’s particularly egregious that someone was betting on a bomb plot, so it’s an ongoing problem for[Polymarket],” Alexander Tomic, Boston University’s associate dean for strategy, innovation and technology, told Al Jazeera.
Traders are located overseas, operate anonymously, and can trade using cryptocurrencies. Although US users are officially banned from accessing Polymarket, a 2024 CoinDesk investigation found that Americans were using VPNs to circumvent location restrictions.
damage control
Kalsi issued a statement, citing concerns over its position against Iran and pointing to its “death carve-out” policy, which prohibits the settlement of trades if the outcome of a certain event ends in death, and said it compensated users for their net losses in the violent events market.
“The death carve-out is important. As a federally regulated prediction market, we are required and feel it is important to ensure that we cannot directly profit from wars, assassinations, terrorism, and other violent outcomes,” CEO Tarek Mansour emphasized in a post on X.
“Khalsi does not approve of markets that are directly linked to death. We have put every precaution in this market to prevent people from trading based on the outcome of death. Our rules were clear from the beginning, we never changed them, and we settled based on them. We compensated for all commissions and net losses[on the Iranian positions]because we thought the UX could have been clearer for our users,” a Kalshi spokesperson told Al Jazeera.
“This market was important because a change in leadership in Iran would have major implications for the world order, including geopolitical, economic, and national security implications.”
However, Polymarket posted a disclosure regarding “Middle East Market” transactions defending its platform’s role.
“The promise of prediction markets is to harness the wisdom of crowds to create accurate, unbiased predictions about the events that matter most to society. That ability is especially valuable in heartbreaking times like today. After speaking with those directly affected by the attacks, they had dozens of questions, and we realized that prediction markets could give them the answers they needed in a way that TV news and X could not,” the memo said.
He continues to express his views on Iran, such as “Will the Iranian regime collapse by 2027?” “Who will enter Iran by June 30th?”
The platform had allowed positions on the possibility of a nuclear explosion, but Coinbase reported on Tuesday that it had withdrawn it.
Polymarket did not respond to a request for comment.
Polymarkets face continued scrutiny. CEO Shane Coplan was raided by the FBI in November 2024, when authorities seized his device amid concerns about betting on the 2024 presidential election and speculation that the platform’s position on Donald Trump’s election victory had swayed voters.
There was opposition, calling the platform “political revenge.”
According to the Wall Street Journal, Koplan faces allegations of creating a hostile work environment at the company, including yelling at employees, sometimes while shirtless.
In 2022, the platform faced a three-year ban by the CFTC, which was later relaxed for sports betting, but other political, business, technology and geopolitical markets remain inaccessible to US users.
trump tie
In July 2025, the U.S. Department of Justice discontinued its investigation into Polymarket. A month later, the company received backing from 1789 Capital, a venture firm associated with US President Donald Trump’s son Donald Trump Jr., who also joined Polymarket’s board of directors.
Mr. Kalsi also has ties to the government.
In January 2025, Donald Trump Jr. joined Calci as a strategic advisor. In May, the CFTC dropped an appeal by Mr. Carsi seeking to block a federal court decision that allowed him to offer bets on U.S. elections.
Several Kalsi staffers also joined the Trump administration. They include Eliezer Mishory, Mr. Kalsi’s former regulatory adviser, who joined the Department of Government Efficiency in April to oversee Securities and Exchange Commission matters. Samantha Schwab, a former business development staffer at Carsi, has joined the Treasury Department as deputy chief of staff.
