'Gruesome' War Bets Fuel Calls For Crackdown On Prediction Markets

15 March 2026
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Natalie ShermanBusiness press reporter


Stew, a 35-year-old from Montana, has actually taken pleasure in messing around in sports betting since he downloaded the Kalshi app about 18 months ago.


But simply a couple of weeks earlier, after finding reports of raised pizza deliveries around the Pentagon during some late-night scrolling, he made a different sort of bet - betting $10 (₤ 7.50) on the odds that Iran's Supreme Leader Ayatollah Ali Khamenei would be "out" by 1 March.


It was a trade that checked the limits of the kinds of bets Americans are allowed to make.


So-called forecasts markets - managed by firms such as Kalshi - have taken off in popularity over the in 2015, hosting more than $44bn in trades.


They are quickly changing the betting landscape in the US, where sports wagering was mostly illegal until 2018 and gambling on elections had actually been off-limits up until 2024.


While much of the activity on the platforms focuses on sporting matches, users can speculate on any variety of questions, including regional elections, whether the US main bank will cut interest rates and the year of Jesus Christ's return.


The apps ignited throughout the 2024 US governmental campaign, after a legal success cleared the method for them to accept election bets and they showed the towards Donald Trump.


But it is more grisly wagers connected to military action involving Iran, Venezuela and Israel that have drawn attention recently.


In theory, such bets contravene of US financial guidelines, which disallow trading on contracts including war, terrorism, assassination, gaming or other prohibited activities.


But that hasn't stopped firms from taking in countless trades.


Critics have actually taken on the activity, requiring a crackdown on the apps, which they say are facilitating unseemly - and possibly illegal - war profiteering, creating nationwide security risks and making it possible for opportunities for insider trading and corruption.


"You have now opened up gambling essentially on practically anything and it has actually become this very, very gruesome kind of thing on the death of a president," stated Craig Holman, federal government affairs lobbyist at the general public Citizen advocacy group, which recently submitted a complaint this week over the bets.


Polymarket alone has actually hosted what Bloomberg estimated as more than $500m in bets related to the Iran war, at one point offering an opportunity to play the odds on the chance of nuclear detonation.


The business, which is headquartered in New york city however operates on a limited basis in the US, ultimately eliminated that market after it drew scrutiny on social media however users can still send bets on questions like when US forces will get in Iran. It did not react to the BBC's request for comment.


Kalshi also ended up cancelling the Khamenei market, which had drawn $54m in trades, noting that US-regulated entities were barred from "having a market straight deciding on someone's death".


The business, which did not react to an ask for remark for this short article, has stated the war bets were taking place on uncontrolled exchanges outside the US.


Concerns about the war bets have actually hit a larger fight over how forecast market firms ought to be regulated.


Unlike traditional video gaming firms, in which the odds are set by the company, prediction market companies work more like a stock market, allowing users to bet versus each other on the result of future events using "occasion contracts".


That design has enabled national monetary regulators at the Commodities Futures Trading Commission (CFTC) to claim oversight.


But critics state they are sports betting and betting operations attempting to dress up as monetary exchanges in a quote to avoid stricter guidelines and taxes faced by traditional video gaming firms, which are managed by the states.


Disagreement over who should be policing the apps has actually stimulated dozens of legal fights throughout the US, as states begin to assert their right to control the business like other video gaming companies, rather than leave oversight up to the CFTC.


Even some Republicans have voiced concerns, as conventional gaming companies have likewise stepped up their lobbying, getting a smart former Trump authorities, Mick Mulvaney, to plead their case in Washington.


"Nobody is saying that betting should not be allowed," states Ben Schiffrin, director of securities policy at Better Markets, which promotes for monetary reforms. "What the states are saying and other supporters are stating is things that are gambling should be controlled as gambling."


Suspiciously timed bets associated to military operations involving Israel, Venezuela and Iran have added fodder to those calls.


In current weeks, Democrats have introduced legislation to bar federal officials from trading occasion contracts, pointing to incidents such as when a gambler new to Polymarket made almost half a million dollars on the capture of Venezuela's president right before it was officially revealed.


They have also provided informs to customers about the threats of expert trading and composed to the administration urging it to more plainly implement the guidelines against betting on war.


But the chances of a crackdown remain long.


Though the Biden administration had actually taken a hard line on the sector, proposing to prohibit sports and politics-related occasion contracts, that regulatory drive stalled after a court defeat and the 2024 election of Donald Trump, who came to power promising a lighter hand.


Last month, the CFTC said it would withdraw the proposed ban on sports and election associated agreements.


It has actually likewise taken the side of prediction market companies in the legal fights they are dealing with in the states, which Michael Selig, Trump's chairman of the Commodity Futures Trading Commission, condemned in a current viewpoint piece as "overzealous".


He argued that event contracts served "genuine financial functions", enabling businesses to hedge against dangers activated by occasions.


"It's clear that Americans like the product and wish to take part," he said, while also emphasising that platforms must still follow rules.


As the pressure installs, Polymarket has actually announced steps to more officially cops suspicious activity, while Kalshi, which advertises its status as a "regulated exchange", has actually become more vocal about what it is doing to combat insider trading.


It just recently revealed punishments in 2 cases of insider trading and revealed that it had opened 200 investigations over the last year.


The company also eventually cancelled the $54m market around Khamenei's ouster.


In a series of declarations explaining the decision, the firm stated it did not "list markets directly connected to death", keeping in mind that its terms had actually consisted of that carve-out.


It promised to make the terms more clear from the outset, stating it had "learned a lot" from the occurrence.


But in an indicator of growing pains, the choice still stimulated outrage among users, including Stew, who said the firm had actually at first "buried" those rules and its explanation seemed disingenuous, considered that there were "just a handful of practical techniques" for Khamenei to go.


Stew, who received a refund, said he wasn't sure regulation was the answer, but he was understanding to the idea that the dispute seemed to be stumbling around semantics.


"They call it contract trading, which I guess technically speaking, that's what it is. But if we're all being sincere here, it's still betting," he stated.


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