Iran War Becomes Multimillion Dollar Business for Prediction Markets

The war in Iran has reportedly been good business for the prediction markets sector.

As Bloomberg News reported Wednesday (March 4), companies such as Polymarket and Kalshi, which offer financial contracts on the outcome of everything from sporting events to elections, are now letting users trade on things like when Iran’s leader would be ousted.

On Polymarket, bettors made a record $425 million in wagers on the geopolitics category during the week ending March 1, compared to $164 million the week before, the report added, citing user-compiled data on Dune Analytics.

As the report noted, the companies have been criticized for these types of bets. Prediction markets are governed by the U.S. Commodity Futures Trading Commission (CFTC), which has rules to prevent insider trading and contracts related to war.

Although Polymarket is launching a U.S. venue under CFTC oversight, the platform where the Iran wagers are listed is based offshore, Bloomberg said.

For its part, Kalshi has said it avoids any markets directly referring to military action. Its new bets related to Iran deal with questions of whether the country will become a “democracy” this year or host a presidential election. These have generally seen less activity than the Polymarket bets, the Bloomberg report said.

Kalshi CEO Tarek Mansour, Bloomberg added, has argued that the contract dealing with Ayatollah Ali Khamenei served a legitimate purpose, saying that leadership changes in Iran hold implications for global oil prices, national security and the larger world order.

“These markets have important geopolitical and global economic impacts,” a Kalshi spokesperson told Bloomberg.

War-related wagers have gotten the attention of lawmakers, PYMNTS reported earlier this week. Among them is Sen. Chris Murphy, D-Conn., who over the weekend posited that insiders may have made money from prediction markets based on the timing of the initial strike on Iran.

“I’m introducing legislation ASAP to ban this,” Murphy said in a post on X.

As covered here last week, the reality around predictions market is a chaotic one, with “lots of sports volume, plus jurisdictional trench warfare.”

States are issuing cease-and-desist orders against multiple platforms (including Robinhood’s derivatives arm and Crypto.com), while the CFTC has indicated it may go to court to defend the federal government’s right to regulate the predictions space.

At the same time, the CFTC is reportedly working on new regulations governing event contracts. This is a sign, PYMNTS wrote, that “the grown-ups have arrived because the kids won’t stop inventing new ways to wager on reality.”