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On the morning of February 28, 2026, a joint U.S.-Israeli military operation codenamed "Roaring Lion" by Israel and "Epic Fury" by the Pentagon rained Tomahawk missiles, fighter jets, and one-way attack drones on Iran's capital, Tehran [1][2]. Among the dead: Ayatollah Ali Khamenei, Supreme Leader of the Islamic Republic of Iran, who was gathered with top military and intelligence officials in the national security council offices when the strikes began around 9:45 a.m. local time [2].

Within hours, a pseudonymous account on the cryptocurrency-based prediction market Polymarket was sitting on more than half a million dollars in winnings. The username: "Magamyman" [1].

The account had bet big that Khamenei would be out of power by the end of February. And it was right.

Now, as Iran retaliates with strikes on U.S. bases across the Persian Gulf and members of Congress demand answers, a single question hangs over the fast-growing prediction market industry: Did someone with knowledge of classified military operations use a largely unregulated betting platform to turn state secrets into a personal windfall?

The Trade

According to publicly available blockchain data and reporting by NPR, the Magamyman account was first created in 2024 and had a modest track record before the Iran strikes [1]. Its previous notable play: an $87,000 win betting "No" on an "Israel strikes Iran by January 31, 2026" contract [1]. That bet, which proved correct when no strike materialized in January, suggested either shrewd geopolitical analysis or something more troubling — a pattern of someone who appeared to know when strikes would and wouldn't happen.

The big score came on contracts pegged to whether Khamenei would be "out as Supreme Leader of Iran by February 28" [3]. The Magamyman account purchased large positions at what were, at the time, low odds. When the strikes killed Khamenei and resolved the contract in the affirmative, the account cleared more than $553,000 in profit [1]. Some reporting places the figure closer to $600,000 [4].

But Magamyman was far from the only winner. According to blockchain analytics firm Bubblemaps SA, six freshly created Polymarket accounts collectively earned approximately $1.2 million in profits by correctly betting on the U.S. striking Iran by February 28 [5]. All six wallets were created in February 2026. All six had exclusively placed bets on when Trump would strike Iran. One account made its bets "mere hours before the first bombs fell on Tehran" [5].

The most suspicious of these accounts made $494,374. The wallet was created and immediately placed four bets on U.S. strikes occurring on February 26, 27, 28, and March 1 — then went silent [4].

Half a Billion Dollars in War Bets

The individual accounts are just the visible tip of an enormous iceberg. Across Polymarket's suite of Iran-related contracts, a staggering $529 million was traded on bets tied to the timing and outcome of the bombing campaign [4][6]. On Kalshi, a U.S.-regulated competitor, more than $54 million was traded on a market predicting when Khamenei would be out of power [1]. Combined, over $580 million changed hands on prediction markets connected to a single military operation.

The sheer volume raises fundamental questions about what prediction markets have become. Polymarket, which facilitates anonymous betting through cryptocurrency wallets, has evolved from a niche experiment in "information aggregation" into what critics now call a shadow futures market for geopolitical violence — one that operates almost entirely beyond the reach of regulators.

"Prediction markets allow a huge chunk of their users to gamble on geopolitical speculation, while a select few with insider knowledge benefit far more," noted Futurism in its analysis of the suspicious accounts [5].

'Insane This Is Legal'

The reaction from Capitol Hill was swift and furious.

Senator Chris Murphy (D-Conn.) posted on social media: "It's insane this is legal. People around Trump are profiting off war and death." He announced plans to introduce legislation "asap" to outlaw the practice [1][7].

Six Democratic senators, led by Adam Schiff of California, sent a letter to CFTC Chairman Michael Selig demanding that the agency "clearly reiterate that the CFTC will categorically prohibit any contract that resolves upon or closely correlates to an individual's death" [8]. The letter, also signed by Senators Richard Blumenthal (CT), Cory Booker (NJ), Tim Kaine (VA), Catherine Cortez Masto (NV), and Jacky Rosen (NV), set a March 9 deadline for a response [8].

The senators argued that these contracts "present dangerous national security risks, including creating incentives to incite violence, foment geopolitical conflicts, and disclose classified information" [8].

California Rep. Mike Levin echoed the concern, noting pointedly that Donald Trump Jr. serves on Polymarket's advisory board: "Prediction markets cannot be a vehicle for profiting off advance knowledge of military action" [9].

The White House denied that anyone in the president's circle made the trades [1].

The Regulatory Black Hole

Under U.S. commodity trading laws, contracts that resolve based on death, war, or terrorism are illegal. The Commodity Exchange Act explicitly prohibits such markets because they "create a financial reward for violence, human suffering and geopolitical instability" [1][8].

But here is the catch: Polymarket's Iran markets operated on its international platform, which is not regulated by the CFTC — or, as NPR bluntly noted, "anyone for that matter" [1].

Polymarket was founded in 2020 by Shayne Coplan. In November 2024, the FBI raided Coplan's New York apartment as part of a DOJ investigation into whether the platform illegally allowed U.S.-based users to trade [10]. But the Trump administration dropped both the DOJ and CFTC investigations in 2025 without filing charges [10]. The administration subsequently granted Polymarket approval to open a U.S.-based platform, though it has yet to fully launch [1].

The connections between Polymarket and the Trump orbit run deep. Donald Trump Jr.'s venture capital firm, 1789 Capital, has invested millions in the company. Trump Jr. serves as an adviser. In March 2025, Coplan publicly thanked President Trump for inviting him to a crypto summit at the White House [10].

Meanwhile, CFTC Chairman Selig — the man the senators are asking to crack down — has been a vocal champion of prediction markets. He wrote that "the CFTC will no longer sit idly by while overzealous state governments undermine the agency's exclusive jurisdiction over these markets by seeking to establish statewide prohibitions on these exciting products" [11].

A Pattern of Insider Bets

The Magamyman trade did not occur in a vacuum. It is the latest in a series of suspiciously well-timed prediction market bets that have drawn scrutiny.

In June 2025, Israeli authorities arrested and later indicted two people — a civilian and a military reservist — for using classified military information to place winning bets on Polymarket [12]. Prosecutors alleged the reservist accessed classified details about Israel's planned attack on Iran (Operation 'Am Kalavi') and shared them with the civilian, who placed successful wagers predicting that Israel would attack Iran on a specific Friday and by the end of June 2025 [12].

In January 2026, an anonymous trader made hundreds of thousands of dollars on Polymarket by betting on the arrest of Venezuelan authoritarian leader Nicolás Maduro — a bet placed with suspiciously precise timing [1].

The Israeli prosecution offers the most concrete evidence to date that prediction markets are being exploited by individuals with access to classified military intelligence. The February 2026 trades bear the same hallmarks: precise timing, large positions, and accounts with no history beyond the specific event they profited from.

Two Platforms, Two Approaches

The Iran strikes exposed a fundamental split in the prediction market industry.

Kalshi, which is CFTC-regulated and requires identity verification, took an aggressive approach after Khamenei's death. CEO Tarek Mansour stated: "We don't list markets directly tied to death" [1]. The company issued partial refunds at the last-traded price before Khamenei's death was confirmed, attempting to avoid running afoul of U.S. laws prohibiting markets where people profit from assassination [1].

The decision created an uproar among Kalshi's own traders, who felt cheated. They argued they had been encouraged to trade on the Khamenei market — which Kalshi had heavily promoted on social media — only to have their winnings clawed back [1].

Polymarket took the opposite approach: it let the contracts resolve normally and defended its markets. The company issued a statement claiming that prediction markets "harness the wisdom of the crowd to create accurate, unbiased forecasts for the most important events" [9]. Polymarket claimed it spoke with "those directly affected by the attacks" who sought insights the platform could uniquely provide, asserting: "We realized that prediction markets could give them the answers they needed in ways TV news and X could not" [9].

Critics found the defense tone-deaf. The platform was, in effect, arguing that allowing people to profit from correctly predicting when bombs would fall on a foreign capital served a public informational good.

The Deeper Question

The Magamyman case crystallizes a tension that has been building since prediction markets went mainstream. Proponents — including many in the Trump administration and Silicon Valley — argue that these platforms are powerful information tools. When Polymarket's odds correctly predicted Trump's 2024 election victory while polls showed a toss-up, the industry claimed vindication [10].

But the Iran contracts show the dark underside of that vision. When the "information" being aggregated concerns the timing of military strikes, the line between prediction and profiteering disappears. When the bettors may include people with access to classified intelligence, the market doesn't aggregate wisdom — it monetizes state secrets.

The Israeli prosecution of the military reservist proves this is not a theoretical concern. And the pattern of freshly created accounts making precisely timed, single-event bets on Polymarket suggests it may be happening repeatedly.

As the $580 million in Iran-related bets demonstrates, prediction markets are no longer a curiosity. They are a major financial ecosystem. The question now is whether anyone — the CFTC, Congress, or the platforms themselves — will draw a line at allowing anonymous bettors to profit from the deaths of foreign leaders and the fog of war.

Senator Schiff and his colleagues have given the CFTC until March 9 to answer [8]. As of this writing, Chairman Selig — the man who called prediction markets "exciting products" — has not responded.