Prediction markets like Polymarket and Kalshi saw massive trading activity over the weekend as tensions escalated between the U.S., Israel, and Iran. With global markets closed, traders turned to these platforms to bet on outcomes ranging from crude oil prices to whether Iran's Supreme Leader Ayatollah Khamenei would remain in power. Kalshi CEO Tarek Mansour defended hosting these markets despite criticism.

Lawmakers including Connecticut Sen. Chris Murphy and Arizona Sen. Ruben Gallego condemned the activity, with Murphy vowing to introduce legislation to ban such trading. Democratic Rep. Mike Levin highlighted a Polymarket account that reportedly made $515,000 betting on U.S. strikes against Iran. Three U.S. service members have been killed and five wounded since the strikes began, according to military officials.

Israel has already arrested army reservists for using sensitive information to place bets on strikes against Iran, signaling that prosecutions for insider betting on international conflicts have begun in some jurisdictions. Kalshi faced additional controversy for promoting a market on whether Khamenei would be "out" as leader, which critics argued amounted to a proxy market on assassination. The company refunded fees and cashed out positions at last-traded prices, but some users complained about feeling cheated by the decision.