Prediction market platforms Polymarket and Kalshi have seen trading volumes soar to record highs as geopolitical tensions between the US, Israel, and Iran escalate. According to data from Token Terminal, notional trading volume on Polymarket and Kalshi reached $2.49 billion and $2.85 billion, respectively, for the week ending March 9. Dune Analytics data shows total notional volume across all prediction markets has hit $145 billion from 2.8 million unique users.
This surge in activity is primarily driven by contracts tied to the military conflict. Politics-related contracts became the third-largest category on Polymarket with $598 million in volume and the eighth-largest on Kalshi with $16 million last week. A specific Polymarket contract titled "Iran strikes Israel on…?" had over $14 million wagered on March 10 alone.
Concurrently, US regulators and lawmakers are moving swiftly to impose new rules and potential bans. The Commodity Futures Trading Commission (CFTC) recently issued a staff advisory classifying event contracts as a "financial asset class" and submitted an Advanced Notice of Proposed Rulemaking to gather public comment on applying the Commodity Exchange Act (CEA) to prediction markets. This follows CFTC Chair Michael Selig's assertion of the agency's "exclusive jurisdiction" over these markets, though an Ohio judge recently challenged this claim in a ruling related to Kalshi.
More significantly, legislative action is targeting the core of the current trading frenzy. US Senator Adam Schiff introduced the "DEATH BETS Act," which seeks to amend the CEA to ban federally-regulated prediction markets from listing contracts tied to war, terrorism, assassination, and individual deaths. This legislative push comes amid renewed insider trading allegations. In February, Israeli authorities arrested two people suspected of using secret information about Israel's strike on Iran for insider trading on Polymarket, and six Polymarket traders reportedly netted $1 million by accurately betting on a US strike against Iran.
The ethical and practical dangers of these markets were starkly highlighted in a separate incident. The Times of Israel military correspondent Emanuel Fabian reported receiving death threats from Polymarket bettors attempting to pressure him to change his reporting on an Iranian missile strike near Beit Shemesh on March 10. The individuals wanted him to falsely report the missile was intercepted so their "no" bets on the strike occurring would win. Fabian filed a police report.
Despite the controversy, the platforms continue to operate and grow. Polymarket US, headquartered in New York, operates under CFTC oversight after acquiring CFTC-licensed QCX LLC for $112 million in late 2025. Its offshore platform remains separate. Kalshi is also a CFTC-regulated Designated Contract Market (DCM). According to The Block, Kalshi recorded about $10.4 billion in trading volume in February, while Polymarket logged roughly $7.9 billion, with both on pace for a seventh consecutive monthly high of around $20 billion.
