Paul Alper points us to this news story from the Washington Post, “Bettors wagered $54 million on Khamenei’s death. Now they’re not getting paid,” which reports:
When he learned Saturday about the killing of Iran’s Ayatollah Ali Khamenei, the Israeli-American business executive in New York was excited to cash in.
On the prediction-market site Kalshi, the executive – who spoke on the condition of anonymity due to concern over what his friends would think – had placed two bets, totaling $3,460, that Khamenei would be “out as Supreme Leader” by March or April 1. His Kalshi app placed green check marks next to his bets, indicating he’d won payouts worth more than $63,000.
Minutes later, however, Kalshi froze the $54 million trade for everyone who bet on that scenario, saying the site doesn’t allow transactions “directly tied to death.” The change triggered an online uproar, as Kalshi users flooded social media to argue the site had unfairly robbed them of winning bets. . . .
Kalshi heavily promoted the trade to bettors on its homepage and app and in push notifications before Khamenei’s death was publicized. Kalshi also tweeted the morning of the strike that the odds “Khamenei is out as Supreme Leader have surged to 68%,” along with a disclaimer that Kalshi didn’t broker trades that “settle on death.” . . .
Polymarket said in August that the president’s eldest son, Donald Trump Jr., had joined its advisory board, and a handful of recent bets on the administration’s moves have sparked public accusations of insider trading.
The analytics firm Bubblemaps said it found six “suspected insiders” on Polymarket that had made $1.2 million by betting that the U.S. would hit Iran by Feb. 28, the date that Operation Epic Fury began. All of the accounts were made last month and bet exclusively on Iran-strike timing; some of the bets were made within hours of the first explosions in Tehran. One account bet $60,000 and won $560,000. . . .
On the first morning of the assault, Polymarket posted a meme image of a man with five screens laying out bets about Khamenei’s ouster and the caption, “Can’t right now babe, I’m monitoring the situation.”
OK, this is just evil. I was going to say, “Even setting aside the corruption angle . . .”–but why should we set aside the corruption angle? As we’ve seen from the news over the years, you don’t need prediction markets to have massive corruption, but this seems like just one more opportunity for these people to loot the public treasury. Indeed, as we’ve discussed, this sort of thing is literally meritocracy (in contrast to a merit-based employment system in the civil service).
So, yeah, that’s bad. But even setting aside the corruption angle, the idea of betting on someone’s death is really disturbing to me–and not just to me, of course, hence the controversy evidenced by the news article.
Now, I recognize that my perspective is culture-bound. Back in the day, life was cheap, humor was coarse, and gambling has always been popular. Ancient Romans bet on gladiators, and that was a life-and-death sport. And, even nowadays, you’re allowed to bet on your own life. Indeed, a few years ago I made such a bet myself, putting money up front with a big payoff if I die before the age of 65.
Where to draw the line in this particular family of trolley problems? Life insurance is ok, as long as no fraud is involved–and, as I’ve learned from various movies of the noir era, you should choose your beneficiaries wisely. Buying life insurance for someone else, that’s not so cool.
What about betting on which of the people in this list die first? That’s in poor taste but it doesn’t seem evil to me (assuming you don’t have any personal connection to these people); it’s an example of an actuarial calculation, and actuarial calculations seem just fine to me. Indeed, it’s even fine with me to gamify this, as, after all, insurance companies make a lot of money from this sort of thing anyway.
Even with actuarial work, there’s the potential for market manipulation, as various government policies can affect death rates (hi, Secretary Kennedy!), but this is nothing compared to the corruption possibilities for things like government contracts and drug approvals; I’m not so concerned about it.
I could imagine some situations where it would not seem evil to bet on individual people dying, people you actually know. I’m thinking of settings where life is cheap, and you’re personally at risk. For example if you’re part of a platoon of soldiers on some suicide mission, I could imagine a grim, gallows-humor sort of bet on how many of you will come back alive. Presumably the cost-benefit here is such that there’d be no motivation for market manipulation. On the other hand, it would seem evil to me for two officers to bet on the lives of the soldiers they’re sending on the mission, and it also seems absolutely wrong for two doctors, say, to bet on the survival of a patient. Even if this does not affect the doctors’ performance and they’re just doing it to let off steam, no, I don’t think this works in our society. Grim jokes, sure–I’ve read enough hospital-themed books and seen enough hospital-themed TV shows to get the impression that doctors, like cops, will joke about life and death in ways that might seem to outsiders such as me to be in poor taste–but betting, no. That’s real screwed up Dr. Oz-level shit.
There’s also a difference between betting that someone dies during the next year–that can happen if you’re 112 years old!–and betting that someone will be murdered or assassinated. The real issue isn’t bets “directly tied to death,” but rather bets directly tied to killing.
What about betting on economic statistics like the inflation rate? No life and death here, and it seems ok, but I do think it should be regulated, in the same way that bank loans are regulated and betting on the stock market is regulated. There’s nothing stopping people from doing such bets on the side, but when real money is involved . . . you can’t eliminate all possibilities for corruption, but you at least want to make it difficult, balance the expected costs and benefits so that the incentives for market manipulation are reduced.
Similarly with betting on political events such as elections and, yes, wars. People are already betting on wars indirectly, through “put options” on oil futures, or whatever it’s called. Setting aside any issues of life and death, the corruption issue becomes more and more of a potential problem to the extent that the bets become tied to particular actions by individuals. Just for example, you might want to take an over/under bet on this blog’s total web traffic in 2026 (actually, I have no idea what our traffic is; I purposely didn’t set up such a tracking system because that way lies madness), but you wouldn’t want to bet on something directly manipulable such as whether I post something in the Literature category on 28 March.
Besides the distastefulness of betting on a particular person being killed, there’s also a problematic history of these betting markets. As we’ve discussed before, back in the early 2000s the government tried to set up a terrorism prediction market that was run by an actual terrorist. The problem in that case was not financial but rather the fox-guarding-the-henhouse issue. Talk about moral hazards. This is not a joke; it’s people in power who seem all too willing to consider other people’s lives as expendable. Which, yeah, that’s how things are in a war. But often the decision to go to war is itself a choice.
P.S. More on this from my Columbia economics colleague Rajiv Sethi.
P.P.S. More here.
I had exactly this thought related to that post a couple months ago (https://statmodeling.stat.columbia.edu/2026/02/11/sethi-on-betting-on-geopolitical-violence/). Don’t we have a lot of people in charge of these kinds of decisions who also happen to hawk crypto and have few moral compunctions? We’ve allowed a system that encourages this to happen. It’s bad that Kalshi was hyping these kinds of bets but good that they aren’t honoring them.
We know with confidence that there’s a significant overlap between the people who shape betting markets on military action, the people who profit from those bets, and the people who influence whether military action actually takes place. There’s obviously potential for perverse incentives.
It’s not fundamentally different from the long‑standing tradition where arms manufacturers, along with politicians financially tied to them, help steer military decisions while also benefiting from the outcomes
The problem with prediction markets on killing political figures is, to put it euphemistically, “insider trading”. This was promoted many years ago by a guy who thought it was a feature, not a bug. It was quite a saga, and would have made a great book at the time. As I recall, he ended up going to jail for real-life of Federal agents, as he was not exactly the most mentally stable of people.
Figuring out where to draw the line with prediction markets is difficult. Intrade ran a market on whether Osama Bin Laden would be captured or killed but prices in that market didn;t move until hours AFTER he had been lkilled. This suggests the Obama administration was more secure than the current administration, although it might also have been because the depth of the markets, and hence the incentive to leak classified information, wasn’t high enough back then. Morality aside there’s also the question of who would bet in these market knowing that there are insiders participating?
Unashamed plug for my own previous thoughts on these issues…
https://www.linkedin.com/pulse/climate-prediction-markets-repugnant-mark-roulston-ykxfe/
Mark:
Yes, good point on who’s participating in these markets if they don’t have inside information. Maybe the same sort of people who bet on sporting events?
Also, I clicked through to your link and I agree: like you, I have no problem with prediction markets on climate. I think that, in general, gambling and betting and prediction markets should be regulated, also there should be a harder line on corruption more generally. I don’t want policy-connected people betting on who they are planning to kill; I also don’t want them corruptly making money indirectly by selling oil futures or whatever.
In the linked article, Mark Roulston wrote:
“The aim of a climate prediction market is not to allow betting on people’s misery but to obtain better information for planning mitigation and adaptation policies to alleviate misery. The fact is that humanity has been gambling with the climate for decades, prediction markets are merely a way to find out what sorts of odds we were getting.”
I’m trying to understand this perspective, I really am. When we talk about political polling and smart people insist that betting markets are a valid source of information, I don’t know what to think. There is a lot of special sauce between polling and voting, some of which might include insider knowledge. But betting on future climate? There is no such thing as insider information here, so isn’t everyone just betting on a gut feeling? How can that possibly be “better information” than the climate model predictions?
The big problem with papers on telepathy is the complete absence of a plausible mechanism for how it could occur. How is some rando person making a prediction on future climate different from telepathy? Really smart people who can pore over and deeply understand climate data and models in ways that actual climate scientists cannot, but who are only willing to share their insights if they can be monetized? Is that the special sauce that no one quite wants to put into words?
Matt:
Betting markets are a form of information aggregation. The theory is not that betting markets, or any other aggregation system (e.g., asking people to give individual guesses and then taking the median) can uncover additional information not in the inputs. Rather, the idea is that different people do have forecasts, based on whatever methods they are using, and there are ways of combining these forecasts. A betting market can be seen as a form of aggregation that gives more weight to the forecasts of people who are willing to put more money on the line.
So, no, there’s no “special sauce”; it’s just an aggregation tool.
I agree with characterizing it as an information aggregation tool. But it does make me wonder what the value is of aggregating a bunch of opinions that are based on no real expertise or knowledge. In the case of financial or economic matters, lots of people have different bits of knowledge as well as their gut feelings (based on whatever). So, the aggregation may provide some meaningful signal. But if the people betting do not have expertise or special information, we are just aggregating a bunch of feelings. Possibly of interest to people, just like surveys in that they say something about what people think. But it is hard to see that the information collected tells us anything about climate change. It seems like pure gambling to me. That is what Matt’s comment causes me to think.
Yes, prediction markets are a tool for aggregation – they aren’t a substitute for expertise and models but a way of synthesizing them. For climate there are multiple models that make different predictions, the divergence tends to get greater as the predictions become more specific (e.g. what will happen to rainfall in a particular region) overlaid on this is tacit expertise about the strengths and weaknesses of different models. e.g., there might be physical arguments why a model should not be trusted/less trusted for a specific detail. Prediction markets are a good way to capture this tacit expertise and turn it into something more quantitative. This is all before you start worrying about the fact that all climate predictions are conditioned on GHG concentrations and you really need to take a (probabilistic) view on different emissions scenarios to get an unconditional forecast of climate a few decades hence.
A decade ago, as I was exploring TOR’s darknet I stumbled on a really intriguing (although morbid) concept. It was a bet-based anonymous hitman hiring website and its idea really stuck with me.
Basically, it had you bet on when someone would die. You could bet any amount of money which would go into that person’s pool, and when that person passed away you would check who had guessed the closest and they would win the money.
The hitman part comes from the fact that if you plan to kill someone, you are able to place a very precise bet related to their time of death with a low amount of money and ensure that you’ll win the money. On the other side, if you want to entice someone into killing a specific target, you can bet a large bet on a ludicrous time and just wait. You don’t expect to win, but that’s not why you’re there.
Now, to be clear, I doubt anyone was ever in any danger because of that website because who would trust such a shady business, but I find the idea imaginative, and it’s interesting to see that people seem to have attempted in practice what you warn about in your post.
Kalshi had carved out the death. WaPo news should have presented the actual rules on the market, not just one side.
https://kalshi.com/markets/kxkhameneiout/ali-khamenei-out/kxkhameneiout-akha
I glanced over a snopes article on this and it seemed to indicate that several of the accounts placed multiple wrong bets on the timing before getting it right. If we imagine many bettors and new bettors getting into a market as a story grows, then it seems like by chance some are going to both enter the market near the time and bet near the date of the event. It would seem to be difficult to find any kind of smoking gun in this type of scenario. Of course, this is all beside the point of the general ethics problem here.
The idea of betting on someone else’s death and profiting is not a new one – my actuarial textbooks discussed how this developed over 200 years ago. The answer in the UK is something called “insurable interest”. Essentially, to take out insurance on someone dying you have to have some sort of existing financial interest. So family members or your employer (e.g. key man insurance) is fine, but I couldn’t take out insurance on, say, Keir Starmer.
A quick online search tells me the US has the same principle, albeit in state laws not federal. Of course, the issue with Kalshi is the wording: “out as Supreme Leader” doesn’t mean dead, although that of course is one way. However, it could be that paying out on a bet that pays on death is actually illegal in some way: I’m now speculating but it would seem to be covered by a lack on insurable interest.
Interesting; thanks for sharing this info.
> Of course, the issue with Kalshi is the wording: “out as Supreme Leader” doesn’t mean dead, although that of course is one way. However, it could be that paying out on a bet that pays on death is actually illegal in some way
They explicitly exclude death as a way out as discussed in the article and detailed at https://kalshi-public-docs.s3.amazonaws.com/contract_terms/WLEADEROUT.pdf but apparently other betting (sorry, I mean prediction) platforms are not so scrupulous.
Ah – always beware of the small print! However, I don’t think Kalshi could claim to be entirely scrupulous. According to Wikipedia, the Supreme Leader position was created as a life appointment. It was later modified so the “Assembly of Experts” could dismiss them, but that has not ever happened. Now both holders have died in post.
While “out as Supreme Leader” may seem to leave other options, I do wonder if the chances of that happening other than by death are (were?) really small. Was the headline bet misleading without the caveat?
Well, the guy was 86 – what would happen if he had a health event which didn’t kill him, but left him severely incapacitated? Such as a major stroke, or a heart attack where he survived it but didn’t recover consciousness? Does the position then become ceremonial until he actually dies? It seems like there’s plenty of cases which “should” be covered in the fine print.
Interesting, so would a Tesla shareholder have an insurable interest in Elon Musk?
Some companies have insurance on key individuals, so, yeah.
There was boom in ‘viatical settlements’ in the 1990s, when investors would essentially buy the expected life-insurance payouts of people with AIDS, who would then have access to (some of) the money when they were alive and needed it. Ethical opinions on this were a bit varied, but I don’t think anyone had much sympathy for the investors when protease inhibitors appeared and a lot of the life-insurance policies didn’t pay out as fast as they had expected.
Is there a prediction market regarding the prediction market itself? That is, speculation about speculation, and so on, just like Russian Dolls?
Bertrand Russell would enjoy that question. For example, what about a contract called X that pays off only if X does not occur?
Yes! There was news recently about contracts for the Second Coming of Christ (which typically pay off just enough to cover the cost of locking up the money for a year). Someone had bet on the price of the contract going over 5%, and this was allegedly driving buying of the original Jesus bet: https://gizmodo.com/checking-in-on-polymarket-bets-on-christs-return-jump-on-bets-that-bets-on-christs-return-will-jump-2000720298
Andrew: Of course in finance there’s effectively all sorts of betting on economic statistics. While not quite the same, but very similar, effectively some of the biggest betting is on “Will the Federal Reserve change its interest rate, and by how much?”. There’s often reports about the various odds here, in financial stories. Some years ago, there was a huge scandal about manipulation of the “London Interbank Offered Rate” (LIBOR):
https://www.cfr.org/backgrounders/understanding-libor-scandal
The difference is insider trading or manipulation in such cases is outright illegal, or even if not, potentially career-ending. However, the Trump administration treats such activities like a perk of power, “it makes me smart”.
These bets seem to violate the axioms that define how bookmakers make probabilities. That is, if there’s a betting system that has an expected value that’s greater than the gambling system, then either the method of estimating the probability of an event occurring is wrong or the gambling system is. In this case, because adjusting the odds doesn’t seem to change the ratio of the payout to the wager, it seems that the gambling system is.
An example: there are 1000 rare events that’s predicted to occur at about 0.01% of the time. Assume that an insider has knowledge of when one of these events occur. If the expected payoff from this one event is greater than the cumulative proceeds from the other 999 events, than the gambling system loses money.
So, because it seems that a gambling system can’t inherently make a probability of a rare event occurring and not a) be subject to an insider making a wager b) unable to detect the difference between an insider making this wager and a random wager and c) because the probability of rare events occurring is inherently cumulative, there’s no way that a gambling system can make money offering bets of rare events.
(I realize this is about the ethics of gambling but this is very different from, say, life insurance. It seems, at least to me, about an inherently unstable gambling system.)
> These bets seem to violate the axioms that define how bookmakers make probabilities.
There are no probability-making bookmarkers in these bets.
> there’s no way that a gambling system can make money offering bets of rare events.
They are not really “offering” bets (if by “they” you mean the prediction market platform, there are also market makers). They don’t have to estimate the probability of anything any more than the dealer in a poker table.
So Andrew, you would oppose betting on the death of The Little Dictator, Kim Jong Il? Or, say, Putin or Zelensky? What about Mexican cartel leaders or Hamas leadership (ok they are your friends I get it)? Of course we don’t want corruption in betting markets generating billions for fraudsters any more than we want corruption to generate billions for Walz and his Somali day cares, but outside of that I don’t see why betting on the death of a person who is obviously a potential target is immoral. Have you bet on Trump’s demise, even informally? Almost surely so…
Anon:
1. I definitely oppose betting on killing people. Betting on people’s natural deaths is another story, although, yeah, I feel uncomfortable with that. You “don’t see why betting on the death of a person who is obviously a potential target is immoral.” Fine, that’s your view. It bothers me first because it creates a positive incentive for policymakers to kill people for money and, more generally, a corrupt incentive to alter policy for money. As we both agree, corruption’s already happening; that doesn’t seem to me to be a good argument for opening the door to new forms of corruption.
2. I’m not “friends” with Mexican cartel leaders or Hamas leadership, or for that matter with Kim, Putin, or Zelensky. For you to say that is just crazy. As I sometimes say in the comments, you seem to be arguing with someone here, but it’s not me you’re arguing with. You might want to go to twitter or 4chan or whatever and find some friends of Mexican cartel leaders or Hamas leadership to argue with.
3. No, I haven’t “bet on Trump’s demise,” and it’s crazy for you to be “almost sure” about something like that. Everyone’s going to die sometime. I have never placed any bets, “even informally,” on when this would happen to Trump, or for Kim, Putin, and the others on your above list.
I run in some pretty liberal circles, and not a single person I know has ever bet on Trump’s design. In fact, only two people I know have made any bets at all in their adult lives, and only one of those two outside of casino games. This kind of a response leads me to believe that there are some social circles where everybody takes bets on every idle speculation that comes up in conversation, to the extent that they can’t imagine that anyone else speculating without betting.
I admit I do enjoy a friendly game of poker for money.
FYI: https://apnews.com/article/suicide-ice-detention-centers-b2d1cb0e4b579e0d89caabd00aa04e34
“At one point he said he overheard a security guard talking about bets made among the staff over which detainee would be next to die by suicide. The guard said he had paid $500 into a pool, with the total pot riding on the outcome. The talk was particularly jarring, he said, because he had contemplated suicide himself. “
Seth:
I guess the next step is for the government to try to shut down the Associated Press or get some connected rich guy to take it over so they stop reporting stories like this.