Kalshi, Polymarket Diverge on Handling of Iran War Predictions

Summary

Bloomberg Businessweek Podcast Summary
Episode: Kalshi, Polymarket Diverge on Handling of Iran War Predictions
Date: March 5, 2026
Hosts: Carol Massar & Tim Stenovec
Guest: Chris Beam, Bloomberg Businessweek Contributor

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Episode Overview

This episode delves into how two major prediction market platforms, Kalshi and Polymarket, diverge in their approach to handling sensitive "event contracts"—in particular, those linked to conflict and regime change, such as recent events concerning Iran. The conversation examines the legal frameworks, philosophical distinctions, and emerging regulatory issues shaping prediction markets, especially where they blur the line between financial products and gambling.

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Key Discussion Points & Insights

1. Differing Regulatory Structures

• Kalshi:
  • US-based, registered with the CFTC (Commodity Futures Trading Commission).
  • All markets must adhere strictly to US law.
  • Recent example: Froze a market regarding the fate of Iran's Supreme Leader following his death, reimbursing traders for fees and net losses.
    • Quote (Chris Beam, 02:34):
      "Kalshi is a US company that is registered with the CFTC and so every market that appears on Kalshi needs to adhere to US law."
• Polymarket:
  • Operates primarily on an international platform based in Panama.
  • US users can only bet on sports; international users trade on other events, including wars and political upheavals.
  • Largely outside the CFTC’s jurisdiction.
    • Quote (Chris Beam, 03:13):
      "That platform is technically based in Panama, so it does have to follow some Panamanian law. But the laws that apply to the platform often are in the countries where the traders are located."

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2. Regulatory Gray Areas and Overseas Activity

• Jurisdiction Challenges:
  • International regulatory responsibility is diffuse and often based on the user's location, not just the platform's registration.
  • Polymarket’s user base is global, complicating enforcement.
• Relationship to Traditional Finance:
  • Partnerships with legacy players (like NYSE and Intercontinental Exchange) lead to tricky optics, especially given the association with gambling.
    • Quote (Chris Beam, 04:07): "Are some of the more traditional financial organizations... going to have a problem with platforms allowing people to bet on war or which leaders will be deposed? That's why you've seen such a different reaction from these two different companies."

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3. Event Contracts vs. Gambling: Drawing the Line

• Kalshi’s Framing:
  • Distinguishes "betting" (prediction) from "gambling."
  • Betting is seen as a legitimate forecasting tool; gambling has connotations of house advantage and less transparency.
    • Quote (Chris Beam, 07:34):
      "I've seen Tariq Mansour, the CEO of Kalshi, say that he's, he's comfortable with the word betting, he's less comfortable with the word gambling."
• Market Structure:
  • Kalshi only allows U.S. bets on regulated markets.
  • Polymarket restricts U.S. users to sports, with plans to expand to entertainment and politics domestically but not yet implemented.

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4. Controversy and Compliance: Handling “War Markets”

• Kalshi:
  • Proactively froze the Iran Supreme Leader market once news of death surfaced, following internal policies against markets tied to death.
• Polymarket:
  • Continues to allow trading on overseas conflict outcomes; enforcement is virtually nonexistent.
  • American users are geo-blocked but can circumvent via VPN, which is technically illegal.
    • Quote (Chris Beam, 05:48):
      "So if you wanted to illegally trade on Polymarket's international platform, you would need a VPN. And that's definitely happened. Americans have done that. But it's technically against the law."

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5. Insider Trading and Market Integrity

• Kalshi:
  • Actively monitors and publicizes enforcement actions.
  • Uses algorithms to detect suspicious trading and claims to have investigated over 200 cases.
    • Quote (Chris Beam, 09:07): "Kalshi has been very proactive, I would say, about saying they're addressing insider trading, they're surveilling traders and using algorithms to detect patterns..."
• Polymarket:
  • Offers little transparency or enforcement, leading to headlines about insider trading in high-stakes markets.
    • Quote (Chris Beam, 09:52): "Polymarket for its part, doesn't really talk about this at all... The big headlines... are almost all on Polymarket because you're not seeing any regulation there and there seems to be very little appetite to actually do anything about it."

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6. Future of Regulation

• Regulatory clarity is lacking, and the diverse approaches of platforms like Kalshi and Polymarket underscore the urgent need for a unified stance.
  • Quote (Chris Beam, 10:46): "It depends what kind of regulator. You know, the current chairman of the CFTC says he wants to regulate this, but it's unclear what he's actually going to do."

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Notable Quotes & Timestamps

• On Regulatory Distinctions (Chris Beam, 02:34):
  "Kalshi is a US company that is registered with the CFTC and so every market that appears on Kalshi needs to adhere to US law."

• On Overseas Jurisdiction (Chris Beam, 03:13):
  "That platform is technically based in Panama, so it does have to follow some Panamanian law. But the laws that apply to the platform often are in the countries where the traders are located."

• On Financial Industry Partnerships (Chris Beam, 04:07): "Are some of the more traditional financial organizations... going to have a problem with platforms allowing people to bet on war or which leaders will be deposed? That's why you've seen such a different reaction from these two different companies."

• On Event Contracts vs. Gambling (Chris Beam, 07:34):
  "I've seen Tariq Mansour, the CEO of Kalshi, say that he's, he's comfortable with the word betting, he's less comfortable with the word gambling."

• On Insider Trading Enforcement (Chris Beam, 09:07):
  "Kalshi has been very proactive... they're surveilling traders and using algorithms to detect patterns..."

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Key Timestamps for Discussion Segments

• 01:41 – Episode opens on prediction markets & Iranian events
• 02:27 – 04:07 – Regulatory frameworks: U.S. vs. international
• 04:08 – 06:44 – Collaborations, optics, and policy issues
• 07:20 – 08:33 – Distinctions between "betting" and "gambling"
• 08:34 – 10:33 – Insider trading and market integrity challenges
• 10:33 – 11:00 – Outlook for future regulation

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Tone and Takeaways

In an analytical but conversational tone, the hosts and Chris Beam dissect the evolving landscape of prediction markets, highlighting the legal, ethical, and practical dilemmas platforms face as they move into areas previously reserved for traditional finance or outright gambling. Key takeaways include the importance of regulation, the trouble with cross-border enforcement, and the ongoing philosophical battle to define prediction markets’ place in the financial ecosystem.

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Bottom Line:
Kalshi and Polymarket represent two divergent paths for prediction markets—one tightly regulated and striving for mainstream legitimacy; the other borderless, bold, and risk-prone. As global events like wars and leadership changes become fodder for financial speculation, the line between prediction and gambling gets blurrier, and the case for thoughtful, unified regulation grows more urgent.

Transcript

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[Bloomberg Radio Host]

You're listening to Bloomberg businessweek with Carol Massar and Tim Stanvak on Bloomberg Radio.

[Bloomberg Businessweek Host]

We're also keeping an eye on prediction markets, especially in the context of war. Traders on Kalshi and Polymarket debated and bet on Iran's future markets, responded to news of US And Israeli forces bombing Tehran. Kalshee froze a market on whether the Ayatollah would be out as supreme leader, citing rules that markets cannot be tied to death, and reimbursed traders for fees and net losses after some objected to the resolution. Yeah. Chris Beam back with us. He's contributor to Bloomberg Businessweek. He's also the author of the COVID story of the current issue of Bloomberg businessweek. It's about how Polymarket and Kalsha are gamifying the truth. He joins us from New York. Chris, what are you allowed to in the context of conflict, what are you allowed to bet on on calcium Polymarket?

[Chris Beam]

Well, there's very different answers for for each platform.

[Bloomberg Businessweek Host]

Explain why that is so.

[Chris Beam]

Fundamentally, Kalshi is a US Company that is registered with the cftc and so every market that appears on Kalshi needs to adhere to US Law. Polymarket is slightly more complicated. It does have a US entity, but you can only bet on sports on the US Platform. The vast majority of Polymarket's trading happens on its international platform, which is outside the jurisdiction of the cftc.

[Bloomberg Businessweek Host]

And who regulates that? If it's not the CFTC regulating that, who regulates that?

[Chris Beam]

Well, it depends on, it's every other country where people are trading. So that platform is technically based in Panama, so it does have to follow some Panamanian law. But the laws that apply to the platform often are in the countries where the traders are located, not where the business itself is located.

[Bloomberg Businessweek Co-host]

So when we have.

[Bloomberg Businessweek Host]

I'm sorry, I interrupted you so many times, you couldn't even answer the question.

[Bloomberg Businessweek Co-host]

So when we have exchanges like the New York Stock Exchange or ice, like Intercontinental Exchange, when they're lining up with these companies or doing deals or collaborations, as the NYSE is doing with Polymarket, I mean, they're basically though partnering with a company that does a lot of sports gambling, right?

[Chris Beam]

Well, that is certainly how a lot of critics of the prediction market platforms are framing it. They see trading on prediction markets as no different from sports gambling. Whether you're betting on sports itself or other topics. The way that these companies see it is that you're trading what they call event contracts. And that's very different from gambling for all sorts of technical reasons. But when it comes to these war markets, I mean, you raise an interesting point. Like are some of the more traditional financial organizations like Intercontinental Exchange, which has partnered with polymarket, are they going to have a problem with platforms allowing people to bet on war or which leaders will be deposed? That's why you've seen such a different reaction from these two different companies. Kalshee has kind of bent over backwards to say we're not letting people bet on death one way or the other. That's why they froze the, the market on the Supreme Leader of Iran once it became clear that he was dead. In polymarket's case, the. Because all the, all of these war markets that we're talking about are overseas and have nothing to do with what is, is or is not allowed in the U.S. um, my guess is that Intercontinental Exchange and others are just treating it as that, as a completely separate company that doesn't involve them.

[Bloomberg Businessweek Co-host]

So like a firewall, but it is still the same company.

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[Chris Beam]

So it is essentially a firewall where Americans are geo blocked from trading on polymarkets international platform. So if you wanted to illegally trade on Polymarket's international platform, you would need a vpn. And that's definitely happened. Americans have done that. But it's technically against the law. In the case of, you know, are they are they separate companies. Yes, but they both operate out of polymarkets New York headquarters and they both have the same social media presence. So you can be forgiven for being a little confused.

[Bloomberg Businessweek Host]

Would Kalshee benefit from having, from being outside of being regulated by the CFTC rather than being here in the United States? Like, would they benefit from structuring like polymarket?

[Chris Beam]

That's a really good question. I think the two companies are taking very different strategies. Kalshi probably sees operating in the US following the rules, welcoming regulation as a path to winning in this space. It's just a very different path from polymarkets, where the vast majority of the activity is happening overseas and their business model is therefore likely to be different in the long term.

[Bloomberg Businessweek Guest]

Oh, okay.

[Bloomberg Businessweek Co-host]

So, but still on Poly Market in the US a lot of it is sports, right? And still sports. And yeah, dare I say, can I say gambling? Like, I'm not even quite sure is it correct to say that?

[Chris Beam]

So the answer to your first question is you can only bet on Sports on Polymarket's U.S. platform. Okay. That's the only type of wagering, betting, gambling, whatever you want to call it, that's allowed. They say that they are going to add other categories like politics or entertainment, but they haven't done that yet. The, the problem is as far as, you know, what to call it. I've seen Tariq Mansour, the CEO of Kalshee, say that he's, he's comfortable with the word betting, he's less comfortable with the word gambling. So I guess Kalshee tries to draw a line there saying, you know, betting could just be a synonym for, you know, predicting. Whereas gambling has different implications about the odds and the role of the house or the, the, the bookie and how much of a cut they take.

[Bloomberg Businessweek Host]

Yeah, that's, that's a good point because these are yes no's and you've explained this to us in the past when we've interviewed you because these are yes no's. There's not the same sort of like the house always wins when it comes to, when it comes to gambling. Hey, insider trading on these. Kalshi was in the news last week because it said it find and ban two traders who violated Kalshi's rules. This seems like it's going to become a growing problem not just on, on Kalshi, but also on, on polymarket. How are they policing this?

[Chris Beam]

Yeah, so Kalgi has been very proactive, I would say, about saying that they're addressing insider trading, they're surveilling traders and using algorithms to detect patterns that suggest that someone might have insider information. And then as you said, they've announced some cases where they've actually cracked down on, on insider trading and find people and they claim that they've sent more than 200. They've investigated more than 200 cases. You know how that compares to the extent of the problem?

[Bloomberg Businessweek Host]

Yeah, we don't really. 200 seems like a small number.

[Chris Beam]

Yeah, in the grand scheme of things, it does. And what's interesting is that Polymarket for its part, doesn't really talk about this at all. When I was working on the the piece last a few weeks ago, Polymarket did not respond to questions about insider trading. And the big headlines that you see generally, you know, insider trading on the Iran attack market, on the Maduro market a few weeks ago, those are almost all on Polymarket because you're not seeing any regulation there and there seems to be very little appetite to actually do anything about it.

[Bloomberg Businessweek Co-host]

I feel like every time we have these conversations, Chris, it just reminds me that at some point I think, right, regulators are going to have to come in at some point and kind of figure this out. And just got about 20 seconds, 25 seconds.

[Chris Beam]

Yeah. And it depends what kind of regulator. You know, the current chairman of the CFTC says he wants to regulate this, but it's unclear what he's actually going to do.

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