Hamini's death tests the prediction market bottom line: Kalshi decides to refund "don't profit from dead people," Polymarket reports insider trading involving millions of dollars

Kalshi Co-Founder Tarek Mansour Announces Platform’s “Death Exemption” for Hamini Market — Refunds All Fees and Settles at Last Trade Price Before Death. While this move demonstrates the moral boundary of prediction markets, it has sparked strong user backlash over profit restrictions. Meanwhile, six traders on Polymarket are suspected of insider trading, betting before the Iran airstrike and netting approximately $1 million.

(Background: Kalshi Cracks Down on Insider Trading! MrBeast Editor Fined $20,000 and Banned for Two Years)

(Additional context: Can we track the next insider trader on Polymarket? Absolutely, and the barrier is low.)

Table of Contents

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• How does Kalshi’s “Death Exemption” settle?
• User backlash: Profit restrictions anger the community
• Larger issue on Polymarket: Suspected insider trading

Last Sunday (March 1), Iran’s Supreme Leader Khamenei died during a joint US-Israel military operation. Following the news, the “Will Khamenei step down as Supreme Leader?” market on prediction platform Kalshi faced settlement challenges. Co-founder Tarek Mansour announced the platform’s approach, centered on a single principle: “Prevent anyone from profiting from death.”

How does Kalshi’s “Death Exemption” settle?

Mansour explained that Kalshi has never created markets directly tied to death. When a market result involves death, the platform activates an exemption clause outlined in the rules, handling traders who entered at different times as follows:

• Traders who placed bets before the death news: settle at the last trade price before the death announcement, with all fees fully refunded.
• Traders who entered after the death news: refunded the difference between their entry price and the last trade price, along with fees.

Mansour emphasized that the policy of “prohibiting profit from death” has been a clear stance of the platform for a long time, and relevant clauses are embedded in the market rules.

User backlash: Profit restrictions anger the community

However, this moral stance hasn’t been universally accepted. Some traders believe they made legitimate bets based on geopolitical assessments, and the platform’s later restriction on profits is akin to “changing the rules of the game,” sparking heated discussion in the community.

Prediction markets have always operated in a moral gray area — when event outcomes involve human lives, should platforms prioritize market mechanisms or uphold ethical boundaries? Kalshi chose the latter, but at the cost of user trust.

Larger issue on Polymarket: Suspected insider trading

Compared to Kalshi’s “refund controversy,” Polymarket faces more serious allegations. Reports indicate that before the US and Israel launched an airstrike on Iran at the end of February, six Polymarket traders precisely bet on “US attacking Iran,” netting about $1 million.

The timing of these trades closely aligns with the military action, raising strong suspicions of insider trading. This isn’t the first time Polymarket has faced such doubts — during the Maduro arrest event in Venezuela, mysterious wallets placed large bets before the news was public, earning hundreds of thousands of dollars afterward.

Prediction markets’ role amid geopolitical conflicts is under unprecedented scrutiny: are they democratizing information tools, or are they playgrounds for insider arbitrage? As both Kalshi and Polymarket become embroiled in controversy, regulators are likely to pay more attention to this rapidly growing industry.