Odds swing wildly as Polymarket bets on Iran’s successor collapse

This morning, three days after US-Israeli military strikes killed Supreme leader of Iran Ayatollah Ali Khamenei, Polymarket traders thought they’d found his replacement — and then lost more than half of their position values by lunchtime.

Alireza Arafi, a little-known cleric, was the frontrunner among binary options traders on Polymarket at a 22% odds rate this morning. However, he’d plummeted to 9% at time of writing.

With Khamenei dead and Iran’s theocratic leadership in disarray, its de facto interim leadership council, the Expediency Discernment Council, named Arafi on Sunday to join Masoud Pezeshkian and Gholam-Hossein Mohseni-Eje’i in a three-person body governing the country under Article 111 of its constitution.

Arafi is also deputy chairman of the Assembly of Experts, the 88-member clerical body that normally selects the country’s supreme leader. Earlier today, Israel detonated munitions at the Assembly of Experts building.

Finally, Arafi is a member of the Guardian Council, which vets candidates for that very assembly.

In summary, Arafi currently holds an interim leadership position alongside the country’s two other highest-ranking men, helps decide who may run in contention, and sits on the body that votes for candidates.

Sometimes, Polymarket traders get it wrong. Other times, they simply read an org chart.

Read more: Polymarket ends trading loophole for bitcoin quants

The seminary loyalist sitting on Iran’s top committees

Local media has described Arafi as a “staunch loyalist to the core ideology of the Islamic Republic.” In fact, he formerly headed one of the regime’s most prestigious religious schools, Al-Mustafa International University.

Born in 1959, Arafi has spent his entire career rising through Iran’s clerical bureaucracy. The late Khamenei personally appointed him to lead the country’s seminaries in 2016 — a powerful position in the theocratic state — and then promoted him to the Guardian Council in 2019.

Each successive accolade in his regime’s form of Islam makes Arafi a better candidate to become Ayatollah, the highest title of Twelver Shia clergy and common parlance for Iran’s supreme leader.

However, his promotion is certainly not guaranteed, hence Polymarket’s betting line at a mere 22% this morning and just 9% now.

When trading offshore binary options, payouts are never sure until funds clear a bank account.

When Donald Trump, for example, called Kevin Hassett a “potential Fed Chair” and “a respected person, that I can tell you,” traders rushed to place trades at 70% on Polymarket and 74% on Kalshi.

Those gamblers lost it all when Trump instead nominated Kevin Warsh.

No consensus about who will become Iran’s supreme leader

Arafi’s competitors among Polymarket traders tell a story of how little consensus exists about Iran’s leadership.

Gholam-Hossein Mohseni-Eje’i, the judiciary chief and Arafi’s fellow council member, sits at 17%.

Hassan Khomeini, grandson of the revolution’s founder, was at 15% this morning but crashed to 8% by time of writing. Mojtaba Khamenei, the late Ayatollah’s son, trades at just 7% but rose to 19% by time of writing.

An 13% bet that Polymarket abolishes its own market entirely, likely due to death of candidates, rounds out the field’s more exotic wagers.

This market was created on February 28 and resolves on December 31. Iran’s Assembly of Experts is expected to name a successor within days, although many months remain before December 31.