In theory, such bets run afoul of US financial rules, which bar trading on contracts involving war, terrorism, assassination, gaming or other illegal activities.

But that hasn’t stopped firms from taking in millions of trades.

Critics have seized on the activity, calling for a crackdown on the apps, which they say are facilitating unseemly, and potentially illegal, war profiteering, generating national security risks and enabling opportunities for insider trading and corruption.

“You have now opened up gambling basically on almost anything and it has turned into this very, very gruesome type of thing on the death of a head of state,” said Craig Holman, government affairs lobbyist at the Public Citizen advocacy group, which recently filed a complaint this week over the bets.

Polymarket alone has hosted what Bloomberg estimated as more than $500m in bets related to the Iran war, at one point offering an opportunity to play the odds on the chance of nuclear detonation.

The company, which is headquartered in New York but operates on a limited basis in the US, eventually removed that market after it drew scrutiny on social media but users can still submit bets on questions like when US forces will enter Iran. It did not respond to the BBC’s request for comment.

Kalshi also ended up cancelling the Khamenei market, which had drawn $54m in trades, noting that US-regulated entities are barred from “having a market directly settling on someone’s death”.

The company, which did not respond to a request for comment for this article, has said the war bets are happening on unregulated exchanges outside the US.

Concerns about the war bets have collided with a bigger battle over how prediction market firms should be regulated.

Unlike traditional gaming firms, in which the odds are set by the company, prediction market companies function more like a stock exchange, allowing users to bet against each other on the outcome of future events using “event contracts”.

That design has allowed national financial regulators at the Commodities Futures Trading Commission (CFTC) to claim oversight.

“The law is consistent with a dramatic recent policy shift, to suppress the ethnic diversity formally recognised since 1949,” Magnus Fiskesjö, an associate professor of anthropology at Cornell University said in a university report.

“The children of the next generation are now isolated and brutally forced to forget their own language and culture.”

However, Beijing argues that teaching the next generation Mandarin will help their job prospects.

It also says the law for “Promoting Ethnic Unity and Progress” is crucial for promoting “modernisation through greater unity”.

The law was voted and passed on Thursday at the National People’s Congress in Beijing, which has never rejected an item on its agenda.

The law also provides a legal basis to prosecute parents or guardians who may instil what it described as “detrimental” views in children which would affect ethnic harmony and it calls for “mutually embedded community environments” which some analysts believe could result in the break up of minority-heavy neighbourhoods.

The Chinese government started to push for what it describes as the “sinicisation” of minority groups in the late 2000s and create a more unified national identity by assimilating ethnic groups into the dominant Han culture.

Han Chinese make up more than 90% of the country’s 1.4 billion people.

Beijing has long been accused of restricting the rights of minority ethnic groups in regions like Tibet, Xinjiang and Inner Mongolia.

Critics say assimilation has often been forced on people in these places – a state-led policy that has accelerated under Chinese leader Xi Jinping who has taken a harder line on dissent and protests, especially in areas home to minority ethnic groups,

In Tibet, the authorities have arrested monks, and taken control of monasteries to ensure they do not worship the Dalai Lama.

When the BBC visited a monastery that had been at heart of Tibetan resistance in July last year, monks spoke of living under fear and intimidation.

“We Tibetans are denied basic human rights. The Chinese government continues to oppress and persecute us. It is not a government that serves the people,” one of them told us.

In Xinjiang, human rights groups have documented the detention of a million Uyghur Muslims in what the Chinese government calls camps for “re-education”, while the UN has accused Beijing of grave human rights violations.

The BBC’s reporting from 2021 and 2022 found evidence supporting the existence of detention camps, and allegations of sexual abuse and forced sterilisation, which Beijing denies.

In 2020, ethnic Mongolians in northern China staged rare rallies against measures to reduce teaching in the Mongolian language in favour of Mandarin.

Parents even held children back in protest at the policy as some ethnic Mongolians viewed the move as a threat to their cultural identity. Authorities moved quickly to crackdown on what it saw as dissent.

The Communist Party says it embraces different ethnicities. The country’s constitution states that “each ethnicity has the right to use and develop their own language” and “have the right to self-rule”.

But critics believe this new law will cement Xi’s push toward assimilation.

“The law makes it clearer than ever that in Xi Jinping’s PRC non-Han peoples must do more to integrate themselves with the Han majority, and above all else be loyal to Beijing,” Allen Carlson, an associate professor of government at Cornell University said, referencing China by the initials of its official name.

This focus on development and prosperity is “telling”, Professor Ian Chong of the National University of Singapore told the BBC.

“It is easy to read this language as meaning that minority languages and cultures are backward and impediments to advancement.”

Xi’s approach towards minorities is “consistent with his idea of creating a great and strong Chinese nation with a northern Han core… minorities are seen as branching off from that core, and hence in some ways derivative,” he adds.

“In practice, this has prompted concerns about further rounds of increasing control, diminution, and even crackdowns on minority cultures and languages.”