Kalshi faces controversy over Ayatollah Khamenei resignation betting market… class-action lawsuit filed

Prediction-market platform Kalshi has become embroiled in a class-action lawsuit over how it handled a betting market tied to Iranian Supreme Leader Ayatollah Ali Khamenei’s departure.

According to Cointelegraph on the 7th (local time), investors filed a class-action suit alleging that Kalshi failed to adequately disclose a “death carveout” applied to its “Khamenei steps down as Supreme Leader” market and did not settle winning trades.

The complaint says the provision was not included in the rules summary provided to users and was not displayed in a way that would allow ordinary users to recognize the policy. Plaintiffs said, “The defendant itself acknowledged that the prior notice was grammatically ambiguous.”

The market in question was structured to predict “whether Khamenei steps down from the position of Supreme Leader.” However, after Khamenei’s death was confirmed, Kalshi voided positions in the market and did not settle the result as “Yes.”

In response, Kalshi co-founder Tarek Mansour said, “Kalshi does not list markets directly linked to death itself,” adding, “If death could affect the outcome, we design the rules so users cannot profit from a death.”

Plaintiffs argued the provision amounted to an “unfair and deceptive business practice” applied to consumers’ detriment in a specific market. The complaint also stated that “both consumers and the platform knew that the most realistic way an 85-year-old authoritarian leader would leave power was through death.”

Kalshi said it would compensate users affected by the policy based on the last traded price. Plaintiffs, however, argued that even in this process, the reference time for the price used and the calculation method were not adequately disclosed.

Mansour countered that “Kalshi did not profit from this market and covered all losses with its own funds,” adding that “no user suffered losses because of this market.”