Kalshi prediction market was sued for a failure to pay out $54 million to people who bet that Iranian Supreme Leader Ayatollah Ali Khamenei would leave office before March 1, 2026, according to a class action lawsuit filed on Thursday.
Khamenei was killed on Saturday in US-Israeli strikes that left hundreds dead, including top Iranian officials.
The strikes followed a months-long US military build-up in the region.
Kalshi customers were drawn to the “Khamenei Market” because of the fluid geopolitical circumstances, the lawsuit said.
However, the complaint added, it was not until after Iranian leader was killed that the company invoked a “death carveout” provision to avoid paying customers what they were owed.
“With an American naval armada amassed on Iran’s doorstep and military conflict not merely foreseeable but widely anticipated, consumers understood that the most likely—and in many cases the only realistic—mechanism by which an 85-year-old autocratic leader would ‘leave office’ was through his death. Defendants understood this as well,” the lawsuit said.
The language specifying that Khamenei’s departure could be due to any cause, including death, was “clear, unambiguous and binary,” the lawsuit said, describing Kalshi’s actions as “deceptive” and “predatory.”
The lawsuit, which was filed in the US District Court for the Central District of California, said the company continued trading even as news of Khamenei’s death began to circulate.
However, a Kalshi spokesperson said the company’s rules did not change and were clear from the start as it “included every precaution …. to make sure people could not trade on the outcome of death.”
“We even reimbursed all fees and net losses out of pocket — to the tune of millions of dollars — to make sure not a single person lost money on this market,” the spokesperson said.
Prediction markets have exploded in popularity since the 2024 US election, when their real-time probabilities proved more accurate than polling in forecasting Donald Trump’s victory.
They offer tradable yes-or-no contracts that allow users to bet on a wide range of real-world events from sports to politics and the economy.
Bet costs fluctuate between zero and 100 cents, and typically pay out when an outcome is confirmed.
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