Prediction market platform Kalshi is facing a proposed class-action lawsuit over disputed payouts linked to bets on whether Ali Khamenei, Iran’s Supreme Leader, would leave office.
Trading volume on the market hit approximately $54 million, with traders betting on the outcome of Khamenei’s leadership status. However, the bone of contention now sits on the debate whether making bets on a death scenario is legal or not.
The disagreement came about as a result of the decision made by the platform regarding the outcome of the market, with traders claiming that they were not fully compensated.
Kalshi, however, maintains that it followed its established policies when settling the contracts. The case now raises broader questions about transparency and rule enforcement in prediction markets.
Kalshi accused of rule change in Khamenei prediction market
Traders who bet that Ali Khamenei would leave office before March 1 have accused prediction market platform Kalshi of changing the rules after the outcome became clear.
According to the lawsuit, the platform applied a rule excluding outcomes linked to a person’s death only after reports emerged that Khamenei had been killed in weekend military strikes.
Kalshi denies the claim and says the rule banning markets from being resolved based on someone’s death was included in the terms from the beginning. The company also said it refunded millions of dollars in trading fees and losses to traders affected by the decision.
The case, filed in the U.S. District Court for the Central District of California, accuses Kalshi of applying the rule retroactively and misleading users about how the market would be settled.
Kalshi accused of allowing Khamenei bets despite death reports
The complaint says that Kalshi let trading in the market go on even after news of Ali Khamenei’s death started to spread. The plaintiffs say that the original terms of the market made it clear and simple that Khamenei could leave office at any time.
According to the lawsuit, the 85-year-old leader’s removal from power through death was viewed as a plausible outcome given the heightened military tensions at the time.
Kalshi, however, disputes the allegations. Company representatives said the platform took precautions to prevent markets from being resolved based on a person’s death. The company added that its terms explicitly barred death-based outcomes from the beginning and that the rule was not introduced after the event occurred.