A class action lawsuit alleges prediction market Kalshi failed to disclose a “death carveout” in its “Ali Khamenei out as Supreme Leader” market and subsequently refused to pay out winning trades. The plaintiffs claim the carveout was omitted from the user-facing rules summary and not presented in a way that would alert a reasonable consumer to its existence or effects.
According to the complaint, defendants later acknowledged that their prior disclosures were “grammatically ambiguous.” After reports confirmed the death of former Iranian Supreme Leader Ali Khamenei, Kalshi voided positions in the market so it did not resolve to “yes.”
Kalshi co-founder Tarek Mansour said the platform does not list markets directly tied to death and that rules are designed “to prevent people from profiting from death.” Mansour also announced reimbursements for affected users, calculated using the market’s last traded price before Khamenei’s death was confirmed — a policy that drew user criticism.
The plaintiffs described the carveout as “predatory” and an “unfair” business practice in this context, arguing that, with heightened U.S.-Iran tensions and a U.S. naval presence nearby, consumers reasonably interpreted “leave office” to most likely mean death for the 85-year-old leader. They allege Kalshi understood this risk when designing the market.
The lawsuit further challenges the transparency of Kalshi’s reimbursement method, saying the platform did not disclose the exact timestamps or methodology used to determine the “last traded price.”
Mansour responded that the platform’s no-death-markets policy was stated in the market rules and that Kalshi reimbursed losses out of pocket, asserting “not a single user walked away losing money from this market.” The dispute occurred as prediction market trading volumes surged to record highs in 2026, increasing scrutiny of platform practices and rule clarity.
Cointelegraph notes its coverage follows its editorial policy and encourages independent verification of facts.
