A class action suit alleges prediction market Kalshi failed to disclose a “death carveout” in its “Ali Khamenei out as Supreme Leader” market and then declined to pay out winning trades. Plaintiffs say the carveout was omitted from the user-facing rules summary and was not presented in a way that would alert a reasonable consumer to its existence or effect.
The complaint says Kalshi later acknowledged its earlier disclosures were “grammatically ambiguous.” After media reports confirmed the death of former Iranian Supreme Leader Ali Khamenei, Kalshi voided positions in the market so it did not resolve to “yes.” That decision prompted the lawsuit alleging nonpayment and lack of proper disclosure.
Kalshi co-founder Tarek Mansour told users the platform does not list markets directly tied to death and that the rules are designed “to prevent people from profiting from death.” He also announced reimbursements for affected users, calculated using the market’s last traded price before Khamenei’s death was confirmed. That reimbursement approach drew criticism from some users.
The plaintiffs characterize the carveout as “predatory” and an unfair business practice in this context. They argue that, given heightened U.S.–Iran tensions and a U.S. naval presence nearby, consumers reasonably interpreted the phrase “leave office” as most likely to mean death for the then-85-year-old leader. The complaint alleges Kalshi was aware of this risk when it created the market.
The suit also challenges the transparency of Kalshi’s reimbursement method, saying the platform did not disclose the exact timestamps or the methodology used to determine the “last traded price.” Plaintiffs contend that lack of precision left users unable to verify whether reimbursements matched what they were owed.
Mansour replied that the 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 comes as prediction market trading volume surged to record highs in 2026, drawing increased scrutiny to platform practices and rule clarity.
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