Prediction market platform Kalshi is facing a class action lawsuit in California over its handling of a market tied to the removal of Iran’s former supreme leader Ayatollah Ali Khamenei.
The lawsuit alleges the platform misled traders who expected contracts predicting Khamenei’s removal before March 1 to resolve at $1 after his death was confirmed on February 28.
Instead, Kalshi invoked a “death carveout” clause that resolves markets at the last traded price if an official leaves office solely because of death.
“We don’t list markets directly tied to death,”
Said Kalshi chief executive Tarek Monsour, explaining the rule was designed to prevent traders from profiting from someone’s death.
Plaintiffs claim the rule was not prominently disclosed and argue that traders who correctly predicted the outcome received payouts far below the expected contract value.
Kalshi said it reimbursed all trading fees and net losses related to the market and maintained that no trader lost money overall.
The disputed market generated more than $54 million in trading volume, while the plaintiffs held roughly $259.84 worth of contracts at the time of resolution.