Kalshi Sued Over $54M Market on Iran Leader Exit

TLDR

• Kalshi faces a proposed class action over a $54 million market on Iran’s Supreme Leader Ali Khamenei leaving office.
• Traders allege the platform failed to honor payouts on “yes” positions after halting the market.
• The lawsuit claims Kalshi did not clearly disclose a death-related carveout before reports of airstrikes surfaced.
• Plaintiffs argue the contract language promised full payouts if Khamenei exited the role by set dates.
• Kalshi CEO Tarek Mansour said the company does not offer markets directly tied to a person’s death.

Kalshi faces a proposed class action over a halted market tied to Iran’s Supreme Leader Ali Khamenei. Traders claim the platform failed to honor payouts on “yes” positions after trading surged. The dispute centers on contract language and disclosures tied to a reported death exception.

Kalshi Market Rules at Center of Payout Dispute

The complaint states that Kalshi structured the market as a binary contract tied to Khamenei leaving office by set dates. Traders argue the language promised full payouts to “yes” holders if he exited the role. However, the filing says the platform did not clearly disclose a death-related carveout before reports of airstrikes surfaced.

Plaintiffs claim Kalshi allowed trading to continue on Feb. 28 as reports of US and Israeli strikes spread. They allege the platform encouraged more “yes” bets despite knowing those contracts would not pay. According to Bloomberg Law, the suit argues the rules were “clear, unambiguous, and binary,” yet traders say the death carveout appeared only after trading intensified.

The disputed market drew about $54 million in trading volume before Kalshi halted it. Traders contend they expected payouts if Khamenei left office for any reason. The lawsuit states that the platform’s disclosures failed to highlight any exclusion tied to death until after the reports emerged.

Plaintiffs Adam Risch and Yonatan Gliksman filed the case in the US District Court for the Central District of California. Novian & Novian LLP represents the proposed class of US traders. The complaint alleges breach of contract and violations of California law.

Kalshi Response and Legal Claims

Kalshi CEO Tarek Mansour addressed the dispute in public posts after criticism increased. He stated that the company does not offer markets directly tied to a person’s death. He wrote, “While the rules were clear and we tried our best to highlight them, traders vocalized they were not prominent enough.”

Mansour later said the company would reimburse traders for fees and net losses linked to the halted market. He added that Kalshi would update how similar contracts disclose death-related exceptions. He wrote that the firm would reimburse losses out of pocket.

The plaintiffs seek damages and restitution from the platform. They also request court orders requiring improved disclosure practices for future contracts. The filing argues that Kalshi’s conduct misled traders about payout conditions.

The market asked participants to predict whether Khamenei would leave office by specific deadlines. Trading accelerated after reports of airstrikes circulated. Kalshi halted the market shortly after the reports, and the dispute now proceeds in federal court.

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