Prediction market Kalshi faces lawsuit over disputed $54M bets

Kalshi faces a class-action lawsuit over disputed payouts totaling approximately $54 million related to bets on Iranian Supreme Leader Ali Khamenei’s departure from office.

Users who wagered Khamenei would leave his position before March 1 claim the prediction market platform retroactively applied a rule excluding death-based outcomes after he was killed in weekend military strikes.

The company maintained its terms explicitly prohibiting trading on death scenarios from the market’s inception and reimbursed millions in fees and losses to affected traders.

The lawsuit filed in U.S. District Court for the Central District of California accuses Kalshi of applying the exclusion only after the outcome materialized, calling the practice deceptive.

Khamenei died Saturday during joint U.S.-Israeli military operations that killed hundreds including senior Iranian officials following months of American force deployment to the region.

Platform continued accepting trades as death reports emerged

The complaint alleges Kalshi allowed trading to continue even after information about Khamenei’s death began circulating.

Plaintiffs argue the market’s original terms clearly stated his office departure could result from any circumstance, making the payout conditions straightforward.

The 85-year-old leader’s removal from power through death was the most probable scenario given the military tension, according to the lawsuit.

American naval forces had assembled near Iran while armed conflict appeared increasingly inevitable. This had created conditions where Khamenei’s death became the realistic path for his office departure rather than resignation or other peaceful transitions.

Company claims death exclusion existed from market launch

Kalshi representatives said the platform took every precaution to prevent trading on death outcomes when creating the market.

The terms included explicit language barring death-based resolution from the beginning rather than being added later, according to the company’s statement.

Prediction market platforms have grown notably since the 2024 presidential election when their probability calculations outperformed traditional polling in forecasting Donald Trump’s victory.

These services let users purchase yes-or-no contracts on future events like political developments, sporting competitions, and economic indicators.