Kalshi prediction market sued over ouster of Iran leader bet

The Kalshi prediction market was sued for ​failing to pay $54 million to people who bet that Iranian Supreme ‌Leader Ayatollah Ali Khamenei would leave office before March ​1, according to a class-action lawsuit filed on ⁠Thursday.

Khamenei was killed on Saturday in U.S-Israeli strikes that left hundreds dead, including top Iranian officials. The strikes followed a months-long U.S. ‌military build-up in the region.

Kalshi did not invoke a “death carveout” provision until after the Iranian leader was ‌killed to avoid paying customers in Kalshi’s “Khamenei Market” what ‌they ⁠were owed, the lawsuit said.

“With an American naval ⁠armada amassed on Iran’s doorstep and military conflict not merely foreseeable but widely anticipated, consumers understood that the most likely — and in many cases the ​only realistic — mechanism by ‌which an 85-year-old autocratic leader would ‘leave office’ was through his death. Defendants understood this as well,” the lawsuit said.

The language specifying that Khamenei’s departure could be due to any cause, ‌including death, was “clear, unambiguous and binary,” the lawsuit said, ​describing Kalshi’s actions as “deceptive” and “predatory.”

The lawsuit, which was filed in the U.S. District Court for the ⁠Central District of California, said the company continued trading even as news of Khamenei’s death began to circulate.

However, a ‌Kalshi spokesperson said the company’s rules did not change and were clear from the start as it “included every precaution …. to make sure people could not trade on the outcome of death.”

“We even reimbursed all fees and net losses out of pocket, to the tune of millions of dollars, to ‌make sure not a single person lost money on this market,” ​the spokesperson said.

Prediction markets have exploded in popularity since the 2024 U.S. election, when their real-time probabilities ⁠proved more accurate than polling in forecasting Donald Trump’s victory.

They offer ⁠tradable yes-or-no contracts that allow users to bet on a wide range of real-world events from sports ‌to politics and the economy. Bet costs fluctuate between zero and 100 cents, and typically pay out when an ​outcome is confirmed.