Prediction market Kalshi sued over Iran-related contract settlements

Kalshi, a regulated prediction market, faces a class-action lawsuit after voiding winning trades and reimbursing users following confirmation of Iran Supreme Leader Ali Khamenei’s death in a market asking whether he would leave office. Plaintiffs allege Kalshi failed to disclose a “death carveout” in the user-facing rules summary, presented the carveout unclearly, and used nontransparent timestamps and a disputed reimbursement methodology (last-traded price). Kalshi’s co-founder Tarek Mansour said the platform rejects markets explicitly tied to individual deaths, pointed to the policy in full market rules, and said affected users were reimbursed at the market’s last-traded price so no one lost money. Plaintiffs call the carveout “predatory,” saying death was the most foreseeable exit path for the 85-year-old leader amid geopolitical tensions. The dispute arrives as geopolitical prediction-market volumes climb, highlighting legal, regulatory and reputational risks for crypto-native betting and derivatives platforms that list sensitive events. For crypto traders, the case underlines counterparty, regulatory and liquidity risks when trading geopolitically sensitive contracts on centralized or regulated prediction markets; it may prompt tighter platform rules, reduced event listings, and higher caution among traders using such venues.