- A class action lawsuit alleges prediction market Kalshi failed to properly disclose a “death carveout” clause in a market predicting the end of Ali Khamenei’s rule.
- The platform invoked this policy to void all trades following Khamenei’s confirmed death, refusing to pay out winning “yes” positions.
- Kalshi co-founder Tarek Mansour defended the platform’s adherence to its no-“death markets” rule and offered reimbursements to affected users.
- Plaintiffs argue the calculation method for these reimbursements was not transparent, calling the overall practice “predatory” and unfair.
A class action lawsuit has been filed against the prediction market platform Kalshi, accusing it of failing to adequately disclose a critical rule and withholding payouts to traders. The legal action centers on the platform’s “Ali Khamenei out as Supreme Leader” market, which was voided after the Iranian leader’s death.
The plaintiffs said the death carveout policy was not displayed to notify a reasonable consumer. Consequently, Kalshi did not resolve the market to a “yes” outcome, refusing to pay winning trades.
Kalshi co-founder Tarek Mansour said the company does not list markets directly tied to death. He maintained the platform designed rules specifically to prevent people from profiting from such an event.
However, the lawsuit filing characterizes this as a predatory and unfair business practice. “With an American naval armada amassed on Iran’s doorstep… consumers understood that the most likely… mechanism by which an 85-year-old autocratic leader would ‘leave office’ was through his death,” it stated.
Meanwhile, Mansour announced reimbursements for affected users based on the market’s last traded price. The plaintiffs argue the methodology for this calculation was neither disclosed nor transparent.
Mansour later said the policy was clearly stated in the market rules. “Kalshi made no money here and even reimbursed all losses out of pocket,” he asserted.
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