A class-action lawsuit has been filed against the Kalshi prediction market, alleging that the death toll on the Ali Khamenei as Supreme Leader market was not properly disclosed to users and the platform failed to pay out winning trades.
The plaintiffs said the fatality policy was “not included in the summary of the user rules” and was not displayed in a way that would make a “reasonable consumer” aware of the policy or its effects.
“The defendants themselves later admitted that their previous disclosure was ‘grammatically ambiguous,'” the lawsuit states.
Kalshi canceled the market’s trading positions after confirming the death of Khamenei, Iran’s former supreme leader, meaning the market did not decide on a yes.
“We don’t list markets that are directly related to death. When there are markets that involve potential death outcomes, we develop rules so that people can profit from death,” said Kalshi co-founder Tarek Mansoor.
The plaintiffs described the search policy as “predatory” and an “unfair” business practice for this particular market. The lawsuit states:
“With a U.S. Navy massed on Iran’s doorstep and military conflict not only predictable, but widely expected, consumers realized that the most likely, and in many cases, the only realistic mechanism by which an 85-year-old dictator would ‘step down’ was his death. The defendants understood it, too.”
Mansour also announced compensation for users affected by the carve-out policy, calculated using the “last trading price” in the market before Khamenei’s death was confirmed. The refund policy has also received a significant push from users.
The plaintiffs in the lawsuit say the methodology and exact time stamps used to calculate the “last traded price” for the forecast market are not disclosed and are not transparent.
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Mansour argued that Kalshi was only following its policy of not allowing “death markets”, saying the policy was clearly spelled out in the market’s rules.
“Kalshi did not make money here and even compensated all the losses from his own pocket. No user of this market has lost his money and has not left this market,” he said.
The incident occurred as trading volumes in the 2026 forecast markets hit record highs as the platforms continue to gain popularity.
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