Kalshi Faces Class Action Lawsuit Over Khamenei Prediction Market Payout

Prediction markets platform Kalshi is facing a class action lawsuit filed in the US District Court for the Central District of California, stemming from the resolution of a market focused on the potential removal of Iran’s Supreme Leader, Ayatollah Ali Khamenei. Plaintiffs allege they were denied full payouts after Khamenei’s reported death on February 28th, due to Kalshi applying a 'death carveout' provision. This rule stipulates that if a leader leaves office solely due to death, payouts are based on the final traded price, not the full contract value.

The plaintiffs argue this decision was misleading and deprived them of expected earnings, claiming they were paid significantly less than anticipated. While Kalshi reimbursed trading fees and net losses, ensuring no traders ultimately lost money, the lawsuit seeks compensatory and punitive damages. Kalshi CEO Tarek Mansour defended the platform’s actions, stating the rule was designed to prevent profiting directly from death and acknowledged a need for clearer rule presentation.

The lawsuit occurs as prediction markets gain prominence, with Kalshi recently achieving an $11 billion valuation. The case highlights the complexities of designing and implementing rules for event-based markets, particularly those involving sensitive events like the death of a political leader, and the importance of clear communication with traders regarding contract conditions.

(Source：Cryptonews)