Prediction Market 'Kalshi' Sued for Not Paying $54 Million for Bets on Khamenei's Death

An anonymous reader shared this report from the Independent: A popular predictions market app will not pay out the $54 million some of its users believed they were owed after correctly forecasting the death of Ayatollah Ali Khamenei, according to a report.

Kalshi, which allows players to gamble on real-world events, offered customers favorable odds on Khamenei, 86, being "out as Supreme Leader" in response to the announcement of joint U.S.-Israeli airstrikes on Tehran in the early hours of Saturday morning. The company promoted the trade on its homepage and app and tweeted [last] Saturday: "BREAKING: The odds Ali Khamenei is out as Supreme Leader have surged to 68 percent." It continued: "Reminder: Kalshi does not offer markets that settle on death. If Ali Khamenei dies, the market will resolve based on the last traded price prior to confirmed reporting of death." Khamenei was later confirmed dead in the airstrikes and the company clarified in a follow-up post: "Please note: A prior version of this clarification was grammatically ambiguous. As a customer service measure, Kalshi will reimburse lost value due to trades made between these clarifications...."

While the company has offered to reimburse any bets, fees or losses from the trade placed prior to its clarification message, it has nevertheless attracted a firestorm of complaints on social media.
A Kalshi spokesperson told Reuters they'd reimbursed "net losses" out of pocket "to the tune of millions of dollars". But a class action lawsuit was filed Thursday saying Kalshi had failed to pay $54 million: 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... 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."
"In a notice filed Monday, the company proposed standardizing the terms of all its markets that implicitly depend on a person surviving..." reports Business Insider. "The update comes after Kalshi paid $2.2 million to resolve complaints from users who were confused by the way it divided the $55 million wagered on Iran's Supreme Leader Ali Khamenei's ouster after his targeted killing by Israel and the US."

Their article cites a DePaul University law professor who says "There's now sort of this nascent, but bipartisan movement against prediction markets. I think Kalshi's feeling the heat." For example, U.S. Senator Chris Murphy told the Washington Post, "People shouldn't be rooting for people to die because they placed a bet."

The End Cannot Come Soon Enough

[SlashbotAgent]

All the prediction "markets" are senseless scams. They can only survive by arbitrarily choosing when not to pay. It's the only possible way for the house to always win. These things should never have been allowed to exist.

I don't understand how they bypass ani-gambling laws.

I don't understand why anyone would put money into them.

These scam operations cannot die soon enough.

Re:The End Cannot Come Soon Enough

[know-nothing cunt]

These scam operations cannot die soon enough.

Wanna bet?

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[unixisc]

On those prediction markets? That won't pay out if I win? No, thanks!

Re:

[93 Escort Wagon]

These scam operations cannot die soon enough.

Wanna bet?

What odds are you giving?

Re:The End Cannot Come Soon Enough

[OrangeTide]

I don't understand how they bypass anti-gambling laws.

Perhaps it is difficult to write such a law in a way that also still allows for non-voting, non-dividend-yielding public stocks. Might be easier to just let this prediction market nonsense to go on as long as there isn't a way for people to slide their retirement accounts into it (like they now can with crypto)

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[nlc]

Not that difficult. Here in the UK the Gambling Commission has already said that so called 'prediction markets' are covered under betting intermediary laws similar to betting exchanges and would therefore need to be licensed, regulated and taxed as gambling companies not as market brokers.

Re: The End Cannot Come Soon Enough

[newcastlejon]

Ah. I wondered why I had never heard of them before that episode of South Park.

The End Is Already Here. Legally.

[geekmux]

I don't understand how they bypass ani-gambling laws.

Easy. By calling them "prediction markets" instead of fucking gambling.

It allows the grown-ass children that comprise the average constituency to dismiss the obvious harm caused by gambling addiction when addicting themselves. As well as dismiss and ignore that harm when handing off that addiction to their children in the form of "loot boxes". Might as well just include a six-pack of scratch off tickets with every Happy Meal. You know, get them extra happy about "winning" in life. Early.

I don't understand why anyone would put money into them.

Easy. Because

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[quonset]

It allows the grown-ass children that comprise the average constituency to dismiss the obvious harm caused by gambling addiction when addicting themselves.

So it's like drugs. Got it.

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[Iamthecheese]

>That you don't like something doesn't make it a scam.

No, the fact that they refuse to pay out so they can make more money is what makes them scams.

Re:

[JoshuaZ]

Kalshi had specific terms of this sort before this event. It was a known difference between Kalshi and PredictIt for example. Moreover, Kalshi isn't getting some extra profit from this, since the way this goes, they pay back everything to people who bought yes or not. It is very hard to call something a scam when the business operating it doesn't make any profit from it. But even if that weren't the case, that would make Kalshi a scam, not prediction markets in general. So this fails at two levels to be

Re: The End Cannot Come Soon Enough

[commodore73]

Failing to pay out against the original terms may not increase their profit directly, but reduces their losses. It's a scam.

Re:

[JoshuaZ]

No it doesn't reduce their losses. Here let's do a concrete example. Let's say you have one person who has bought 10 shares at 60 cents for Khameini to leave. That means someone else had 10 shares at 40 cents for Khameini to stay. Now, what the death clause means is that rather than the people with 60 cents to get a full payout and the people with 40 cents get nothing, instead the 60 cent people get 60 cents back a share and the 40 cent people get their 40 cents per a share back. So the total payout here is

Re:

[commodore73]

Certainly a possible gap in my intelligence or understanding, so I am not sure whether to agree. If there were no additional losses, why wouldn't they just pay out rather than face a lawsuit? And then why not just settle the lawsuit per original terms? Changing terms mid-process certainly sounds like a scam regardless of financial outcome.

> someone else had 10 shares at 40 cents for Khameini to stay.

This sounds like an assumption, which may be valid based on what they state, but changing policy see

Re:

[JoshuaZ]

Ok. So Kalshi has for a long time now taken the position that markets would resolve this way in event of death. This is so they aren't accused of running a functional assassination market. This is in contrast to PredictIt, their rival, which has had a policy of paying out on deaths. This is essentially what Kalshi means when they are quoted in the summary above "If Ali Khamenei dies, the market will resolve based on the last traded price prior to confirmed reporting of death." So, there is a slight complica

Re:

[commodore73]

I'm clearly out of my depth here and don't really care to do the research, but in general I don't trust anything about these "markets". But then again, I'm not a gambler. I consider the stock market to be a casino largely driven by mass psychology and inside information rather than fundamentals or actual market forces. And this trading strategy has done very well for me, where I've never had a good day at a casino.

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[geekmux]

All the prediction "markets" are senseless scams.

That you don't like something doesn't make it a scam.

They're scamming the public by making them assume this isn't gambling, while selling that addiction as a "market" to invest in. That's exactly how people can love to hate this shit.

This kind of shit shouldn't be illegal because of odds technicalities. This shit should be illegal because it cripples humans with little or no self control, leading to ruined lives that can easily extend far beyond the addict.

And if you want to know why Greed N. Corruption have successfully lobbied to enable legal gambling in

Re:

[JoshuaZ]

If you want to make that argument for sports gambling, then sure go ahead. Sports gambling is wildly addictive, very popular and set up in ways which maximize addiction. And of course, it has no positive externalities. But none of that applies to prediction markets. Labeling prediction markets as "gambling" misses all of that.

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[snowshovelboy]

The house wins because it takes a fee. The payout price is just the other side of the bet. IMO the only reason why they aren't already illegal under anti bucket shop law is that the house isn't the counterparty.

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[SlashbotAgent]

the house isn't the counterparty.

Yet, they decide when to pay AND change the rules midstream. Why, Who benefits from the sudden change? Kalshi benefits.

Did they change the rules, or 'act of war' clause

[drnb]

Yet, they decide when to pay AND change the rules midstream. Why, Who benefits from the sudden change? Kalshi benefits.

Did they change the rules? Or is there an 'act or war' clause in the terms. Such clauses are boilerplate in many contracts, such as those with insurance companies. Maybe here too?

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[snowshovelboy]

The counterparty to the bet benefits. Kalshi is not the counterparty.

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[Big Hairy Gorilla]

don't they adjust the odds based on how much money is in the pool and how many people bet on it?
we know that at Casinos, the house always wins on average...
is it not the same over at these "prediction markets?"

Re: The End Cannot Come Soon Enough

[i_ate_god]

Don't these markets make money via fees and commissions, while the betting pool is entirely what customers put into it?

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[devnulljapan]

>I don't understand how they bypass ani-gambling laws. >I don't understand why anyone would put money into them. Two words: money laundering

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[HotNeedleOfInquiry]

> They can only survive by arbitrarily choosing when not to pay. It's the only possible way for the house to always win.

Not true, parimutuel betting

https://en.wikipedia.org/wiki/... [wikipedia.org]

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[tlhIngan]

I don't understand how they bypass ani-gambling laws.

The same way Uber/Lyft/etc bypassed taxi and third party hire laws.

The same way AirBnB etc bypassed hotel and short term rental laws.

The say way $lt;tech company> bypasses and "disrupts" other industries

Uber/Lyft/etc aren't "taxi" companies. AirBnB isn't a "hotel" company.

LIkewise, "prediction markets" are not gambling companies. They are merely "marketplaces" like eBay, Craigslist, and such. They merely offer a market of "events" and people can put mo

Re:

[igreaterthanu]

Mod parent down.

This is nonsense. Whilst Kalshi did do the wrong thing here, they did not profit from deciding that NO should win. They do not take a position either way. They are like eBay - neither a seller nor a buyer.

it was all fun and games until

[oumuamua]

this bet: I predict Jihadists will retaliate on prediction market headquarters

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[unixisc]

Can we bet on that, and ask the jihadists to pay us if they pull it off?

Shakespeare had this right

[Arrogant-Bastard]

"A plague o' both your houses!"

I can only hope that this lawsuit escalates into...well, I hope it escalates without upper bound. Parasites suing parasites is the kind of quality legal theater that we can all appreciate.

New thing only good until it is not...

[deep_space_pine]

I love new tech and services, but watching crypto tank and seeing these prediction markets renege on bets - it is truly a beautiful thing when greedy people get their fair share of shit.

They are ripping bettors off.

[Hey_Jude_Jesus]

They bet that he would be out of office and not that he would be killed. Well if they refund all of the bets the people will no longer have a claim. If they don't the trial lawyers are going to tear that co. a part.

Re: They are ripping bettors off.

[commodore73]

You used the wrong verb. It's predict, not bet.

All gambling on everything BS

[HnT]

This is not a prediction-market, these are gamble-on-everything scams and BS and need to be entirely illegal, and it is alarming, suspicious and more than shady that they are not outlawed already.

The house always wins

[hdyoung]

This is online gambling. The house always wins.

Repeat after me 10 times:

The. House. Always. Wins.

They can and will change the rules to make sure that they always win. Their slick internet 8.0 facade doesn't change what they are.

The. House. Always. Wins.

Its less expensive to have friends ...

[drnb]

This is online gambling. The house always wins.

The Las Vegas skyline indicates this occurs in the real world too.

My statistics 101 professor liked to use gambling for class examples.

He also described Las Vegas casinos as a place where you pay people to play games with you. He pointed out its less expensive to just have friends and play games with them.

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[igreaterthanu]

Not so with prediction markets. There is no "house". There is an exchange who matches one retail bettor with another retail bettor, in exchange for a fee. Kalshi is the arbiter of which retail bettor wins, but does not win/lose either way.

Polymarket paid

[schwit1]

Polymarket is offshore and not regulated by the CFTC. Wildwest version. This is where the real betters go.

Kalshi should stop listing anything that may involve death.

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[93 Escort Wagon]

Perhaps the clowns behind Epic Fury should focus less on bombing girls' schools and maybe look into hitting the Polymarket servers - then it might be seen in a more favorable light by more people.

Scammy market does scammy things

[memory_register]

...story at 11.

Seriously, Kalshi has a history of this kind of deceptive practices. Not to mention they, like all betting markets, profit from addiction.

Some examples:

CFTC vs. Kalshi — Election Betting Dispute (2022–2025)

Massachusetts AG Lawsuit (September 2025)

New York Federal Class Action — Illegal Sports Betting (November 2025)

"Deceptive Gambling Platform" Class Action (January 2026)

Nevada Gaming Regulators vs. Kalshi (2025–ongoing)

Multi-State Cease-and-Desist Actions

\o/

[easyTree]

"In a notice filed Monday, the company proposed standardizing the terms of all its markets that implicitly depend on a person surviving..."

Presumably they'll introduce standard terms which address the underlying problem:
* Payouts where odds x subscribers is way more than expected given the asymmetry between their knowledge and others' knowledge of the underlying odds.

In this case, unless they had someone close to the DoW "dreamteam" how could they hope to estimate the odds with any level of certainty?

How ma