Kalshi announced it will not pay 'yes' positions on contracts tied to the death of an Iranian ayatollah, citing its 'death carveout'.

Company rationale

The firm says the disputed contracts concern political change outcomes rather than the physical deaths of individuals and conflict with CFTC rules.

Company figures show approximately $54 million was bet on that outcome across the platform during the contract period.

Legal reaction

Angry users have filed a class-action lawsuit in California, accusing Kalshi of theft and fraud over the decision to withhold payouts.

CEO Tarek Mansour said the company will refund all fees and cover users' net losses from corporate funds to prevent net losses.

Market competitors

By contrast, decentralized prediction market Polymarket allowed withdrawals and paid winning positions, enabling some traders to realize six-figure gains.

Regulatory response

The dispute reached the United States Senate, where lawmakers asked for a ban on betting about military actions and politicians' deaths.

«insider trading in real time»

Implications for prediction markets

The situation questions the viability of regulated prediction markets as the line between policy analysis and ethically disputed 'betting on death' blurs.

Regulators and market operators now face pressure to review listing policies, contract terms, and enforcement practices to prevent similar controversies.