Kalshi Faces $54M Lawsuit Over Khamenei Market Payout

A class-action lawsuit filed March 6 targets Kalshi. The prediction market platform allegedly withheld $54 million from bettors. Those bettors had wagered that Iranian Supreme Leader Ali Khamenei would leave office before March 1.

Khamenei died in U.S.-Israeli airstrikes on Saturday. The strikes killed hundreds, including senior Iranian officials. Kalshi kept trading even as reports of his death began circulating, according to the complaint filed in the U.S. District Court for the Central District of California, as reported by Reuters.

Must Read: Trump Threatens Iran With "Very Hard" Strike as Bitcoin Holds Near $68K

The Death Carveout That Changed Everything

The lawsuit says Kalshi only applied its "death carveout" provision after Khamenei was confirmed dead. The provision was invoked to block payouts. Plaintiffs say this timing was deliberate.

The complaint argues the contract language was "clear, unambiguous and binary." Bettors understood that an 85-year-old authoritarian leader departing office had one realistic path out. Death, the suit says, was not just foreseeable but widely expected given the U.S. naval buildup near Iran.

Kalshi described its own actions as responsible. A company spokesperson said the rules were clear before any market activity began. The firm also stated it reimbursed all fees and net losses. That total, the spokesperson noted, ran into millions of dollars. No customer lost money, Kalshi claimed.

You Might Also Like: Bitcoin Jumps to $68K After Iran Leader Report

Prediction Markets Under Scrutiny

The lawsuit calls Kalshi's conduct "deceptive" and "predatory." It says the platform kept the market running after death reports spread. That decision, plaintiffs argue, compounded the harm to customers.

Prediction markets have expanded fast since the 2024 U.S. elections. Their real-time odds on Trump's victory outpaced traditional polling. These platforms let users trade yes-or-no contracts on real-world events. Contract prices shift between zero and 100 cents. They pay out once an outcome is confirmed.

Related: Sanctions Evasion Drives $154B Illicit Crypto in 2025: Chainalysis

The Khamenei Market drew attention for an obvious reason. Geopolitical tension was public knowledge. A U.S. armada sat off Iran's coast. The suit argues both sides of the trade understood that dynamic.

Kalshi disputes this entirely. The company says its rules included "every precaution" to block trades tied to the outcome of death. The $54 million figure remains contested. The case is now before the federal court in California.

Also Worth Your Time: Trump Urges Crypto Bill Progress as Altcoins Lead Market Gains