Prediction market Kalshi has drawn outrage for refusing to pay out winnings on a $54 million trade related to the death of Iranian Supreme Leader Ayatollah Ali Khamenei.
Many bettors assumed they had won big on wagers that Khamenei would be “out as Supreme Leader” by Saturday after he was killed in joint US-Israeli air strikes over the weekend.
But Kalshi – an American prediction market that allows users to bet on politics, sports, foreign affairs and pop culture – announced it would not be paying out any winnings on those wagers, since its guidelines prohibit markets “directly tied to death.”
“Literally go f–k yourselves. This is RIDICULOUS,” one user tweeted, adding a photo that showed they placed a $72.90 bet that could’ve paid out $936 – but only got $18.72 from Kalshi.
Furious users quickly vowed to delete their accounts, accusing Kalshi of withholding fair-and-square gains and changing its rules at the last minute.
An Israeli-American business executive in New York had placed two bets totaling $3,460 that Khamenei would be “out” by March or April 1, and the Kalshi app showed he won payouts worth more than $63,000 – but then the trade was frozen.
“I was booking my trip to Courchevel,” he jokingly told the Washington Post, referring to the luxurious French Alps ski resort. “Then they changed the rules … and everybody got screwed.”
Earlier this week, prediction market rival Polymarket faced heated backlash from Democratic lawmakers after six suspected insiders made $1.2 million on contracts tied to the strikes on Iran – including an alleged $550,000 windfall related to Khamenei’s death.
Democratic Sen. Chris Murphy of Connecticut said he would draw up legislation to ban bets tied to government actions – as critics have raised concerns that markets tied to death could incentivize assassinations and acts of violence, as well as insider trading from officials.
“This is American commercial immorality on steroids,” Murphy told the Washington Post, adding that prediction markets have created a more “dystopian world.”
“People shouldn’t be rooting for people to die because they placed a bet,” he said.
Kalshi promoted the Khamenei trade to bettors on its website homepage and in push notifications ahead of the Supreme Leader’s killing on Saturday.
Early that morning, the platform alerted users in a tweet that odds on the market “have surged to 68%,” adding a disclaimer that Kalshi does not broker trades that “settle on death.”
In a follow-up post, Kalshi acknowledged that its previous tweet was “grammatically ambiguous” and that it would reimburse losses related to the trade.
“Our rules were clear from the beginning, we never changed them, and we settled based on the rules,” a Kalshi spokesperson told The Post in a statement.
The company told The Post it has paid $2.2 million to cover fees and net losses related to the market.
Kalshi CEO Tarek Mansour argued in a social media post that the Khamenei trade was “important,” but that the company “design[s] the rules to prevent people from profiting from death.”
Traders who made a position after Khamenei’s death would get a full refund, and those who placed bets ahead of time would be paid out on the last-traded price before his death, Mansour said.
“And it’s always possible for a ruler to step down or transition power without death, even in autocracies. It just happened in Venezuela,” Mansour wrote, after users accused the company of using purposely vague language in the market title.
Kalshi users blasted the exec’s explanation, with one writing: “Using the Venezuela example is insane considering that’s only ever happened once.”
“Ahh yes because a dictator was going to willingly just ‘step down.’ Your rules were ambiguous regarding death and intentionally wording it in a way to cause confusion,” another wrote. “If you didn’t want people to bet on death of a leader, then there should have been a giant red warning.”
Some accused Kalshi of hypocrisy, saying it paid out “No” bets on a market questioning whether the late former President Jimmy Carter would be attending President Trump’s inauguration after Carter died.
“You knew people were betting the 99 year old would die before the event,” a user wrote in a post on X. “This has nothing to do with death. This has everything to do with your bottom line.”
Kalshi denied claims that the market title was purposely vague, adding that it has since added green boxes warning about the death carve-out to the top of relevant markets.
The Commodity Futures Trading Commission bans any bets that involve terrorism, assassination or war. While Kalshi is an American platform that is guided by these restrictions, its rival Polymarket operates offshore under different trade rules.
Polymarket has not, for example, frozen trades on its Khamenei market after the Supreme Leader’s death. Trading volume on the market is now at more than $61 million.
On Saturday morning, during the first day of strikes, Polymarket posted a meme of a man surrounded by five computer screens showing bets about Khamenei, writing: “Can’t right now babe, I’m monitoring the situation.”
“The promise of prediction markets is to harness the wisdom of the crowd to create accurate, unbiased forecasts for the most important events to society. That ability is particularly invaluable in gut-wrenching times like today,” Polymarket said in a disclaimer on its website.
“After discussing with those directly affected by the attacks, who had dozens of questions, we realized that prediction markets could give them the answers they needed in ways TV news and X could not.”
Murphy referred to such trades as “corrupt and immoral.”
“It doesn’t smell right to people that these markets are rigged and people inside know the answers…making thousands off whether we sent their kids to war,” the senator told the Washington Post.
Polymarket faced accusations of insider trading after a single user made $400,000 betting on the ouster of Venezuelan dictator Nicolás Maduro in January.
The company, which boasts presidential son Donald Trump Jr. on its advisory board, saw the Justice Department and Commodity Futures Trading Commission scrap active investigations into it soon after Trump took office last January.
Polymarket did not immediately respond to The Post’s request for comment.
