Kalshi faces backlash over handling of $54M market on Khamenei’s ouster |
Kalshi faces backlash over handling of $54M market on Khamenei’s ouster
The prediction market Kalshi is facing pushback over its handling of more than $54 million in trades on the ouster of Iran’s Supreme Leader Ayatollah Ali Khamenei after he was killed in U.S. and Israeli airstrikes on the country last weekend.
The platform, which has underscored that it “does not offer markets that settle on death,” is resolving the market based on the last traded price before Khamenei’s death, much to the dismay of some users who are not receiving the payout they expected.
“We don’t list markets directly tied to death,” Kalshi CEO Tarek Mansour wrote Saturday in a post on the social platform X. “When there are markets where potential outcomes involve death, we design the rules to prevent people from profiting from death. That is what we did here.”
In the market rules listed on the site, the platform noted that if Khamenei died, the market would be resolved based on the last price before his death. If there is a question about this price, a review committee is tasked with determining a “fair market value.”
This has resulted in a flood of critical posts on social media, as some argue Khamenei is no longer Iran’s leader and the platform should settle the market as such.
“I know some of you disagree and prefer that we list these markets without a death carveout because it keeps the rules simple and because many traditional markets, like oil futures, can be proxy markets for war and death,” Mansour added. “But we believe that’s different than having a market directly settling on someone’s death, which is not allowed for US regulated entities.”
In the face of the backlash, Kalshi is reimbursing all fees from the market, as well as the cost of entry for those who placed bets after Khamenei died. They will also pay users based on the price before the Iranian leader’s death, as indicated by the market rules, Mansour said.
Prediction markets have recently come under scrutiny on several fronts, including wagers related to death. Half a dozen Senate Democrats wrote to the Commodity Futures Trading Commission (CFTC) last month to voice concerns about “prediction contracts that incentivize physical injury or death.”
“These contracts present dangerous national security risks, including creating incentives to incite violence, foment geopolitical conflicts, and disclose classified information,” Sen. Adam Schiff (D-Calif.) and others said in a letter to CFTC Chair Mike Selig.
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