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.
The New York Post reports that many bettors on Kalshi assumed they had won big on wagers that Ayatollah Khamenei would be out as Supreme Leader of Iran by Saturday after he was killed in joint US-Israeli air strikes over the weekend. However, 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.
Furious users quickly vowed to delete their accounts, accusing Kalshi of withholding fair-and-square gains and changing its rules at the last minute. One user tweeted, “Literally go f–k yourselves. This is RIDICULOUS,” adding a photo that showed they placed a $72.90 bet that could have paid out $936 but only received $18.72 from Kalshi.
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.”
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 percent, 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.
A Kalshi spokesperson told the Post in a statement that their rules were clear from the beginning, they never changed them, and they settled based on the rules. The company said 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 designs 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 executive’s explanation, with one writing that using the Venezuela example is insane considering that has only ever happened once. Another wrote that a dictator was not going to willingly just step down and that the rules were ambiguous regarding death and intentionally worded in a way to cause confusion. Some accused Kalshi of hypocrisy, saying it paid those who bet “no” on a market questioning whether the late former President Jimmy Carter would be attending President Trump’s inauguration after Carter died.
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 (CFTC) 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 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 that they were monitoring the situation. The company stated that 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.
Read more at the New York Post here.
Lucas Nolan is a reporter for Breitbart News covering issues of free speech and online censorship.
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