A major scandal has erupted in the US over the activities of the prediction platform Kalshi, which launched a betting market on the question, “Has Ali Khamenei left his position as Supreme Leader of Iran?” The discussion was sparked by reports of the Iranian leader’s death due to joint strikes by the US and Israel, leading to significant excitement among traders.
This is reported by Finway
Kalshi’s Policy on “Death Markets” and Commission Refunds
Kalshi’s CEO Tarek Mansour stated that the company has implemented mechanisms from the very beginning to prevent users from profiting directly from a person’s death. According to him, the market was structured to avoid speculation on events related to death.
“We don’t list markets directly tied to death. 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. I know some of you disagree and prefer that we list these…”
The contract regarding Khamenei’s departure was active from January 9, 2026, and during this time, the trading volume exceeded $50 million, with $20 million in trades executed on February 28 alone. This was the day the first reports of the Iranian leader’s death emerged.
According to the regulations, in the event of death, contract positions were to be closed at the last price before the event was confirmed, rather than automatically based on a “Yes/No” principle. Mansour clarified that the price was fixed at 1:14 AM Eastern Time. All bets placed after the announcement of the death were canceled with a full refund, including commission fees, which Kalshi promised to return to traders.
Discussion on the Legitimacy and Settlement of the Market
The scandal intensified due to confusion over the wording and the settlement procedure. In documents for the US Commodity Futures Trading Commission (CFTC), the “last trade price (before death)” was mentioned, while the market page stated “until confirmed report of death.” As a result, there was a time gap between the actual event and its public confirmation, during which active trading continued.
Additional criticism arose from a post by Kalshi on social media X, where the probability of Khamenei’s departure was reported to have risen to 68%. Notably, former SEC employee Amanda Fisher criticized this as promoting a “market based on murder.”
Kalshi promoting a Khamenei “leaves office” market while everyone thinks he’s dead, knowing that if he is dead they freeze the market and pocket the fees. Just incredibly cynical stuff. I’m a big fan of Kalshi and prediction markets generally, but this is really horrible…
In the past, Kalshi has faced similar issues after launching the market “Who will attend Donald Trump’s inauguration?” when the death of former US President Jimmy Carter affected the outcome of the contract.
Critics emphasize that such situations, where a person’s death influences the market outcome, contradict Kalshi’s claims about the unacceptability of “death markets.” Meanwhile, Mansour stressed that the disputed contracts were not about death, but rather about a change in political status, which is significant for the political and economic situation in the world.
The scandal has emerged against the backdrop of increased regulatory scrutiny of the prediction markets industry. A group of Democratic senators previously called on the CFTC to ban contracts dependent on death. In response, Kalshi emphasized that its platform complies with all regulatory requirements, and the trading volume over the past year exceeded $44 billion.