Kalshi is facing user backlash over a contract on whether Iran’s Supreme Leader, Ali Khamenei, would be “out” of power, with the dispute centering on how the market was settled after the platform applied its no-death policy. In a post on X, the company’s CEO said Kalshi does not list contracts that settle directly on someone’s death, and that the Khamenei market included a specific death carve-out.
How Kalshi says the contract was structured
The CEO said Kalshi designs rules to stop traders from profiting directly from death whenever a market outcome could involve it. That framework was used for the Khamenei contract. The company’s position was that a change in Iran’s top leadership carries major geopolitical, economic and national security significance, with possible effects on oil and commodity prices, so a market on whether he would be out of office could be listed even though death could become part of the real-world sequence of events.
Under the platform’s rules, the contract was settled using the last traded price before the time of death. Kalshi said all positions were paid out at that pre-death price, no matter when they were opened. The company also said it reimbursed the difference for users who bought shares after the time of death at higher prices and refunded all trading fees tied to the market.
Users challenged the clarity of the rules
The explanation did not satisfy many traders. Some users argued the death carve-out made the contract harder to understand and said the settlement terms were not displayed clearly enough in the trading interface. Others accused Kalshi of deleting replies and failing to honor what they saw as a straightforward wager. Several users said they took losses and would move their activity to rival prediction markets.
Critics also pointed to earlier contracts involving elderly public figures, arguing that Kalshi had previously allowed markets where death was an obvious possible outcome. That line of criticism shifted the debate beyond a single contract and toward broader questions about transparency and consistency in how the platform applies its standards.
Platform says interface changes are coming
The CEO acknowledged that some users would prefer simpler rules without carve-outs. He said Kalshi would work on improving how those caveats are shown in the user interface, so traders can better see special settlement conditions before entering positions.
The episode highlights a wider issue for regulated U.S. prediction markets: how to write, display and enforce rules for sensitive contracts linked to mortality while keeping settlement standards clear to traders.