Prediction market platform Kalshi is facing a proposed class action lawsuit from traders. The suit claims the exchange improperly halted payouts for a market betting on Iran's Supreme Leader Ali Khamenei leaving office.
The market, which saw approximately $54 million in trading volume, was halted following reports of U.S. and Israeli airstrikes on Iran.
The complaint, filed in the U.S. District Court for the Central District of California, alleges that Kalshi's market rules led traders to expect payouts if Khamenei left office, but the platform failed to clearly disclose a "death carveout" until after strike reports emerged.
Traders accuse Kalshi of allowing trading to continue on February 28, encouraging "yes" bets on Khamenei's departure, despite knowing these bets would not pay out.
Kalshi CEO Tarek Mansour stated the platform does not offer prediction markets directly tied to a person's death. He later announced Kalshi would reimburse traders for fees and net losses associated with the market and improve disclosure for similar contracts.
The lawsuit was filed by traders Adam Risch and Yonatan Gliksman, represented by Novian & Novian LLP. The suit seeks damages and court orders for improved disclosure practices, alleging breach of contract and violations of California law.
Prediction market platforms like Kalshi are under increased regulatory scrutiny in the U.S., with some states viewing their event contracts as gambling.