TLDR
- Kalshi settled pre-death trades at last price before Khamenei’s death.
- Post-death positions will receive full refunds of entry costs.
- Market drew over $50 million in total trading volume.
- CEO says rules were set to prevent profit from death events.
Kalshi CEO Tarek Mansour defended the platform’s market design after backlash over a contract tied to Iran’s Supreme Leader Ali Khamenei. He said the exchange structured the market to prevent traders from profiting from death and confirmed that all fees would be reimbursed.
The controversy followed reports that Khamenei was killed in U.S.-Israeli strikes early Saturday morning. The contract titled “Ali Khamenei out as Supreme Leader?” had been live since January 9. It generated more than $50 million in total trading volume, including about $20 million on Saturday alone.
Market Structure and Settlement Terms
According to the CFTC-filed terms, if Khamenei died, the contract would settle at the last traded price before his death. It would not resolve to a binary “Yes” outcome. Mansour said the final eligible price was recorded at 1:14 a.m. Eastern Time on Saturday.
Traders who entered positions before the reported death will have those positions settled at that recorded price. Those who entered positions after his death will receive full refunds of their cost of entry. Mansour stated on X, “We don’t list markets directly tied to death.” He added, “When there are markets where potential outcomes involve death, we design the rules to prevent people from profiting from death.”
The company also said it will reimburse all fees linked to the contract. Kalshi halted trading at about 2:59 p.m. Eastern Time and formally closed the market at 10:06 p.m., according to DeFi Rate data.
Dispute Over Contract Language
Questions arose over the contract’s settlement language. The CFTC-filed rules referenced the “last traded price prior to the death.” However, the market page stated “last traded price prior to confirmed reporting of death.”
The difference between actual death and confirmed public reporting created hours of active trading. Kalshi issued two clarifications during the day. The company acknowledged that the earlier language was “grammatically ambiguous.”
Critics said the language gap created confusion during a period of heavy trading. Reports of Khamenei’s death circulated Saturday morning, and trading activity increased sharply. Some market participants argued that clearer wording could have reduced uncertainty.
Backlash and Industry Debate
Much of the criticism focused on Kalshi’s promotion of the market. During the surge in trading, Kalshi posted on X that the odds Khamenei was out as Supreme Leader had risen to 68 percent. Mansour reposted the message. Amanda Fischer, a former SEC chief of staff now at Better Markets, described the contract as “more or less offering a proxy market on assassination.”
Others pointed to past markets on the platform. Kalshi previously ran a contract asking who would attend former President Donald Trump’s inauguration. After former President Jimmy Carter died in December 2024, that contract settled to “No.” Some social media users argued that the earlier settlement showed inconsistency.
Mansour responded that leadership change markets can cover non-fatal exits from power. He cited recent events in Venezuela as an example of leadership transitions without death.
The issue comes as prediction markets face closer scrutiny. Six Democratic senators, led by Adam Schiff, recently sent a letter to the CFTC. They urged the agency to ban contracts that resolve on or correlate to an individual’s death. The Coalition for Prediction Markets, which includes Kalshi, stated that “contracts involving death have no place on American exchanges” and said regulated platforms already prohibit them.
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