Kalshi CEO defends Khamenei market design after backlash, says platform will reimburse all fees

Kalshi CEO Tarek Mansour defended his platform’s handling of a controversial prediction market contract tied to Iran’s Supreme Leader Ali Khamenei, who was killed in U.S.-Israeli strikes early Saturday morning.

“We don’t list markets directly tied to death,” Mansour wrote on X. “When there are markets where potential outcomes involve death, we design the rules to prevent people from profiting from death.”

The market, titled “Ali Khamenei out as Supreme Leader?”, had been live since January 9 and accumulated more than $50 million in total volume, with roughly $20 million trading on Saturday alone, according to prediction market analyst Dustin Gouker.

Under the CFTC-filed contract terms, if Khamenei died, positions would settle at the last-traded price before his death rather than resolving to a binary “Yes” payout. Mansour said that price was recorded at 1:14 AM ET Saturday. Traders who entered positions after his death will receive full refunds of their cost of entry, he added.

The settlement did not go smoothly. Kalshi halted trading at roughly 2:59 PM ET and formally closed the contracts at 10:06 PM ET, per DeFi Rate. The platform issued two clarifications during the day, acknowledging that prior settlement language was “grammatically ambiguous.”

The CFTC-filed terms referenced the “last traded price (prior to the death),” while the market page read “last traded price prior to confirmed reporting of death.” That distinction mattered: the gap between Khamenei’s actual death and confirmed public reporting covered hours of active trading.

Much of the backlash focused on how Kalshi promoted the market. While reports of Khamenei’s death circulated Saturday morning, Kalshi posted on X: “BREAKING: The odds Ali Khamenei is out as Supreme Leader have surged to 68%.” Mansour reposted it. Amanda Fischer, a former SEC chief of staff now at Better Markets, described it as “more or less offering a proxy market on assassination.”

Others pointed to what they said was an inconsistency in Kalshi’s position. The platform had previously run a “Who will be at Trump’s inauguration?” market that included Jimmy Carter as an option. After Carter died in late December 2024 at the age of 100, Kalshi settled that contract to “No,” effectively resolving a market based on someone’s death. “You settle on death, just not when it makes you money,” one widely shared post on X argued, contrasting that outcome with the Khamenei death carveout.

Mansour argued the Khamenei market served legitimate purposes, citing geopolitical, economic, and national security implications of Iranian leadership changes. He pointed to Venezuela’s recent power transition as evidence that autocratic leaders can leave power without dying.

The controversy arrived at a charged moment for the industry. Days earlier, six Democratic senators led by Adam Schiff sent a letter to CFTC Chairman Michael Selig urging the agency to ban contracts that resolve on or correlate to an individual’s death, citing controversial Polymarket contracts tied to Venezuela and Ukraine.

The Coalition for Prediction Markets, an industry group that includes Kalshi, responded that “contracts involving death have no place on American exchanges” and that regulated platforms already prohibit them.

Kalshi has positioned itself as the compliance-forward player in a prediction market industry that generated over $44 billion in combined volume last year, as The Block previously reported. The senators’ letter set a March 9 deadline for the CFTC to respond.

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