Kalshi Closes Khamenei Market Over Death Carveout Rule
US-regulated prediction market Kalshi closed its market on Ali Khamenei's ouster after the Iranian Supreme Leader died in airstrikes Saturday, citing a death carveout clause that prohibits markets from settling directly on someone's death.
Key Takeaway
Death carveout rules divide regulated and crypto prediction markets as lawmakers push to ban political betting entirely.
Kalshi CEO Mansour apologized to users early Sunday morning after closing the market betting on Iranian Supreme Leader Ali Khamenei's removal from power. The platform settled the market based on the last traded price before death confirmation, pointing to a death carveout clause in its contract rules.
The closure sparked immediate controversy. Six brand-new Polymarket users closed trades betting on Khamenei leaving office by February 28, the date he was killed in coordinated US-Israeli airstrikes. Bubblemaps tracked these accounts placing bets hours before the strike hit his Tehran compound.
Polymarket's international site, which doesn't require identity verification and isn't regulated by the US Commodity Futures Trading Commission, hosted ₱30.8 billion ($529 million) in volume on its Khamenei ouster market before closing. Kalshi requires know-your-customer onboarding for all users, giving it more regulatory scrutiny than crypto-based competitors.
Mansour said the company will reimburse all fees and refund traders who bought shares after the death. He admitted how the market was presented to users should be updated, along with other markets that have a death carveout. The CEO defended the policy by saying many traditional markets like oil futures can serve as proxy markets for war and death, but that's different from having a market directly settling on someone's death, which isn't allowed for US-regulated entities.
Democrat Senator Chris Murphy called for legislation to ban such markets Sunday, saying it's insane this is legal and that people around Trump are profiting off war and death. Acheron Trading Chief Legal Officer Daniel Lo said institutional investors won't join prediction markets without clear KYC and AML standards, calling it one of the blockers to mainstream adoption.
This article was written based on reporting from Dlnews.
