Kalshi said its market on whether Ali Khamenei would be “out” as Iran’s Supreme Leader excluded death as a winning outcome. Instead of automatically paying Yes positions after Khamenei’s death, the platform said it used the last traded price before death to settle pre-death positions and offered remedies to affected traders. The dispute centered on whether “out” meant simply no longer in office—or, under the market’s rules, leaving office by a route other than death.
What the Khamenei market asked—and why traders objected
The Kalshi event contract asked whether Ali Khamenei would be “out” as Iran’s Supreme Leader by a specified date. Traders who held Yes positions argued that his death meant he was no longer Supreme Leader, matching the ordinary-language reading of “out.” Kalshi’s stated position was that death was not a qualifying settlement trigger.
Kalshi co-founder Tarek Mansour said, “We don’t list markets directly tied to death. When there are markets where potential outcomes involve death, we design the rules to prevent people from profiting from death. That is what we did here.” That is the platform’s explanation, not an independently verified finding about the original contract text.
How Kalshi said it settled positions
Reports say Kalshi did not treat death as an automatic Yes win. For positions held before Khamenei’s death, the platform used the market’s last traded price before death rather than paying out as though the Yes outcome had occurred. Kalshi also announced fee reimbursement and other remedies, including refunds or reimbursement for affected traders and positions opened after death.
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WIRED reported that a source at Kalshi estimated the company’s cost to make users whole at approximately $2.2 million. That figure is a reported estimate attributed to a company source, not a publicly audited settlement total.
Why the wording became part of the dispute
The key distinction is between what “out” might mean to a trader reading the headline and what the contract’s settlement rules define. Traders said the plain-language wording could include death. Kalshi said its rules carved death out, so the market was not meant to pay on that basis.
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The Block reported a difference between CFTC-filed terms referring to the last traded price “prior to the death” and market-page language referring to the last traded price “prior to confirmed reporting of death.” It also reported that Kalshi issued clarifications and described earlier wording as grammatically ambiguous. WIRED reported that some users had not seen a carveout notice before the attack; Kalshi said the rules had not changed, while acknowledging that the user experience could have been clearer. The original filing and archived market-page notice history are not established here, so the exact controlling text and what users saw at each point remain unresolved.
What the episode says about event-contract risk
An event contract’s headline is not necessarily its full settlement definition. Before trading, readers should inspect the complete rules for what counts as an outcome, what events are excluded, how timing is determined, and what price or procedure applies if the contract cannot resolve in the apparent way. A market that sounds like a simple question can have a narrower rule-defined trigger.
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That distinction matters especially when the headline uses ordinary terms such as “out,” while the rules may specify a particular route or exclude an event. In this case, the disagreement was not merely about whether Khamenei was still in office; it was about whether death could count as the event that made the contract Yes.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Reported market size and regulatory context
The Washington Post reported $54 million in wagers on the market. Separately, The Block reported more than $50 million in total volume, including roughly $20 million traded on Saturday, citing analyst Dustin Gouker. Those are differently described reported figures and should not be treated as interchangeable or combined.
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The Washington Post also quoted Amanda Fischer, former SEC chief of staff and policy director at Better Markets, asking, “How is an 86-year-old theocratic leader supposed to lose his power other than through death?” Aaron Courtney, Kalshinomics co-founder, raised a separate ethical objection: “Is it morally acceptable to profit from correctly predicting that bombs will fall on people?” These comments reflect criticism of the market’s framing and implications, not a regulatory ruling.
The Washington Post described CFTC restrictions involving contracts related to terrorism, assassination, or war. A May 22, 2026 House Oversight Committee letter said Kalshi has been a CFTC-designated contract market since November 2020 and is subject to Commodity Exchange Act requirements. That background does not establish that a regulator made a final determination on this particular contract.
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