TLDR:

• Kalshi’s “Ali Khamenei out as Supreme Leader?” market accumulated over $50 million in total trading volume.
  
• Traders who held positions before Khamenei’s death were paid out at the last-traded price of 1:14 AM ET.
  
• Kalshi’s promotional post on X during the strikes drew sharp criticism from former SEC chief of staff Fischer.
  
• Six Democratic senators urged the CFTC to ban contracts that resolve on or correlate to an individual’s death.

Kalshi, the CFTC-regulated prediction market platform, is under scrutiny following its handling of a controversial contract tied to Iran’s Supreme Leader Ali Khamenei.

Khamenei was killed in U.S.-Israeli strikes early Saturday morning. The market, titled “Ali Khamenei Out as Supreme Leader?” had accumulated over $50 million in total trading volume. Roughly $20 million of that traded on Saturday alone, according to prediction market analyst Dustin Gouker.

Settlement Process Draws Criticism

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

Under the CFTC-filed contract terms, positions would settle at the last-traded price before Khamenei’s death. That price was recorded at 1:14 AM ET Saturday, per Mansour.

Trading was halted at approximately 2:59 PM ET on Saturday. Kalshi formally closed the contracts at 10:06 PM ET, according to DeFi Rate.

The platform issued two clarifications throughout the day, acknowledging that prior settlement language was “grammatically ambiguous.”

A key dispute emerged over the timing of Khamenei’s confirmed death. The CFTC-filed terms referenced the “last traded price prior to the death.”

However, the market page read “last traded price prior to confirmed reporting of death.” Hours of active trading occurred between his actual death and public confirmation.

Mansour announced that traders who entered positions before Khamenei died would be paid at the last-traded price.

Those who entered after his death would receive full refunds of their cost of entry. He also confirmed Kalshi would reimburse all fees from the market.

Promotional Posts and Prior Settlements Add to the Debate

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 the statement.

Amanda Fischer, a former SEC chief of staff now at Better Markets, described it as “more or less offering a proxy market on assassination.”

Critics also pointed to an earlier Kalshi market asking “Who will be at Trump’s inauguration?” Jimmy Carter was listed as an option.

After Carter died in late December 2024, Kalshi settled that contract to “No.” One widely shared post argued: “You settle on death, just not when it makes you money,” directly contrasting the two outcomes.

Mansour defended the Khamenei market as serving a legitimate purpose. He cited geopolitical, economic, and national security factors as reasons for listing the contract.

He also noted that power transitions in autocracies can happen without death, pointing to Venezuela as a recent example. “It just happened in Venezuela,” Mansour wrote on X.

The controversy also comes as six Democratic senators led by Adam Schiff sent a letter to CFTC Chairman Michael Selig. They urged the agency to ban contracts that result in or correlate to an individual’s death.

The Coalition for Prediction Markets responded that “contracts involving death have no place on American exchanges.” The letter set a March 9 deadline for the CFTC to respond.