Kalshi has initiated a full reimbursement of fees and adjusted settlement terms for its "Ali Khamenei out as Supreme Leader" market following the confirmed death of the Iranian leader. The platform's decision to void positions opened after the event underscores a strict adherence to its long-standing policy against listing markets directly tied to human mortality.
Tarek Mansour, co-founder of the prediction market platform, confirmed the administrative adjustments in a statement on X. "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," Mansour said. The move comes after Iranian state media reported the death of Ayatollah Ali Khamenei early Sunday, a development following an attack launched by Israel and the United States the previous day.
Settlement Mechanics and Trader Reimbursement
The platform's response distinguishes between traders holding positions prior to the event and those entering the market after the death was confirmed. Traders with open positions before Khamenei's death will be paid according to the "last-traded price before his death." Conversely, users who opened positions after the death was confirmed were reimbursed the difference between the higher entry price they paid and the last traded price. Kalshi is also reimbursing all fees associated with the market.
A Kalshi spokesperson reiterated the platform's stance to Cointelegraph, stating that the policy on not allowing "death markets" is clear and long-standing. The decision to void post-event positions sparked immediate backlash from users online, who accused the platform of curtailing potential profits. However, the administrative action aligns with the platform's core operational framework regarding events involving loss of life.
Patterns of Insider Trading on Rival Platforms
The controversy over the Khamenei market arrives amidst heightened scrutiny of prediction markets regarding geopolitical events. In February, six traders on the rival platform Polymarket netted approximately $1 million betting that the US would initiate a strike on Iran before the end of the month. On-chain analysis revealed that all six wallets involved were created in February, with positions filled hours before explosions were heard over Tehran.
These trading patterns raised immediate suspicion of insider trading activity among on-chain investigators and analysts. The timing of the bets, particularly those filled just before the explosions, suggested a potential leak of non-public information regarding the US-Israel operation. This incident mirrors a similar pattern observed in January, when US President Donald Trump announced the arrest of an individual who leaked information tied to the raid and capture of Nicolás Maduro.
Comments from Trump regarding the arrest fueled speculation from on-chain analysis platform Lookonchain that the leaker referenced may have been linked to winning bets on Polymarket placed shortly before the US raid in Caracas. The recurrence of such patterns highlights the persistent challenges prediction markets face in maintaining integrity during high-stakes geopolitical events.
Implications for Market Integrity
The Kalshi intervention highlights the divergent approaches platforms take in managing high-risk, high-sensitivity markets. While Polymarket allowed the Khamenei death market to resolve based on the final price, Kalshi proactively adjusted payouts to align with its ethical guidelines. The distinction between pre-event and post-event traders ensures that the platform does not inadvertently reward speculative behavior based on the confirmation of a death, a practice it deems inconsistent with its operational rules.
As geopolitical tensions escalate, the ability of prediction markets to function without being compromised by insider information remains a critical area of focus for regulators and market participants alike. The reimbursement of fees and the adjustment of settlement prices for Kalshi users serve as a practical application of the platform's commitment to preventing profit from mortality, even as the broader industry grapples with the implications of information asymmetry in global conflict scenarios.
Source: CoinTelegraph | Analysis by Rumour Team