Prediction market platform Kalshi paused and settled its contract titled "Ali Khamenei Out as Supreme Leader?" on February 28, 2026, after reports of the Iranian Supreme Leader's death in U.S.-Israeli strikes — resolving all pre-death positions at the last traded price before confirmed reporting of death at 1:14 a.m. ET. CEO Tarek Mansour pledged full refunds of trading fees and full reimbursement for positions entered after death, declaring "no user will lose a dollar in this market." Traders holding "Yes" positions acquired at elevated prices before the halt — as the market priced in the strikes — disputed that characterization, reporting real net losses on settled contracts.
"No user will lose a dollar in this market." — Kalshi refunded all trading fees across the market and reimbursed the cost of entry for positions opened after death was reported. Pre-death positions were settled at the last traded price before 1:14 a.m. ET per published contract rules.
Contract Rules and Settlement Mechanism
Kalshi's published contract rules governed the settlement outcome directly. The contract's death-specific clause — requiring resolution at the last traded price before confirmed reporting of death — was central to both the settlement logic and the trader complaints that followed.
Trading paused under Kalshi Rule 13.1 as death reports circulated, pending a formal review. Settlement was then executed at the last price prior to the 1:14 a.m. ET confirmed-death timestamp. For traders who bought "Yes" contracts before the halt — as the market rose in response to strike reports but before the official cutoff — the settlement price was below their entry cost, producing a net loss that fee refunds did not cover.
The death-departure clause was written to prevent Kalshi from operating a direct death market, consistent with CFTC regulations prohibiting contracts tied to individual deaths. The last-price mechanism was intended to neutralize the death event's effect on settlement — but in practice, rapid post-strike price movement before the halt created a mismatch between final settlement and trader expectations.
Trader Losses and Complaints
$21.7M
Volume across Kalshi Khamenei-related contracts
$45M
Polymarket volume — single Khamenei variant
$529M+
Polymarket total Iran-related market volume
1:14 a.m.
ET timestamp — Kalshi settlement cutoff (Feb 28)
Users holding "Yes" positions purchased at elevated prices in the window between initial strike reports and Kalshi's halt reported effective losses when settled at earlier pre-cutoff prices. The complaint structure fell into two groups:
CEO Ethics Position and Refund Scope
Tarek Mansour defended the settlement in statements via X and through platform communications, reiterating that Kalshi's policy opposes profiting from individual deaths. He framed the original market as addressing broad leadership transition — noting potential non-violent departure paths existed when the contract was listed.
Kalshi stated explicitly that no markets directly tied to individual deaths are listed on the platform, and that contract design prevents profiting from such events. The CFTC framework under which Kalshi operates as a regulated exchange prohibits death-contingent binary contracts — a structural constraint that differentiated Kalshi's settlement from Polymarket's binary Yes resolution.
Kalshi vs. Polymarket — Regulatory Divergence
The contrast between Kalshi's settlement and Polymarket's outcome illustrates how regulatory status shapes contract design and resolution in prediction markets covering the same geopolitical event.
When a prediction market settles on the price before death but traders bought expecting the death, the only thing refunded faster than fees is the illusion of certainty.