HOOD, DKNG, GEMI: The Prediction Market Backlash Has Begun as Kalshi Hit with Class Action Lawsuit

Prediction market platform Kalshi is facing a class action lawsuit following its refusal to pay out $54 million to users who bet on the removal of Iranian Supreme Leader Ayatollah Ali Khamenei before March 1, 2026. The lawsuit, filed in California, alleges that Kalshi invoked a “death carveout” provision to avoid payment after Khamenei’s death in February, calling the company’s actions “deceptive” and “predatory.” Kalshi has stated it will reimburse fees from bets placed before February 28th.

Analysts predict this lawsuit could negatively impact the growing prediction market and serve as a warning to other companies considering entering the space, including Robinhood (HOOD), DraftKings (DKNG), and Gemini (GEMI). The lawsuit centers around the “Khamenei Market,” which attracted customers due to the volatile geopolitical climate.

The case highlights the risks associated with event-based prediction markets and the potential for disputes over payout conditions, particularly when dealing with politically sensitive events. The outcome of this lawsuit could set a precedent for how prediction markets handle similar situations in the future.

(Source：Markets Insider)