Prediction market platform Kalshi is facing a class action lawsuit over its handling of a market predicting the ouster of former Iranian Supreme Leader Ali Khamenei. The lawsuit alleges that Kalshi's "death carveout" policy was not properly disclosed to users, leading to voided trades and unpaid winnings. Plaintiffs argue that the policy was "deceptive" and "unfair," as it was not included in the user-facing rules summary. Kalshi co-founder Tarek Mansour defended the platform's actions, stating that the policy against "death markets" was clearly outlined and that all user losses were reimbursed. Despite this, the reimbursement methodology has been criticized for lacking transparency. The lawsuit comes as prediction markets experience a surge in trading volumes in 2026.