Kalshi SUED By People BETTING MONEY On Iran Leaders Death
Kalshi faces a $54 million lawsuit over a wager on Iranian Supreme Leader Ali Khomeini's death, as the platform ruled "leaving office" excludes dying despite traders' expectations. Host Tim Poole, who profited by selling contracts before the event, highlights legal ambiguities regarding insider trading and contrasts Kalshi's U.S. regulations with Polymarket's permissive stance on death outcomes. While acknowledging gambling addiction risks, Poole ultimately champions prediction markets as vital tools for gauging public sentiment on geopolitical events. [Automatically generated summary]
A massive lawsuit has been filed over the killing of Ayatollah Khomeini in Iran, and it's not for any of the reasons most people would expect.
It's because people were betting on the death of this man to the tune of $54 million, and they did not get paid.
This all has to do with the prediction market emergence, Kalshi and Polymarket, and what people expect when they make wagers.
Technically not wagers.
They're buying contracts on the outcome of a future event, which has presented us with very weird circumstances.
Notably, there is a wager that I, Tim Poole, will or will not appear at a White House press briefing this year.
And there are questions about whether or not I'm allowed to say anything.
It just becomes very, very weird.
Insider trading rules, regulations under the CFTC, and it's resulting in a, well, weird future.
Because personally, I'm not completely opposed to the idea of prediction markets, but there are circumstances arising around whether or not something is or is not insider trading.
Recently, a story came out about a potential insider who accurately predicted major moves by the U.S. military and profited to the tune of $100,000 in one month.
This individual is predicting that the U.S. will likely have boots on the ground in Iran, but we'll see how much of this is actual insider knowledge and how much of this is just speculation on a market where you can sell your contract at any point for a profit.
The story with Kalshi is actually quite simple.
Khomeini was killed, and many people bet he would be out as supreme leader.
But Kalchi qualified this by saying death does not count as leaving office.
Therefore, if you bet he'd be out of office under the assumption that death meant leaving, it doesn't count.
There's a problem with that logic because some people wagered he would not be out as supreme leader.
And if the rule is in order to qualify for this bet as a yes or a no, he must voluntarily or be removed from office.
Like actually say I hereby resign or have someone come in and say you are being removed.
And if that condition is not met, then no is 100% and should pay out to those who bought that contract.
However, what ends up happening is Kalshi basically says we're going to freeze the market and pay everyone out based on the last traded prices, which is creating a whole lot of confusion.
So my friends, we're going to talk about this latest news, but we're really going to dive into the wild world that is getting massively like Scrooge McDuck rich off of just guessing that something might happen.
Oh boy, a lot of people are.
Now, full disclosure, my friends, we here at Timcast actually do have a sponsorship from Kalshi.
And with respect, I'm not going to hold back my thoughts and opinions for that matter, but I will disclose we do have that sponsorship.
Additionally, I actually fall into this class action camp, strangely, because I had previously made a purchase of contracts that Khomeini would also be, he would be leaving office.
And I did this under the presumption we were going to blow him up because Trump said he was going to blow him up.
And I was completely unaware that the wager, I'm sorry, the contract was actually that you were going to be expecting Khomeini to step down from his lifetime appointment as the supreme leader.
And, you know, theoretically, you get old and he says, I'll give to my son or something, but no one really expected that to happen.
And so, with all that being said, I am not interested in any class action lawsuit nor going after Kalshi for that matter.
It was a couple hundred bucks.
And I do it largely just for fun.
But I want to make sure I fully disclose that I do have some skin in the game as to how it pertains to all this stuff.
But I'll give you my genuine, honest thoughts and opinions on the wacky and wild world, that is, prediction markets.
And I'm going to say this.
I'm actually slightly in favor of them.
I am not a hardcore, like, I don't know what the right word is, prohibitionist on various things.
I think the problems we face when it comes to potential gambling or alcoholism or drugs is always cultural.
And I think it's fine if somebody wants to have fun and buy a contract that they think an event is going to happen or a thing is going to be said.
I don't have a problem with it existing, but I do have an issue with abuse in general.
And abuse, I think, can be solved through cultural remedies.
But let's read the news, my friends.
Before we do, I got a big announcement.
You guys got to go to casbrew.com, scroll down and check it out.
Canned pool water now available.
If you ever want to drink pool water, then something is wrong with you.
Please don't do it.
But if you want to drink canned pool-branded water, it's available now at casbrew.com.
Limited supply as of right now.
We have 12 packs.
We only have about 947, 12 packs, and they're going to sell like hotcakes, like hotcakes they're going to sell because it's a gag product and we're goofing off.
But I reached out to my crew and they said the warehouse says there is no plastic lining this can, which I honestly, I find that hard to believe because almost every single can that you'll get will have plastic liner in it.
Now, the caps do have plastic gaskets.
That's what I'm being told.
However, take that with a grain of salt.
I want to get official certification to make sure because my understanding was there is going to be plastic in these cans.
And that matters because I'm not here to lie to you guys, sell a product.
Traders on the prediction market site Kalshi assumed they had won a fortune by correctly betting on the Iranian leader's demise.
The ensuing scandal has thrown a spotlight on the dystopian rise of gambling on real-world events.
But my friends, Bloomberg Law with the breaking news as of today, let's throw it in the mix.
We got it here, boys.
Kalchi sued over death carve-out in Iran leader prediction market.
They say, Kalchi Inc. should have paid out on a $54 million market, speculating when Iran's supreme leader Ali Khomeini would vacate his role after he was killed during U.S. and Israeli airstrikes, a proposed class action said.
Kalchi and his exchange's plain language rules made traders who predicted his departure expect payouts, and they didn't adequately disclose a death carve-out until after news of Khomeini's death had spread.
Said the complaint filed in the U.S. District Court for the Central District of Columbia.
Then rather than halting trading as reports of military strikes accumulated, Kalchi lured more traders into yes positions on Khomeini's exit while knowing it wouldn't deliver payouts.
I'm going to give you my honest opinion.
Kalchi had put out tweets, and so let me show you this one.
This is from February 28th at 8.28 a.m.
Kalchi says, breaking, if you're just waking up, there's been major news in Iran.
U.S. and Israel have begun major combat operations in Iran, targeting top Iran officials.
Iran launches counterattack on U.S. bases in Qatar, Kuwait, UAE, and retaliatory attacks on Israel.
American officials say strikes will continue for days to weeks.
I do not believe that Kalchi intended to wrong anybody.
My understanding is that Kalchi has always had the rules that these are not predicated upon the death of the individual, but actually leaving office.
I just think that most people didn't know this.
I think that Kalchi put this tweet out not with the intention to entice anybody.
And this is coming from somebody who, I'm going to say this, I believe I am owed substantially more money.
I do so.
I do so believe.
And I'll tell you why.
There's two perspectives on this.
And again, let me pause real quick and just, I want to reiterate.
The argument from the lawsuit is that Kalchi knowingly was bringing people in saying, hey, look, we're striking Iran.
Thus people thought they were wagering.
I got to be careful how I explained this.
But buying contracts on the outcome of Khomeini dying, not choosing to leave office.
However, it's also fair to say that anybody who actually read the rules could expect that following these bombings, Khomeini might actually say, I am hereby resigning.
But come on, let's be real.
Nobody really believed that was possible.
But it still matters because there's two options as to how this plays out.
So you can see here that I myself have profited to the tune of $323 with the exchange that I did.
I bought in for $315, cashed out for $638.
Now, the thing is, I don't know the exact number.
I think when I bought it was like 26%.
There is a yes and a no potential.
No, I don't think he will leave.
Yes, I think he will leave.
Now, this matters.
This matters as it pertains to this lawsuit because if Kalshi's rules are that death does not qualify, then I sold, I didn't, I didn't, so here's how it played out for me.
When I had purchased futures contracts that Khomeini would be out as supreme leader, and I assumed it meant dead.
And that's on me, that's fine, whatever.
When I woke up in the morning and saw the news that they were bombing Iran, I just sold my position.
I didn't wait for a conclusion as to whether or not he did or did not die.
However, we know that he died instantly around like 4 a.m. U.S. time.
And it was well after that I sold my position, which creates a very, very interesting circumstance.
Kelchi's position is that no, this doesn't qualify as leaving office.
The contract is he would step down or be politically removed, not killed.
In which case, if that is true, the no payout should be 100%.
Why?
Because it is no longer possible for such a circumstance.
Therefore, this middle position they've taken, I believe, is wholly problematic.
And now, based on their own rules, there is an interesting conundrum.
Several individuals, or I should say, the individuals launching this lawsuit, are suing Kalshi under the presumption that it should count that he left office, that he died.
That was the presumption, and that's why they were wagering.
However, if it is true that Kalshi's rules explicitly and have always stated death doesn't count, then it is now impossible.
The contract must close.
Khomeini can never be politically removed from office.
He can't step down, abdicate, resign, or otherwise, and he can't be cooed.
In which case, the answer is definitively no.
He will not be leaving office.
He was just killed.
This should mean that I should retroactively get zero dollars.
Because when the news broke that he that the palace had been bombed, here's another, okay, this is where it gets really crazy.
If it pays yes or no, let's put a tack and put it aside.
At 4 a.m. when the U.S., I believe it's Eastern time, blew up Khomeini's palace, killing him, the contract concludes definitively.
Whether we know it or not, which means upon learning, be it at noon or 2 o'clock, that Khomeini had been dead since 8 a.m., Kalshi should have reversed all trades up to that point and concluded no, which means I lose 100% of the money that I put in,
and anybody who bet no should instantly get a 100% payout, as it is now impossible for him to ever leave.
The answer would be no.
If, however, the expectation and presumption and ultimate conclusion is that Khomeini's death does qualify as a yes on this contract, then I should be paid out an additional $300 and some odd dollars.
Why?
Guys, if I bought a contract that said Khomeini's out as leader and he was officially out as of 8 a.m. because they killed him, Why would anyone be allowed to trade otherwise if the event had already concluded?
Therein lies the problem with prediction markets.
You are not betting on a sporting event with a known stop time.
You are betting on worldly events that we have to confirm, confirm one way or the other.
In which case, imagine this.
Imagine you bet on the outcome of a Bears game.
You know, the great old Indiana, Hammond, Indiana Bears.
I'm hoping that's not going to be the case.
Let's say you were like, I think the Bears are going to win, right?
Only problem is there's no reporters and no fans and literally nobody watches the game.
You then get word at 4 a.m. or you wake up to hear all these reports on social media that Bears fans are cheering in the streets.
And you go, whoa, I think I won.
So you get the option to sell out your position and saying, well, I don't know for sure, but I'm going to, no, no, no, hold on.
They shouldn't allow any more betting after the fact, just because you're waiting to find out if you won.
But see, the thing is, with sports betting, as opposed to whatever is going on with prediction markets, you have clear, definitive end times.
So what do we do?
This is the weird space where now, understanding all of this, to be fair, I mean, new things emerge all the time and we sort through how to solve for them.
That's fair.
We understand it.
But therein lies the main problem.
If Kalshi, again, has always stated, always stated that death does not count, then I got to be honest.
Well, it's your own fault for not reading the rules, mine too.
And Kalshi should reverse every trade after the time of confirmed death.
And I don't mean reported.
I mean when we blew up his building and they said that's what killed him and that was at 4 a.m. Eastern time.
Anything after that is reversed.
And that means for me, I should lose every dollar that I got because I said he would be removed.
And those are the rules.
And it's my fault if that's the case.
Let's read a little bit more and then we'll get into what's going on currently with maybe we can learn something from these markets.
And I'll tell you why I actually do like them.
They're going to say that the language on Cauchy's market was clear, unambiguous, and binary.
That if Khomeini left office, those with yes would receive their full payout.
Kalshi's CEO said that they don't list markets that are directly tied to death.
This is a regulated market.
Polymarket is not regulated in the United States, and there's a reason why they do it because you don't want people betting on someone dying because someone's incentivized to go kill them.
We don't want to live in that world, right?
As backlash mounted, CEO Tarek Mansur said in a March 1st post, Calci would reimburse fees and net losses.
The company would update how it presented similar markets with a death carve out so traders can see the exception more clearly before they trade.
Truth be told, they actually gave me an extra 30-some odd dollars.
After all this concluded, I got a notification that they gave me a reimbursement of around 30 bucks, something to do with the fair market value of the market, like of what I predicted.
I was owed money or something.
I honestly got no idea.
I was surprised.
I thought they were going to take all the money away because it's a no, right?
While the rules were clear, we tried our best to highlight them.
Traders vocalized they were not prominent enough.
We heard you decided to reimburse out of pocket for all fees and net losses from trading in the market.
I got to be honest, I think that's fair.
That's why I'm not interested in this lawsuit.
I think anybody who wants to buy a contract and doesn't read the rules, the rules are clear and you can read them.
That's your fault for making assumptions.
And that's the reality of if you're trying to make wagers on predictions, whatever you want to call it, that's your own business.
It's your own fault, right?
That being said, there is an issue for the no voters that I think actually is more worthy of a lawsuit.
It is unfair, in my opinion, to state the rules were clear, but not pay out those who said no.
Therein lies the real problem and the real potential lawsuit.
If you were someone who wagered no, Khomeini would not be out.
I believe you're owed the full amount.
But here we are.
They say the proposed class would cover those in the U.S. who held yes on Kalshi's Al Khomeini, Ali Khomeini out of Supreme Leader.
Expiration date speculated.
I'm sorry, this is just, it's going to be dumb.
You know what?
I'm sorry.
You're going to go to court and Kalsh is going to be like, here's the contract.
Here are the rules.
Like, if you didn't read the contract that you're buying, that's your fault.
You're buying contracts.
You can read them.
I don't understand how this is just silly.
And considering Kalshi paid out of pocket to resolve this, again, I think it's largely, largely silly.
Now, polymarket's different.
Polymarket is not allowed in the United States.
So you can do it in other places, not here.
And they says death means yes, right?
If he's removed from power for any length of time, that's it.
And so for those outside of the U.S., the outcome was a yes.
And these people got paid.
The only issue is you can't use polymarket in the United States because it's not regulated.
Although it's largely the same thing.
Interesting, I suppose.
But my friends, here's where it gets real fun from Ross Story.
Possible military insider bets big Trump will send U.S. troops to Iran.
This is where the prediction markets I think are valuable.
Not that I like insider trading, but that the wisdom of the crowd, people are buying contracts based on their perception, and then you will get a rather accurate probabilistic reading as to whether something will or will not happen.
Well, here's a guy who on polymarket made 100 grand this month, betting on U.S. military operations and being largely correct.
Now, what I want to say is, as I've tracked all this stuff, you need to understand, right?
Right now, we have on polymarket, will the U.S. invade Cuba in 2026 with a 20% chance?
Okay, I can't use polymarkets, not a lot of the United States, but if you were to buy, let's say, $1,000, let's do, let's say you bought $1,000 that the U.S. will invade Cuba, okay?
Well, you would win.
You'd profit for you'd cash out.
Let's just say cash out.
$4,833 if they do.
But, my friends, that's not what matters.
If you were to right now sell a position, so you can see here that it spiked, right?
Let's say you bought it at 11%, and now you're selling those shares, you'd make $181.
The point is this.
You don't need to actually wait for the event to happen or not happen.
So as many people are pointing out, this guy's predicting these things with accuracy.
Well, he's buying shares that an event will happen and then selling them once he profits from them.
So for instance, if you were on polymarket and said, I think the U.S. might invade Cuba, I'll buy 1,000 shares.
Then Trump recently announced, what did he say?
Cuba's government will fall pretty soon.
Well, it spikes following this.
And people are going, I think we're going to invade Cuba.
As more people start buying yes positions, the value of your contracts goes up and you can sell them and make a profit.
You don't need to actually predict anything.
So that being said, I think we got to take these things with a grain of salt.
I do think there are interesting questions over, I don't know, whether or not it's going to be a nightmare dystopia or whatever.
But we're going to bring this one in and have a good time, as we often do.
Who will attend a White House press briefing this year?
Oh boy, Tim Poole at 50%.
And how much is wagered on it?
I think I, wait, are they, normally you can see the total volume here.
You can't see the volume here.
I think Scott Besant has, you can see thousands wagered.
48,000 is the total volume.
And look, they got value bets, liquidity rewards pool, whatever.
You can wager on me going to a White House press briefing this year.
I find this very strange.
I've never agreed to be a part of any kind of event in which people could make wagers.
You know, I'm not a boxer.
I didn't say I'm going to go fight and then people can bet on whether I win or lose.
So why should I have any, any legal consideration in this capacity?
Now, this question of insider information.
I've had people jokingly be like, let me know if you're going to go.
And here's where it gets weird.
Insider trading is illegal on Calci, and it's banned.
So I'm certainly not making any wages on this, nor would I. Mr. Beast recently fired a guy who apparently was using his insider information to make wages on Calci and make a lot of money.
Don't kill the goose that laid the golden egg, brother.
Whether or not something is insider trading has to do with whether or not information is available to the public.
And public does not mean literally every person.
So let me give you an example of how things get real weird.
Let's say I go to Kellen.
You know, he's one of the producers here.
He runs all the content production.
And I say to him, you know, don't tell anybody, but I am going tomorrow to the press briefing, right?
Let's say I said that.
And then he tells a friend, buy as many.
Yes, Tim Poole's going to go.
We're going to do a thousand bucks and you're going to win $1,500.
What's the max you can do?
The most you can do is $1,700.
It's like he tells someone to do that.
You're going to win $1,472 tomorrow if you do this right now.
You're going to clear out $400.
That's insider trading.
Kellen is providing information only those at the company know, and that is insider trading.
Hold on there, a gosh darn minute.
Here's where it gets real interesting.
Let's say that instead of going to Kellen, I actually walked outside and was at a restaurant, was at a restaurant, and there was a server.
And the server goes, I heard that you're going to be, you might go to the White House press briefing and there's like wagers on it.
And I'll be like, yeah, you know, truth be told, I am literally going tomorrow, and I don't care if anybody knows it.
If that person then goes and buys, not insider trading.
Now, hold on a minute.
You're like, wait, But they learned directly from you.
No, no.
I was in public.
Or actually, a better way to put it is, there's arguments made here.
This could still technically be insider trading, but the argument is I am saying it publicly in a restaurant in front of a ton of people.
It is not private information.
Now, the important thing to understand is why they get so weird and wacky is that the insider trading rules are basically about stocks and futures contracts and short sales and things like this.
Like a company knows that their product has fallen short and they're going to lose a billion dollars off.
You know, we projected to make a billion.
We're only going to make 900 million.
It's bad for their stock.
That information, which is available to only those in the company, will ultimately result in someone making a trade to the detriment of someone else with private information.
That's insider trading.
But this is something totally different.
I'm not selling stocks.
Somebody else is.
How is it insider trading when I have nothing to do with the person selling the stocks?
Therein lies the interesting conundrum around insider trading and prediction markets.
If I am in public at a restaurant and state publicly, I am going to be there tomorrow, it is now information easily available to the public.
Furthermore, the argument, you know, Caulchie bans people from having the ability to control or have insider information.
A server at a restaurant is not a person at my company.
They are a member of the public who has heard from an official source a thing is true.
Scale doesn't matter.
If I get on a bullhorn and yell, I'm going, doesn't matter.
If I go on Twitter and post, I'm going, doesn't matter.
Either way, I have provided the information to the public and scale does not matter.
This whole thing is just plain weird.
So again, as to this wager, will I go to a Wednesday press briefing?
Maybe.
Honestly, I have no idea.
See, the problem is if you bet no, you got to wait until January 1st of 27 to get paid out because that's when you can definitively say I'm not going because I didn't go and the year's over.
As for the yes, that could crack literally any time they ask me to come.
And if they do, I will.
And to be honest, I could call them up and say I'm going to.
And that's where things get really dumb and really weird.
Who is or is not allowed to buy these things?
If I'm at a restaurant, and here's where it gets crazy again.
If I'm at a restaurant, I record a video of myself saying, everybody, I'm holding a press conference here at the delicious cider press in Inwood, West Virginia with the best, the best wings.
They really do have good wings.
And I am here to announce at this press conference, I will be attending this event tomorrow.
I have now informed roughly 17 people publicly that I'm doing a thing.
It's no longer insider information.
Now that this fact is public, can my brother buy the contract?
Why not?
It's publicly available information.
I told everybody they could buy if they want.
They could tell anybody they want to.
They can post the video.
I made the video.
Then later on, if they say, hey, your brother bought this contract, that's insider trading, I can say, no, I publicly announced it.
And after I publicly announced it, he waited a day and then bought.
This is why it's so just plum nuts.
I have nothing to do with the sale of this contract.
And that's where it's weird.
Insider trading was the people at the company buying and selling stocks of the company with information from that company.
I don't work for Caulchy.
To be fair, they sponsor us to do what's called like a micro read.
Basically, there are circumstances where we value the wisdom of the crowd in their predictions.
And we had been using prediction markets as an additional context to whether or not an event might occur, largely political elections.
Call she thought it was a really great idea and offered up a micro transit, like a micro sponsorship, which basically means if you do a set of, like if you, if you are going to use these prediction markets, just shout out Call She and you know, we'll pay you as a sponsorship.
And we are like, we're largely already doing it.
We do love the prediction markets as they benefit us in trying to understand what's going on in the world.
And so, again, with all due respect, I am a fan.
I'm a big fan.
As I told you, like, I play around on this sometimes.
Don't, don't, you know, buy contracts.
You can't, you know, like, don't take, don't do any of this.
Just don't listen to me.
But it exists.
I'm a fan.
And, you know, I'm going to give you my honest thoughts and opinions.
That being said, I'm going to stress this again.
Insider trading rules are, this is what's crazy.
It's crazy to me.
The scenario that I explained, where I go to Kellen and say, I'm going to be there tomorrow, and then him telling someone to buy is insider trading, despite the fact we are not selling these contracts.
Again, we have nothing to do with the sale of these contracts.
That's where it gets just weird, in my opinion.
I never asked anybody to sell a contract.
I don't even know why it's there.
I don't even know how contracts get made on Calci.
Do you just like request it or something?
Honestly, I don't know.
So, why would it be insider trading?
And for that matter, we're going to have to figure the rules out on this one.
If I walk up to a stranger while filming and say, Hey, buddy, I don't know.
Do I know you?
I don't know you.
I don't even know your name.
Hey, guess what?
I'm going to be at the White House tomorrow in the press briefing.
I've now informed the public.
And now what?
Now, can that guy go and buy the shares?
Yeah, I went out in public and said I was doing a thing.
It's just so weird.
Anyway, I do think it's, I don't think it's the end of the world.
I think a lot of people are, you know, Washington Post call it dystopian.
I don't agree.
I really, really don't.
Casinos are popping up all over the place, and there's issues with our culture.
But I personally don't believe that somebody who wants to, look, I'll put it like this: people say, Tim, do you think sports betting is bad?
And I'm like, no, I love sports betting.
I don't really do it all that often.
I sometimes will just wager a couple bucks on who is the favorite for fun.
And then you're like, at the end of the week, I'm like, look at this, you just bet on the winners and you keep making money.
It's fun.
Some people like the long shots.
You make more money.
But, and sometimes the long shots do win.
My point is this: a guy and his buddies, they work hard all week.
They love sports.
They want to throw down 20 bucks or whatever on a Friday night, add a little spice to the game, and then with that extra 20 bucks, they end up winning.
They say, I'm going to buy a round of beers, you know, a couple, it's three beers, right, for me and my buddies.
That is perfectly, perfectly okay.
A guy who makes a decent living and has disposable income and loses it sports gambling, but is living within his means and it's disposable and he's living fine.
I got no problem with it.
A man who loses his entire paycheck to an addiction to gambling, this is a cultural issue.
I don't blame every person who enjoys a glass of wine because alcoholics abuse alcohol.
And that is why I'm like, we shouldn't ban alcohol because of alcoholics.
We need to solve for the issue of alcoholics.
So my friends, what a weird reason for a lawsuit, I guess.
But hey, this stuff's getting wild.
It's getting crazy.
And I got to tell you, there are people who are making mad bank.
I think we can, if we go to Kalshi, and actually, let me see if I can just find it over here.
I don't want to accidentally pull up something that I shouldn't pull up.