Kalshi Sued Over Refusing to Pay Out Prediction Market After Iran Leader's Death

[Vaculin]

Now this is a big issue for them. If it turns out they really cheated the bettors, they will likely lose, and once that happens the whole industry will know about it.

Reputation matters a lot in this space. One serious case can destroy a business, especially if it’s already brought to court where things become more formal and the real details can come out. If they still want to protect their reputation, maybe the best option is to settle it while it’s still possible. Even if they have to pay more to compensate the winners, it could still be better than letting the damage grow even bigger.

You have got to read the case profile well to understand both parties and right now, it seems Kalshi is standing on the grounds of their rules as regards no death betting and might instead refund instead of to pay winnings.

​This case is just the beginning of some of the major test that the predictions market would have to face before they become more legitimate markets.

I saw the first post before this and it looks like the same issue. There was a user complaining that before he placed the bet, death was listed as a possible way of removal. But after the bet was already placed, that condition was suddenly changed.

If that’s really what happened, then I understand why he feels cheated. Rule changes should only apply to bets placed after the change, not to bets that were already accepted under the previous rules. Otherwise it just creates confusion and makes the market look unfair.

[Questat]

They should have taken the L and given the winners their deserved winnings. Changing rules or adding rules that were not there after the outcomes of the predictions have happened is an outright scam.

I think Kalshi is going to lose this one, and they may end up being under scrutiny by law enforcement. They have no idea how much attention they are going to draw to themselves.

That’s a problem, because once the authorities start investigating, this might not be the only issue that gets uncovered. Sometimes one case opens the door for a deeper look, and if they find more irregularities it could create even bigger problems for them.

If that happens, they might end up regretting doing something like this in the first place. Trying to cheat bettors in broad daylight is a risky move, especially when it can attract the attention of regulators.

[Dr.Bitcoin_Strange]

It's good that they got sued, other prediction site that have intentions of putting up such scam will be more careful not to do that in the future, I also hope that the customer that sued them is going to win the case, I think I also saw that first topic when it was first mentioned, I just thought to myself that they should be sued and I'm happy seeing that it has come to pass.

[stadus]

Currently we have been hearing rumors about the leader of Iran is not death.

This is one concerning part for me. What’s the actual basis to verify if the leader is really dead? If it’s just based on rumors or early reports, that could easily be manipulated. A government or group could announce that the leader is dead just to spark anger among people and push them to support retaliation. Situations like this can get very tricky.

I’m not really familiar with the exact rules for this market, that’s why I’m asking. Is a news report already enough for them to grade the bet? Or does it require some official confirmation from a specific authority?

If the rules aren’t very clear, prediction markets can easily bend the interpretation depending on the situation. That’s why the criteria should be very specific from the start.

[CryptSafe]

That serves them better. They will learn their lesson the hard way and will never make a mess of the community if they are able to scale through this lawsuit against them without much pressure. How can they dare change rules of engagement when the bet is still very much active that is a scam from them and I will support a class a tion against them for such callous act.

[acroman08]

Currently we have been hearing rumors about the leader of Iran is not death. I called it rumor due to different videos that had been surfacing online making it difficult for people to believe if Iran still have a leader or not.

Is this rumor new? Because when the US and Israel bombed Iran's supremeleader's house, the Iranian government claimed that their leader was still alive, but later admitted that he died with his wife, daughter, grandkids, along with other high ranking officials. Also, if I remember correctly, currently, Iran has an interim leader, and they are still in the process of picking a permanent one.

[Hispo]

Honestly, the outcome of this lawsuit is going to fully depend on whatever it is written of the Terms of service of the services which provides those markets.
If they reserve the right to close/terminate markets at any time and without giving any further explanation, then I am afraid bettors won't have much room in order to succeed with this lawsuit and get the money which is owed to them.

This is just another reason to be careful when comes to selecting a service for prediction markets, there are services which simply cannot handle to have many of their bettors to successfully bet the odds and pocket money (money which is likely being put on the table by the bookie/ market maker itself).

[sheenshane]

Honestly, the outcome of this lawsuit is going to fully depend on whatever it is written of the Terms of service of the services which provides those markets.
If they reserve the right to close/terminate markets at any time and without giving any further explanation, then I am afraid bettors won't have much room in order to succeed with this lawsuit and get the money which is owed to them.

But I think it's not a good idea to change the rules during the prediction of game initiation.
If that's in the ToS, they have the right, but the consequence is that it drags their reputation into the ground and makes them look like a scam company, since it's rare for the ToS to change while a prediction is still ongoing.

IMO, they deserved that — they got sued, and the plaintiff will win the suit.

[Fivestar4everMVP]

We were discussing about what Kalshi did on this thread: Kalshi caught changing rules last minute, making users lose money

The last post on the thread was 5 days ago. Also to make more people see what is going on as some people posted on the thread that Kalshi should be sued, the prediction market has been sued.

You can also read about the suit: https://decrypt.co/360293/kalshi-sued-refusing-pay-out-prediction-market-iran-leader-death

Who is going to win the suit?

Definitely the user(s) who sued that prediction market are going to win the suit, it's a no-brainer because first of all, they were caught changing the rules of the prediction after the prediction have come to pass.
Rules like we know it is binding, before the Iran supreme leader leaving office market was opened for clients to buy in, there was a rule that was already in place and this is the rules that the clients read and agreed to before buying that market's contract, now if the platform will return to the same rule to edit it when the contract that clients bought has come to pass, then that automatically is a foul play and I think the platform really deserve to be sued and I hope they lose a lot of money in this case so this will not only serve as a lesson to them alone, but to also to other prediction markets out there and even casinos.

I love it when gamblers take pro-active actions against some of this online services as way to teach those behind the platform some lesson that gamblers/bettors are not babies or dummies, many of us are matured sensible and educated young men 😊

[Negotiation]

Platforms like Kalshi or politimarkets rely on people's trust if they suddenly change the rules or stop the payout after a certain event, then people's trust in the entire market is lost. This case is a strong message not only for Kalshi but also for other big players in this sector in the future any other site will think ten times before committing such scams or manipulations. They should be sued many experts and big investors around the world are of the same opinion. This is not just a matter of money it is a test of the integrity of a system. If the verdict in this case goes in favor of customers, it will be a milestone in the history of the digital prediction market.

[SmartGold01]

This is one thing about these site because most times they would always want to adjust their ToS to suit only them where it would make the gambler lose more, and I was even thinking that prediction market could be more better in terms of their rules if they could be preferable compared to some of those gambling site. Of course, if they are caught adjust rules or terms to favor them and the claims has an evidence then that person wins the case provided that there is a good evidence.

[iv4n]

Who is going to win the suit?

It's too early to say anything...

I saw arguments from both sides. Some analysts think Kalshi has a decent chance because it's a regulated exchange with general rules that "override individual market descriptions".

In any case, the lawsuit is here, and the case will enter the court system... So the judge will say what "out of office for any reason" really means, or he will accept Kalshi arrgument. There's no official trial start date, so I guess there's a lot of time for settlement.

[_act_]

I saw arguments from both sides. Some analysts think Kalshi has a decent chance because it's a regulated exchange with general rules that "override individual market descriptions".

That is true, Kalshi has rules that will not be in favour of their customers, but they did not have rules for death related to person to leave seat as a result of the person being oust by death out of office according to what people are saying. The rule just changed when those people have won already. With what I am seeing, it is possible that the people that took Kalshi to court would win. Kalshi just does not want to pay people the $54 Million that was won.

https://www.yahoo.com/news/articles/betting-company-sued-refusing-pay-204029930.html

[freedomgo]

There's no official trial start date, so I guess there's a lot of time for settlement.

Yes exactly, and if both sides refuse to settle it probably means they’re confident they can win the case.

But the bettor who filed the case better be ready for a long battle. Legal fights like that can take a lot of time and money, especially when you’re going against a big company like Kalshi. They’re a billion-dollar company with the resources to hire top lawyers to defend them. For them this is also about protecting their reputation, so they’ll likely take the case very seriously.

[Ronsbit]

Who is going to win the suit?

Kalshi is going to lose.

However, this is good because it will force them to become more transparent about their rules. I hope that the other businesses in the prediction market are taking notes.

A crazy thought came to me now and it is that there should also be a prediction on who will win the suit.

Hahahahaha, this would be a good prediction game for other prediction websites as well, and Kalshi will have to learn their lesson the hard way since they wanted to act smart, but they think they could fool bettors and get away with it that easily. They just shot themselves on their foot. Maybe when they get to the court, they could explain better to the judge why they had decided to act in a scammy way.

[Questat]

Hahahahaha, this would be a good prediction game for other prediction websites as well,

Will Kalshi offer this? hehe

and Kalshi will have to learn their lesson the hard way since they wanted to act smart, but they think they could fool bettors and get away with it that easily. They just shot themselves on their foot. Maybe when they get to the court, they could explain better to the judge why they had decided to act in a scammy way.

if they lose they will learn the hard way, and its probably not just one bettor involved here. if more people come out saying they were also victims of the same scam then the case becomes more believable and stronger, and Kalshi might end up paying damages and even risk their license. imagine investing millions for expansion then one stupid mistake like this could damage the whole business, that would not be good for them at all.

[Z-tight]

I expected the people who held that winning position to sue, so i am not surprised that Kalshi prediction service is facing this class action suit. I cannot call the case now, the law would determine the outcome, but what is certain is that the plaintiffs do have a case, and i think it is a strong one at that. I also doubt Ayatollah would have left his position in any other way, so if they removed the "death" option, then there was hardly a way for the players to win from the beginning.

[Hispo]

Honestly, the outcome of this lawsuit is going to fully depend on whatever it is written of the Terms of service of the services which provides those markets.
If they reserve the right to close/terminate markets at any time and without giving any further explanation, then I am afraid bettors won't have much room in order to succeed with this lawsuit and get the money which is owed to them.

But I think it's not a good idea to change the rules during the prediction of game initiation.
If that's in the ToS, they have the right, but the consequence is that it drags their reputation into the ground and makes them look like a scam company, since it's rare for the ToS to change while a prediction is still ongoing.

IMO, they deserved that — they got sued, and the plaintiff will win the suit.

It is true it would negatively affect their reputation, but they are company and they are going to put on their reputation and their profitability on a scale and see whether it is economically convenient for them to loose some of their image for the sake of money.

It is not something which is exclusive of bookies, casinos or any other company which deals with future contracts. Even big technological companies like Apple, Microsoft and Amazon do some research in order to know who much of their reputation and integrity they can sacrifice to continue to grow faster economically.

The best thing we can do is paying attention to Terms of Service of prediction markets before we sign up to them, and stay away from those who abuser their Terms of service to close markets before they resolve.

[Ronsbit]

Hahahahaha, this would be a good prediction game for other prediction websites as well,

Will Kalshi offer this? hehe

and Kalshi will have to learn their lesson the hard way since they wanted to act smart, but they think they could fool bettors and get away with it that easily. They just shot themselves on their foot. Maybe when they get to the court, they could explain better to the judge why they had decided to act in a scammy way.

if they lose they will learn the hard way, and its probably not just one bettor involved here. if more people come out saying they were also victims of the same scam then the case becomes more believable and stronger, and Kalshi might end up paying damages and even risk their license. imagine investing millions for expansion then one stupid mistake like this could damage the whole business, that would not be good for them at all.

They would definitely lose because what they did was likely a breach of their own terms and conditions or agreement, if you may like, and it is very unethical and unprofessional of an organisation of such magnitude. I have no doubt more people who got affected would turnup for the case to make sure Kalshi pays heavily for their ill actions. I would not be surprised to hear that they have been doing so to other bets whose bettors have no idea what happened, because for the organisation to do this means they have been doing it to others as well.

[OgNasty]

I still don't know WHY Kalshi did this, but it is definitely not good for them.  Especially as they're looking to raise a massive amount of funds.

The prediction markets have all sorts of problems headed their way.  It isn't good for Kalshi that they're already having issues over something that should have been easy for them.  Wait until people start directly influencing these predictions with illegal activities.  That's when the shit will hit the fan.