Regulators spotlight Kalshi insider trading cases amid criticism
Federal regulators and prediction-market exchange Kalshi are drawing attention to a pair of insider-trading cases, saying the actions show event-based markets are subject to the same rules as traditional derivatives platforms. The rollout, however, quickly met pushback from a journalist who argued that at least one of the headline examples had already been reported months earlier.
On Wednesday (February 25), the Commodity Futures Trading Commission (CFTC) released an advisory outlining two enforcement matters that Kalshi had disclosed involving the misuse of non-public information. The agency said plainly that “the Commission has full authority to police illegal trading practices occurring on any DCM, including those described above related to prediction markets.”
Kalshi used its own announcement to underscore that “we ban insider trading” and said it had launched about 200 investigations over the past year. More than a dozen of those inquiries led to formal enforcement actions, according to the company. Kalshi also said that money collected through fines in these cases is being donated to a nonprofit that supports derivatives education.
Growing political and regulatory pressure on Kalshi amid insider trading cases
One case centered on a political candidate who bet on his own race for governor. Kalshi said the candidate placed roughly $200 on contracts tied to his campaign and later promoted the wager online. Because exchange rules bar traders from betting on outcomes they can directly influence, the company issued a five-year ban and fined him ten times the amount of the trade.
The CFTC said the trader “acknowledged that he knew these trades were improper and violated Kalshi’s rules” and added that the conduct may have breached anti-fraud provisions in the Commodity Exchange Act.
Journalist Dustin Gouker countered that the episode was hardly new. Posting on X, he wrote that Kalshi was “victory-lapping cracking down on a politician betting on themselves when I am the one who literally broke the news like 10 months ago.” He also said the company circulated the enforcement news to other reporters but not to him, adding, “And you wonder why I don’t take this company seriously.”
An image attached to Gouker’s post showed his May 26, 2025 Event Horizon article, “California Candidate For Governor Bets On Himself To Win.” In that piece, he identified Republican candidate Kyle Langford as the trader and described a video the candidate shared on social media showing the bet.
The second enforcement matter involved a video editor at the popular online channel by MrBeast. Kalshi said the trader’s positions stood out as “statistically anomalous” and concluded he “likely had access to material non-public information connected to his trading.” The account was suspended for two years, and the trader was fined five times the size of the positions. The CFTC similarly stated the individual “likely had advanced knowledge of the contents of the channel’s videos prior to the time they were publicly posted” and suggested the behavior could amount to misappropriation-based insider trading.
The cases arrive as prediction markets face mounting scrutiny in Washington. Lawmakers have introduced legislation aimed at blocking members of Congress from trading on contracts tied to political outcomes, and some senators have urged the CFTC to crack down on controversial contracts, including those related to deaths. Kalshi’s CEO has publicly backed stronger insider-trading prohibitions, including restrictions on government officials participating in certain markets.
At the same time, rival platform Polymarket has confronted its own insider-trading questions, including disputes over large bets and cash-outs tied to political events abroad.
Featured image: Kalshi / Canva
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