Kalshi CEO says prediction market transparency makes insider trading easier to catch

Transparency as a double-edged sword for prediction markets

Kalshi CEO Tarek Mansour said Wednesday that the open nature of prediction markets — platforms where people bet on real-world events — makes insider trading easier to detect.

Speaking at DC Fintech Week, Mansour called the situation "a blessing and a curse for prediction markets."

"You're committing crime in broad daylight, and that makes it so much easier to kind of police that sort of activity," he said.

Several insider trading cases surface

Prediction markets have grown to tens of billions of dollars since the 2024 U.S. election, but the expansion has brought insider trading problems.

• In April, an active-duty U.S. Army soldier was charged for using confidential information to place bets on Polymarket ahead of former Venezuelan President Nicolás Maduro's capture.
• A former White House teleprompter operator agreed to pay more than $172,000 to settle charges that he used advance access to President Trump's speeches to profit on Kalshi.
• In August, former Rep. George Santos became the first person permanently banned from Kalshi after being accused of violating rules by trading on a bet about whether he would attend the State of the Union.

Mansour said Kalshi detected the Santos trade quickly. "Within a few minutes, we had 100 whistleblowers complaining, being like, something is weird here. We caught it," he said.

Lawmakers push to restrict insider trading

Lawmakers on both sides of the aisle have introduced bills over the past year to restrict trades by people who have access to non-public information. Some states, including New York, have banned state officials from using nonpublic information to profit from prediction markets.

Jurisdiction battle between states and federal regulators

Another major issue is who should regulate prediction markets — states or the federal government. The Commodity Futures Trading Commission (CFTC) argues that most contracts on prediction markets are swaps and fall under its "exclusive jurisdiction." States argue that prediction market firms are operating illegally, violating their gaming laws and avoiding taxes.

States have sued platforms like Kalshi and Polymarket, and the CFTC has sued states back. The issue could go to the Supreme Court as states have reached different conclusions over the past few months.

Kalshi has taken the stance that it wants federal regulation. Mansour said the choice is not between state or federal regulation, but whether prediction markets exist in the U.S. or go offshore.

Why this matters for crypto and prediction markets

Prediction markets allow people to bet on outcomes like political events, sports results, and economic indicators. They are often built on blockchain technology, which records every transaction publicly. That transparency is what makes insider trading visible — but also raises questions about who should regulate these markets and how to protect them from illegal activity.

What comes next

The jurisdiction battle between states and the CFTC could head to the Supreme Court. Meanwhile, lawmakers continue to push legislation to restrict insider trading on prediction markets.

Source

• The Block

Read also: SEC and CFTC Pro-Crypto Rules Face Legal Uncertainty After Supreme Court Shift

Read also: Crypto.com Launches Predict Pro With Order Books and Sports Combos