The prediction markets platform Kalshi has fined and banned three congressional candidates for violating rules that prevent political candidates from betting on their own election results. The company appears to have recently implemented stricter oversight measures to combat insider trading. According to regulatory documents released by Kalshi, those sanctioned include Mark Moran, running for a Senate seat in Virginia; Matt Klein, running for the House of Representatives in Minnesota; and Ezekiel Enriquez, running in the Republican primaries in Texas. The common thread among them is that they all traded on markets related to their own elections. Mark Moran received the heaviest penalty. He was fined $6,229 for trades on two separate election markets and ordered to return his winnings. He was also banned from the Kalshi platform for five years. Moran's statement after the incident was noteworthy; in a post on platform X, he stated that he made the approximately $100 trade because he "wanted to get caught." Moran claimed that his move was aimed at exposing potential manipulation in the industry, specifically referencing allegations related to the New York mayoral race on Polymarket. The penalties for other candidates were more limited. Matt Klein received a $540 fine, and Ezekiel Enriquez received a $784 fine. Both were banned from the platform for five years, like Moran. The Kalshi documents show that Klein and Enriquez purchased contracts for less than $100 related to their own elections. Klein stated that he participated in the prediction markets purely out of curiosity and was only informed later that he had violated the rules. He added that he paid the fine and accepted the ban from the platform as part of his compliance with the rules.
Strict rules in prediction markets
These developments have reignited discussions about insider trading in prediction markets. The fact that political candidates trade on factors they can directly influence, such as whether they remain in the election race, is seen as a serious risk to market integrity. Bobby DeNault, Kalshi's legal and enforcement advisor, stated that rule violations would not be tolerated regardless of the transaction amount. DeNault noted that the candidates' position to influence the market constitutes a violation in itself.
It is also noteworthy that regulatory pressure is increasing in the US. Senators Adam Schiff and John Curtis introduced the "Prediction Markets Are Gambling Act" last month. The bill aims to prohibit the trading of prediction contracts based on sports and gambling-like events on licensed platforms. This step indicates that the sector may be subject to stricter regulations.
With the increased oversight, both Kalshi and Polymarket have begun to take new measures. Especially with the proliferation of blockchain-based platforms, crypto-focused prediction markets like Polymarket are also facing similar regulatory pressures. Kalshi has implemented new screening tools that more closely monitor user activity, while Polymarket has expanded its restrictions against market manipulation. Despite this, both platforms maintain their leading positions in the sector. According to the data, Kalshi achieved a transaction volume of approximately $13 billion in March, while Polymarket's volume reached $10.57 billion.
