- ▸ Kalshi suspended three political candidates for trading on their own elections, framing the activity as insider trading under its CFTC-approved rules.
- ▸ One of those candidates, Minnesota State Sen. Matt Klein, is also sponsoring legislation to ban prediction markets, adding a layer of political tension to the enforcement action.
- ▸ The suspensions come as CFTC leadership ramps up pressure on exchanges to police insider trading, signaling a tougher regulatory environment for prediction markets.
After the Commodity Futures Trading Commission leaders recently outlined insider trading enforcement priorities, Kalshi announced suspensions of three political candidates for “political insider trading,” including one who authored a bill banning prediction markets.
Kalshi released notices on Wednesday, banning three political candidates: Virginia Senate candidate Mark Moran, Texas US Representative Candidate Ezekiel Enriquez and Minnesota State Senator Matt Klein. Klein co-authored SF 4511 in Minnesota, which aims to ban prediction markets in the state.
“Just like in traditional financial markets, bad actors will try to cheat,” a Kalshi statement reads. “Regulated exchanges must constantly evolve and adapt their systems to address insider threats. These three cases are an example of how developing proactive engineering solutions can help identify illicit trading activity.”
Minnesota prediction market mix-up
Kalshi said its systems flagged a candidate for the Democratic Primary for Minnesota’s 2nd Congressional District. It found Klein, running for the seat, traded on the outcome of that election.
The parties negotiated a settlement of $539.85 and a suspension of five years.
Klein is the chair of the Minnesota Senate Commerce and Consumer Protection Committee, which recently advanced the prediction markets ban bill.
Klein issued a statement to the Minnesota Reformer in which he said he placed a $50 trade last October on him winning the primary. He said it was the only trade he’d ever placed on the platform.
“This was a mistake, and I apologize,” Klein said. “My experience, like many other Minnesotans, points to the need for clearer rules and regulations for these types of markets.”
Texas suspicious prediction market action
Kalshi also picked up trading from Enriquez, who traded “a slightly larger amount on the outcome of his own election.”
The Republican candidate for the Texas 21st Congressional District also settled with Kalshi for $784.20 and a five-year suspension.
Virginia candidate says he ‘wanted to be caught’
Moran traded on two markets related to his U.S. Senate race in Virginia. One trade was on a market on individuals who would run for public office, and another was on his candidacy for the US Senate.
Unlike the other two Kalshi suspensions, the company said Moran stopped communications between the parties. Kalshi fined Moran $6,229.30 and suspended him for five years.
Moran later posted on X that he “wanted to get caught,” saying that he wanted to see if Kalshi would come after him and “what their path would be.”
“I traded $100 on myself, knowing this would happen (also knowing that I wouldn’t be vying for the democratic nomination) and the attention it would create to highlight how this company is destroying young men,” Moran wrote, “and as Senator I will go after Kalshi and impose significant penalties on them – 25% – a vice tax – to pay down our national debt.”
Kalshi promises enforcement, suspensions
Kalshi noted that the cases violated the platform’s CFTC-approved exchange rules.
“When a trader violates our exchange rules, they will be subject to exchange discipline,” the statement said. “For more serious matters, we refer cases to the CFTC or DOJ for further investigation and prosecution, which didn’t happen here.”
Kalshi also noted these cases demonstrate its commitment to police trades of all sizes.
CFTC leaders called for integrity actions
CFTC Enforcement Director David Miller and Chair Michael Selig recently publicly called for prediction markets to better police themselves.
“Insider trading in the prediction markets, where there is misappropriated information, is precisely the kind of serious violation that we are going after vigorously,” Miller said. “We will aggressively detect, investigate, and, where appropriate, prosecute insider trading in the prediction markets.”
Earlier this year, Kalshi also suspended Kyle Langford, a candidate for California governor, for trading on that race. Langford also received a five-year suspension from direct or indirect access to Kalshi, along with a financial penalty totaling $2,246.36.
