April 22 - Kalshi, a platform that operates prediction markets, announced on Wednesday that it has suspended three candidates running for U.S. federal office after determining the trades constituted political insider trading. The company said these actions were detected through recently implemented safeguards designed to prevent political candidates from wagering on contests in which they are participants.
In a statement, Kalshi identified the individuals involved as Democratic Minnesota state Senator Matt Klein, who was pursuing the Democratic nomination for the U.S. House seat in Minnesota's 2nd district; Republican Ezekiel Enriquez, who is seeking his party's nomination for the U.S. House seat in Texas' 21st district; and Mark Moran, an independent candidate for the U.S. Senate in Virginia.
According to Kalshi, "All three cases concern political insider trading and were flagged because of our newly released safeguards to block political candidates from trading on their own elections."
Moran acknowledged placing a wager on himself, saying he had traded $100 on his own candidacy and that he did so intentionally to draw attention to the platform. In a post on X, Moran wrote: "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 and as Senator I will go after Kalshi and impose significant penalties on them - 25% - a vice tax - to pay down our national debt."
The two other candidates named by Kalshi could not be reached immediately for comment, the company said.
Prediction markets have seen a notable increase in activity since the 2024 U.S. presidential election, when many participants placed significant bets on Donald Trump’s chances. That surge in use has been accompanied by growing scrutiny of potential insider trading on these platforms, particularly after an unknown trader reportedly made more than $400,000 by betting that Venezuelan President Nicolas Maduro would be ousted from his position ahead of a U.S. mission to capture the leader.
State-level actions have followed. California moved last month to bar state officials from using inside knowledge to place wagers on platforms such as Kalshi and its rival Polymarket. New York Governor Kathy Hochul issued an executive order on Wednesday prohibiting state employees from engaging in insider trading on prediction markets. In announcing the order, Hochul said: "Getting rich by betting on inside information is corruption, plain and simple."
The measures by California and New York reflect widening regulatory concern about the integrity of prediction markets and the potential for insiders to profit from privileged information. Kalshi said its recent safeguards are intended to counter such risks by preventing political candidates from trading on their own races.
Beyond the immediate disciplinary actions, the episode highlights regulatory and reputational pressures facing prediction market operators as usage grows and instances of questionable trading behavior attract public and governmental attention.