Kalshi CEO Tarek Mansour has defended prediction markets against growing insider trading concerns, arguing at DC Fintech Week on October 14 that publicly visible trades make suspicious activity easier to detect and report.
Summary
- Kalshi CEO Tarek Mansour defended prediction market transparency during Washington’s DC Fintech Week on Wednesday.
- Former congressman George Santos received a $35,000 CFTC order over manipulative State of the Union trading.
- Former White House employee Gabriel Perez faced $172,539 in disgorgement and penalties for insider trading.
- Federal regulators and state authorities remain divided over who can legally oversee sports prediction markets.
- New Jersey has asked the Supreme Court to review state authority over federally regulated contracts.
Speaking during the Washington event, Mansour described the large number of transactions and public trading information as a “blessing and a curse for prediction markets.” He said the transparency of platforms such as Kalshi can help identify potentially improper trades, citing the company’s handling of former U.S. Representative George Santos.
His remarks followed several enforcement cases involving government employees, former lawmakers and people accused of using private information to profit from bets on real-world events.
Kalshi CEO says suspicious trades are easier to detect
Prediction markets allow customers to trade contracts tied to future outcomes, including elections, economic reports, sporting events and government decisions.
On Kalshi, customers can purchase contracts that pay according to whether an event occurs. Contract prices move as participants buy and sell positions based on their expectations.
Mansour argued that the ability to examine trading activity helps platforms identify questionable transactions. He said suspicious behavior can attract attention from both monitoring systems and market participants.
“You’re committing crime in broad daylight,” the Kalshi executive said while discussing improper trading.
He explained that the visibility of transactions made investigating potential misconduct easier, despite the challenges involved in monitoring growing trading volumes.
The executive pointed to the case of former congressman George Santos, whose activity on Kalshi attracted scrutiny after he traded contracts linked to his attendance at President Donald Trump’s 2026 State of the Union address.
Mansour said the company received approximately 100 complaints from people questioning the trades shortly after the suspicious activity became apparent.
According to the executive, those reports helped Kalshi identify and investigate the transactions.
The company had previously introduced mandatory employer disclosures for traders as part of its efforts to identify users who might possess sensitive information about events covered by prediction contracts.
Its compliance measures include additional checks for trading activity involving government decisions, corporate announcements and other events where certain participants may know the outcome before the public.
George Santos faced penalties over Kalshi trades
The Santos case provides a documented example of trading misconduct involving a prediction market.
The Commodity Futures Trading Commission (CFTC) announced on July 31 that it had settled charges against Santos for manipulating contracts related to whether he would attend the State of the Union.
According to the regulator, Santos traded the contracts between February 12 and February 25, 2026. During that period, he made public statements about his attendance plans while holding positions that could benefit from changes in market prices.
The CFTC found that some of those statements contained misleading information about his intentions. Contract prices subsequently moved in directions favorable to his positions.
The order required Santos to return $17,569.98 in trading profits and pay a $17,500 civil penalty.
The regulator imposed a three-year trading ban and directed him to stop violating the relevant provisions of federal commodities law.
Kalshi separately permanently barred Santos from its platform. Earlier coverage of the CFTC’s Santos trading case described the regulator’s findings and the penalties imposed.
While Mansour referred to the incident when discussing insider trading, the CFTC’s enforcement order specifically concerned manipulative trading involving an outcome Santos could influence.
Another case involved Gabriel Perez, a former White House teleprompter operator.
The CFTC confirmed in August that Perez had used advance knowledge of presidential speeches to trade contracts predicting words or phrases President Trump would use.
Perez earned more than $107,500 from the trades, according to the regulator.
He agreed to return $107,539.02 in profits and pay a $65,000 civil penalty, bringing the total to $172,539.02.
The settlement included a three-year trading ban. The CFTC credited Kalshi for assisting with the investigation.
Insider trading concerns extend beyond Kalshi
The debate over prediction market misconduct has extended to Polymarket, where authorities have pursued a case involving a U.S. Army soldier.
In April, federal prosecutors charged Army Special Forces Master Sergeant Gannon Ken Van Dyke with allegedly using classified information to profit from contracts linked to a military operation in Venezuela.
Prosecutors alleged that Van Dyke had access to information concerning the planned capture of former Venezuelan President Nicolás Maduro.
Before the January operation, he allegedly placed contracts predicting U.S. military action and Maduro’s removal from power.
The trades reportedly generated more than $400,000 in proceeds, according to the federal allegations.
The charges included commodities fraud, wire fraud and offenses involving the unauthorized use of confidential government information.
The allegations have not been established through a criminal conviction. Investigators described the activity as an example of potential misuse of sensitive government information in prediction markets.
Earlier reporting on prediction market insider trading enforcement covered the CFTC’s growing attention to contracts involving political events, government decisions and corporate developments.
In September, the regulator separately warned exchanges about the risks associated with contracts predicting what public officials would say.
The CFTC’s warning on prediction market mention contracts addressed potential manipulation by traders who could influence the words or events used to settle a contract.
Lawmakers have responded with proposals to restrict trading by people holding nonpublic government information.
Several proposals would address government employees, elected officials and other participants whose positions could provide an advantage in markets tied to official decisions.
However, the proposed restrictions differ in scope, and Congress has not established a single new nationwide framework resolving every category of prediction market trading.
Kalshi faces a separate fight over U.S. gambling laws
While insider trading remains a concern, Kalshi is involved in another dispute over whether states can regulate prediction markets offering sports-related contracts.
The CFTC maintains that federally registered exchanges fall under its authority when they offer derivatives covered by the Commodity Exchange Act.
The federal regulator has argued that states cannot apply conflicting gambling restrictions to contracts traded on properly registered markets.
In April, the CFTC filed a lawsuit against New York, seeking to prevent the state from applying its gambling laws to federally registered prediction market exchanges.
The agency subsequently pursued related legal actions involving other states, including Wisconsin.
State authorities have challenged the federal position, arguing that certain sports prediction contracts function as gambling products and should be subject to state licensing, consumer protection and tax rules.
The disagreement has produced different court decisions across jurisdictions.
As examined in earlier coverage of the CFTC’s dispute with states over Kalshi and Polymarket, the central question concerns whether federal derivatives regulation prevents states from enforcing their gambling laws against these contracts.
New Jersey has taken that question to the U.S. Supreme Court.
The state filed a petition in September seeking review of a federal appeals court decision favoring Kalshi’s position on federal regulatory authority.
Other proceedings have reached different outcomes, leaving the legal treatment of sports event contracts contested.
At DC Fintech Week, Mansour defended the federal approach and warned against rules that could force prediction market operators outside the United States.
“I think it’s a choice of whether prediction markets exist in the U.S. or they go offshore,” he said.
The National Football League has since urged the Supreme Court to consider New Jersey’s petition, arguing that state regulation is necessary to address concerns involving sporting events, betting integrity and consumer protection.
The league’s submission supported a review of the jurisdictional dispute, while Kalshi and other federally registered prediction market operators continued defending the CFTC’s authority over their contracts.
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