Kalshi CEO Tarek Mansour has defended prediction markets against growing insider trading concerns, arguing that public trading activity makes suspicious transactions easier to detect. Speaking at DC Fintech Week on October 14, Mansour cited recent enforcement cases involving former government officials as regulators examine misconduct across the industry.
Mansour described the volume of transactions and visibility of trades as a “blessing and a curse” for prediction markets. He argued that although growing trading volumes create monitoring challenges, public activity allows market participants to identify unusual transactions.
“You're committing crime in broad daylight,” Mansour told the conference while discussing improper trading. He maintained that visible transactions help platforms investigate suspected violations.
The executive pointed to former U.S. Representative George Santos, who traded contracts linked to his attendance at President Donald Trump's 2026 State of the Union address. Mansour claimed Kalshi received approximately 100 complaints shortly after traders noticed suspicious activity. Kalshi subsequently banned Santos permanently.
The Commodity Futures Trading Commission (CFTC) ordered Santos on July 31 to return USD 17,569.98 in trading profits and pay a USD 17,500 civil penalty.
The regulator found that Santos made misleading public statements about his attendance plans while holding contracts that benefited from subsequent price movements. However, the CFTC classified his conduct as market manipulation rather than insider trading. It also imposed a three-year trading ban.
Separately, the CFTC ordered former White House teleprompter operator Gabriel Perez to return USD 107,539.02 and pay a USD 65,000 penalty in August. Investigators found that Perez used advance access to presidential speeches to trade contracts predicting Trump's remarks.
The regulator imposed another three-year trading ban and credited Kalshi for assisting its investigation.
Prediction market investigations have also involved competing platform Polymarket. In April, the Justice Department charged U.S. Army soldier Gannon Ken Van Dyke with allegedly using classified information to place trades before the U.S. military operation to capture Nicolás Maduro in Venezuela.
Federal prosecutors alleged that Van Dyke generated more than USD 400,000 through contracts linked to the operation. However, the criminal accusations remain allegations and do not establish guilt.
Meanwhile, lawmakers have introduced proposals restricting prediction market trading by officials with access to confidential government information. Kalshi has also introduced mandatory employer disclosures for traders to help identify possible conflicts of interest.
Beyond insider trading, Kalshi faces legal challenges over whether state gambling authorities can regulate sports prediction contracts.
The CFTC maintains that federally registered exchanges fall under its authority. However, states argue that sports-related contracts must comply with local gambling laws.
In April, the CFTC sued New York over attempts to enforce gambling restrictions against registered exchanges. New Jersey subsequently petitioned the Supreme Court to review a ruling favoring Kalshi.
Mansour warned that stricter state oversight could force prediction market businesses outside the country. “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 supported New Jersey's petition, citing concerns about sports integrity and consumer protection. The Supreme Court has yet to decide whether to review the case.
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