Kalshi CEO Tarek Mansour has defended prediction markets against growing concerns about insider trading, arguing that public trading activity makes suspicious transactions easier to spot. Speaking at DC Fintech Week in Washington on October 14, he said the transparency of these markets can help platforms and regulators identify potential misconduct.
His comments came as prediction market operators faced several cases involving government employees and former officials accused of using private information to profit from event-based contracts.
Mansour described the large volume of transactions and publicly visible trading activity as both a benefit and a challenge for prediction markets. He pointed to Kalshi’s handling of former US Representative George Santos, whose trades drew complaints from users.
According to Mansour, Kalshi received around 100 complaints after the questionable activity attracted attention. He said those reports helped the company identify and investigate the transactions.
“You’re committing crime in broad daylight,” Mansour said, arguing that visible trading activity can make misconduct easier to detect.
Kalshi has also introduced mandatory employer disclosures for traders as part of its efforts to identify people who may have access to sensitive information about government decisions, corporate announcements and other events.
George Santos faced a $35,000 penalty over Kalshi trades
The case involving Santos highlights the difference between ordinary trading and attempts to influence an event linked to a contract.
The Commodity Futures Trading Commission (CFTC) announced on July 31 that it had settled charges against Santos over contracts tied to whether he would attend President Donald Trump’s 2026 State of the Union address.
According to the regulator, Santos traded the contracts between February 12 and February 25, 2026. While holding positions that could benefit from price movements, he made public statements about his plans to attend the address.
The CFTC found that some of his statements were misleading and that contract prices moved in ways that benefited his positions.
Santos was ordered to return $17,569.98 in trading profits and pay a $17,500 civil penalty, bringing the total to about $35,000. He also received a three-year trading ban and was ordered to stop violating the relevant provisions of federal commodities law.
Kalshi separately permanently banned him from its platform.
Although Mansour discussed the case while defending the transparency of prediction markets, the CFTC’s order specifically involved market manipulation tied to an outcome Santos could influence.
Another case involved Gabriel Perez, a former White House teleprompter operator.
In August, the CFTC said Perez had used advance knowledge of presidential speeches to trade contracts predicting words or phrases Trump would use. The regulator said Perez earned more than $107,500 from the trades.
Perez agreed to return $107,539.02 in profits and pay a $65,000 civil penalty, bringing the total to $172,539.02. The settlement also included a three-year trading ban, and the CFTC credited Kalshi for helping with the investigation.
Prediction market insider trading concerns are spreading
Concerns about the use of confidential information have also reached Polymarket.
In April, federal prosecutors charged US 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 about the planned capture of former Venezuelan President Nicolás Maduro. Before the operation in January, he allegedly placed trades predicting US military action and Maduro’s removal from power.
The trades reportedly generated more than $400,000 in proceeds. 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.
The case has added to concerns about whether government employees and others with access to sensitive information can gain an unfair advantage in prediction markets.
In September, the CFTC also warned exchanges about contracts based on words or phrases that public officials might use. Such markets can create opportunities for manipulation when traders have the ability to influence the event determining the outcome.
Lawmakers have proposed restrictions on trading by people who possess nonpublic government information, including government employees and elected officials. However, the proposals differ in scope, and no single new nationwide framework has resolved every category of prediction market trading.
Kalshi faces a separate legal battle over sports contracts
Beyond insider trading, Kalshi is fighting a broader dispute over whether individual US states can regulate sports-related prediction contracts under gambling laws.
The CFTC argues that federally registered exchanges fall under its authority when offering derivatives covered by the Commodity Exchange Act. It has maintained that states should not be able to apply conflicting gambling restrictions to contracts traded on properly registered platforms.
In April, the CFTC sued New York, seeking to prevent the state from applying its gambling laws to federally registered prediction market exchanges. The agency later pursued related legal action involving other states, including Wisconsin.
State authorities argue that some sports prediction contracts function like gambling products and should therefore be subject to state licensing, consumer protection rules and taxes.
The dispute has produced differing court decisions, leaving the legal status of sports event contracts unsettled.
New Jersey has asked the US Supreme Court to review a federal appeals court decision involving Kalshi and the limits of state authority over federally regulated contracts.
The National Football League has also urged the Supreme Court to consider New Jersey’s petition, citing concerns about sports integrity, betting and consumer protection.
At DC Fintech Week, Mansour defended the federal regulatory approach and warned that restrictive state rules could push prediction market businesses overseas.
“I think it’s a choice of whether prediction markets exist in the U.S. or they go offshore,” he said.
The debate now involves two separate questions: how prediction markets should prevent people from exploiting confidential information, and which regulators have the authority to oversee the contracts themselves. Kalshi’s leadership argues that transparent trading can help identify misconduct, while regulators, lawmakers and state authorities continue debating how these markets should be monitored and governed.
