Record $71B Volume Overshadowed by Wash-Trading Scrutiny — Kalshi Ends Liquidity Incentive Program
Kalshi and Polymarket posted a record combined $71 billion in September 2026 volume, but the milestone was overshadowed by questions about how much is genuine. The Wall Street Journal reported the CFTC is examining repeated ~$5,500 trades on Kalshi that generated over $5 billion in Ethereum perpetual volume in a month — over a third of Kalshi's ETH volume. Polymarket faced questions over suspiciously high volume on low-probability World Cup contracts. Kalshi denied wash trading and filed on September 30 to end its liquidity incentive programme.
Kalshi and Polymarket collectively recorded a record $71 billion in trading volume in September 2026 — the highest monthly combined total in the sector's history — as volume surged ahead of the November midterms and through the NFL season. But the record was immediately shadowed by questions about how much of the volume is genuine. The Wall Street Journal reported on September 30 that the CFTC is examining trades on Kalshi after allegations that repeated near-identical ~$5,500 trades inflated its Ethereum perpetual futures volume. Trades at that size generated more than $5 billion in ETH perpetual volume over a month, and over a third of Kalshi's ETH volume consisted of rapid trades clustered at the same order size — the signature surveillance systems flag as potential wash trading, where a trader transacts with themselves to fake activity without real risk.
For UK readers, wash trading is a recognised form of market manipulation prohibited under the Market Abuse Regulation (MAR) and policed by the FCA for UK-regulated venues. The practice creates a false impression of liquidity and activity, which can mislead other participants and — relevant here — inflate the headline volume figures that investors use to value a trading venue. Kalshi rejected the characterisation, attributing the repeated prints to market makers posting fixed quotes that faster traders hit, a legitimate market-making dynamic. Kalshi also said it is not under formal investigation, distinguishing the CFTC examining trading patterns (routine surveillance) from a formal probe into the company. On September 30, Kalshi filed to end its liquidity incentive programme — removing the financial reward for market-making that critics argued could motivate artificial volume.
Polymarket faced a different volume anomaly. Observers flagged unusually high trading on low-probability contracts at its international venue. For the 2026 FIFA World Cup, $152 million traded on Spain's odds to win — but $158 million traded on Egypt's odds despite Egypt never crossing 0.5% probability, and a comparable amount on Morocco's, which never exceeded 2%. Genuine interest typically scales with realistic probability; a near-zero-probability contract out-trading a favourite is the kind of anomaly that suggests the volume is not genuine directional betting. Low-odds contracts are also the cheapest place to wash trade, because the contract trades at a low price and large notional volume can be generated with little capital at risk.
The scrutiny matters because volume is the headline metric underpinning both valuations. Kalshi is closing a round at $40 billion; Polymarket raised at $15-20 billion. Those figures are justified partly by the volume growth — from under $10 billion combined monthly in late 2025 to $71 billion in September 2026. If a material share of that volume is inflated by wash trading or incentivised market-making rather than genuine demand, the growth narrative supporting the valuations is weaker than the headline suggests. The CFTC's focus on Ethereum perpetual volume is significant because perps are Kalshi's newest institutional product, launched to compete with crypto exchanges — if that volume is substantially inflated, it undermines the institutional-adoption story behind the perps expansion. For a sector heading toward public markets, the integrity of volume reporting is now a first-order question, not a footnote.
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Recent updates
Utah Files Felony Charges Against Kalshi and Its Founders — Second State to Criminally Charge a Platform
Utah filed criminal charges against Kalshi and its two co-founders, Tarek Mansour and Luana Lopes Lara, on October 28 — 13 felonies and a misdemeanour, including a second-degree 'pattern of unlawful criminal activity' count and 12 counts of online gambling promotion. The charges stem from a September sting in which an undercover agent placed 12 sports wagers verified to be in Utah. The CFTC sued Utah the day before to block state enforcement, its tenth such suit. Utah is the second state after Arizona to criminally charge Kalshi, and the first to charge the founders personally. Kalshi called it a 'crazy overreach.'
NBA Names Kalshi and Polymarket Preferred Exchanges — Leaving the NFL Alone in Opposition
The NBA announced on October 26 that it has named Kalshi and Polymarket its 'preferred prediction market exchanges,' signed a non-binding memorandum of understanding with the CFTC on basketball integrity, and expanded its DraftKings deal to include prediction markets — the first league to extend a sportsbook partnership into the category. The exchange deals bar league and team personnel from trading NBA contracts, limit permissible markets, and require sharing suspicious-trading data, in exchange for NBA intellectual property and official data. The NBA joins MLB, the NHL, and MLS as partnered leagues, leaving the NFL as the lone major holdout — and the only league fighting the platforms in court.
CFTC Chair Says Agency Is Watching Prediction Markets for Manipulation Ahead of Midterms
CFTC Chairman Michael Selig said on October 23 that the agency is closely monitoring prediction markets for manipulation ahead of the November 3 midterms, and that it is separately scrutinising oil market trading tied to President Trump's announcements about the war in Iran. Combined midterm open interest on Kalshi and Polymarket stood at $250 million as of October 18, with Kalshi holding 84%. Selig acknowledged the agency often catches political figures trading 'oftentimes after the fact.' The remarks highlight the CFTC's dual role as both the platforms' federal protector and their manipulation watchdog.