Kalshi Suspends Congressional Candidate for Trading on Own Race — Senate Already Banned Members
Kalshi disclosed on August 31 that it suspended North Carolina congressional candidate Laurie Buckhout for three years and fined her $2,589 for trading on her own race — the first publicly known enforcement action against a candidate for prediction market insider trading. Kalshi said it found multiple politicians trading on races they were involved in, including former Congressman George Santos. The Senate had unanimously banned its members and staffers from prediction market trading on April 30. CNN published a major feature on September 24 documenting election officials' concerns about disinformation and insider trading risk from prediction markets as the midterms approach.
Kalshi disclosed on August 31, 2026 that it had suspended North Carolina's First Congressional District Republican candidate Laurie Buckhout for three years and fined her $2,589 for trading on prediction market contracts tied to her own congressional race. Buckhout, who is challenging Democratic incumbent Don Davis in a rematch of their narrow 2024 contest (Davis won 49.5%-47.8%, a margin of roughly 6,000 votes), admitted to placing less than $1,000 in bets on her own race, which Kalshi's rules prohibit for anyone who is a 'decision maker' or has 'any influence, directly or indirectly' over an event's outcome. Kalshi said the Buckhout case was part of a broader national investigation that found multiple politicians trading on races they were involved in, including former Congressman George Santos. The Buckhout suspension is the first publicly known enforcement action by a prediction market platform against a candidate for insider trading on their own campaign.
Kalshi's disclosure comes amid growing scrutiny of insider trading risks on prediction market election contracts. The Senate voted unanimously on April 30, 2026 to ban its members and staffers from trading on prediction markets — a resolution introduced by Sen. Bernie Moreno (R-Ohio) that passed without a roll call vote and went into effect immediately. The Senate action was prompted in part by a separate incident: a US Special Forces soldier was arrested for allegedly betting on a classified operation to capture Venezuelan President Nicolas Maduro based on non-public military information. Senate Minority Leader Chuck Schumer called on the House and the Trump administration to adopt similar bans after the Senate resolution passed; neither the House nor the executive branch has acted on that call as of September 2026. The Senate ban addresses the risk of members trading on legislative outcomes they influence — a prediction market equivalent of the congressional stock trading problem that prompted STOCK Act debates — but does not cover candidates who are not yet members.
A CNN feature published September 24 reported that election officials across multiple states have raised concerns about prediction market election contracts on two grounds. First, several officials told CNN that prediction markets foster disinformation: when market odds diverge from polling averages, some candidates and their supporters cite the market prices as evidence of hidden momentum or fraud, a dynamic that election administrators fear could further erode confidence in election results if the market proves wrong. Second, officials pointed to the broader insider trading risk beyond the Buckhout case: anyone with access to non-public information about an election — campaign staff, polling firm employees, political consultants — could in theory profit from trading on that information, and the SEC-style information barriers that prevent insider trading in financial markets do not fully map onto election information. Kalshi and Polymarket have said they maintain insider trading protections required by federal law, but those protections were designed for commodity event contracts, not for electoral politics where 'material non-public information' is harder to define and enforce.
The credibility of election prediction markets received a notable hit earlier in 2026 when Kalshi's market heavily favored the losing candidate in a Wisconsin gubernatorial primary. The incident was not the first prediction market accuracy miss — markets had been wrong on several 2024 primary outcomes as well — but it came at a moment when election officials and critics were closely watching the platforms' track record on electoral forecasting. The tension between prediction markets' strong overall track record (including the September Fed hike and the Senate control flip) and their individual-race accuracy in lower-volume primaries reflects a fundamental feature of the technology: liquid markets with high trading volume aggregate information well; thinly traded individual-race markets with few informed participants can be just as noisy as traditional polling. As the November 3 midterms approach, with more than 500 active election markets across Kalshi and Polymarket and over $750 million in combined election contract volume, the sector faces both its highest-profile election test and its highest institutional scrutiny simultaneously.
Operators mentioned in this article
Recent updates
Kalshi's Parlays Drive Back-to-Back $5B Days — and Hand Critics Their Strongest Argument
Kalshi traded a record $5.33 billion on November 7 and $5.36 billion on November 8, with multi-leg parlay-style 'combos' making up roughly 75% of both days' volume. Its 30-day volume topped $100 billion. But the parlay dominance cuts against the platform's legal defense: parlays are a quintessential sportsbook product, and the American Gaming Association has told the Second Circuit that parlays make up about two-thirds of Kalshi's volume and should be treated as sports bets. The implied house edge on 10-plus-leg combos is around 25%, undercutting the argument that these are neutral financial instruments rather than gambling.
Cruz Bill Would Require State or Tribal Approval for Sports Contracts — a Bipartisan Legislative Threat Emerges
Senator Ted Cruz, who chairs the Senate Commerce Committee, is preparing a bill that would bar federally regulated prediction markets from offering gambling-tied event contracts, including sports, unless a state or tribal government authorizes them. It would not ban the contracts nationwide but would require platforms to obtain approval jurisdiction by jurisdiction, resembling state-by-state sportsbook regulation. The proposal arrives as Democrats take control of both chambers after the midterms, creating a potential bipartisan reckoning: a Republican committee chair and a newly skeptical Democratic majority both eyeing restrictions on a sector that had relied on federal protection.
CFTC Tells Platforms to Stop Geofencing States — Directly Colliding With State Court Orders
The CFTC issued an interpretation on November 5 of its 'impartial access' core principle, telling regulated exchanges including Kalshi and Polymarket to drop state-by-state geographic blocks within 30 days or explain why they cannot. The demand collides head-on with existing state court orders that require the platforms to geofence: Washington ordered Kalshi to geofence in August, and Michigan ordered it to use licensed geolocation to block the state in September, with a $500,000 daily fine for violations. Chairman Michael Selig framed the interpretation as a uniformity requirement. The platforms are now caught between a federal demand to unblock states and state court orders to block them.