Study Finds $143M in Polymarket Insider Trading; Kalshi Fines Candidates and Issues $2.2M Refund
A law school study flagged $143 million in suspected insider-trading profits on Polymarket over two years and over 200,000 suspicious trades. Separately, Kalshi fined three political candidates who bet on their own races and issued $2.2M in refunds after a disputed Khamenei market.
Two law professors published findings in late March 2026 documenting $143 million in suspected insider-trading profits on Polymarket between February 2024 and February 2026. Using publicly available on-chain blockchain data, the study flagged more than 200,000 individual bets with patterns consistent with non-public information: large positions placed in the minutes before news events became public and outsized sizing on markets that resolved in the trader's favor at long odds.
The methodology relied on Polymarket's own transparency. Every trade on the platform is recorded permanently on the Polygon blockchain and publicly visible, unlike traditional financial markets where reporting is delayed by days. The researchers found the same cluster of wallets repeatedly profiting immediately before major political and geopolitical announcements, a pattern they described as inconsistent with superior forecasting ability. They provided wallet address patterns to the CFTC. The same on-chain visibility Polymarket cites as a consumer protection feature is what made the pattern detectable from public data alone.
The CFTC's capacity to act on those referrals is under strain. The commission's workforce has fallen 24% since January 2025, the steepest proportional staffing cut in its modern history, at the same time that prediction market volume has surged into the billions of dollars annually. A pending CFTC reauthorization bill includes a provision to restore enforcement staffing but its passage is uncertain. The April 24 Van Dyke prosecution was brought by the Department of Justice rather than the CFTC, suggesting meaningful federal enforcement of prediction market insider trading is increasingly falling to DOJ rather than to the designated commodity regulator.
Kalshi has pursued self-enforcement in parallel. The platform fined three political candidates who traded on their own race outcomes: a Democratic primary candidate in Minnesota's 2nd Congressional District (fined $539.85), a Republican primary candidate in Texas's 21st Congressional District (fined $784.20), and a Democratic US Senate primary candidate in Virginia who refused to settle and was assessed $6,229.30 plus any trading gains. Kalshi also issued $2.2 million in refunds following a disputed market on Iranian Supreme Leader Ali Khamenei's tenure in office, after Khamenei was killed at the start of a regional conflict, and now faces civil litigation over that settlement.
Operators mentioned in this article
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 misdemeanor, 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 of 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 scrutinizing 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 attempting to trade 'oftentimes after the fact.' The remarks highlight the CFTC's dual and somewhat conflicting role as both the platforms' federal protector and their manipulation watchdog, at a time when the agency has shed enforcement staff.