Kalshi CEO Supports Bill to Ban Prediction Market Insider Trading by Government Officials

Kalshi CEO Tarek Mansour has publicly supported a new legislative proposal that would bar government officials from engaging in insider trading on prediction markets. The bill, led by New York Rep. Ritchie Torres, seeks to extend insider trading prohibitions from traditional financial markets to the rapidly growing prediction market sector.

The move comes after a trader on Polymarket made over $400,000 from a well-timed bet on the capture of Venezuelan President Nicolás Maduro. The trade, made just hours before the U.S. military's reported action, has raised concerns about potential misuse of nonpublic information.

Mansour emphasized that Kalshi already enforces strict insider trading rules, adapted from the New York Stock Exchange and NASDAQ. The CEO noted that such rules should not be conflated with those of unregulated offshore platforms, which do not enforce similar prohibitions.

Why Did This Happen?

The initiative follows recent events where a single Polymarket account placed a $32,500 bet on the removal of Maduro by January 31, 2026. The trade settled at nearly $1 per share after his capture, netting more than $400,000 in profit. The rapid and substantial gains have led to speculation about whether the trader had access to nonpublic information.

Rep. Torres' proposed bill, the Public Integrity in Financial Prediction Markets Act of 2026, aims to address this gap. The legislation would prohibit federal elected officials, political appointees, and executive branch employees from trading on contracts related to government policy or political outcomes when they possess nonpublic information through their official roles.

How Did Markets Respond?

The controversy has led to increased scrutiny of prediction market platforms, particularly those like Polymarket, which have not explicitly barred insider trading. Kalshi, in contrast, maintains that its rules prohibit trading on material nonpublic information.

Polymarket has faced additional criticism after failing to honor bets on what users described as a clear "invasion" of Venezuela. Customers accused the platform of redefining terms and failing to honor contracts, raising questions about governance and transparency in the sector.

Kalshi CEO Tarek Mansour has urged lawmakers to distinguish between regulated and unregulated platforms. He warned that conflating the two could provide an unfair advantage to foreign operators and weaken regulatory clarity.

What Are Analysts Watching Next?

The debate over prediction markets has drawn attention from regulators, lawmakers, and investors. Some analysts argue that prediction markets can enhance forecasting accuracy, while others highlight the risks of insider influence.

The CFTC, which regulates Kalshi, is under pressure to ensure that rules for prediction markets are as robust as those in traditional financial markets. The agency has not yet responded to inquiries about the proposed legislation.

The future of prediction markets will likely depend on how well platforms can enforce transparency and deter abuse. With the introduction of the Torres bill, the industry faces increased regulatory scrutiny as it seeks to balance innovation with accountability.