The prediction market Kalshi has suspended and fined three political candidates after an internal investigation found they placed bets on the outcomes of their own elections.
It marks one of the most significant steps yet by a U.S. prediction market to police insider behavior as the industry rapidly expands ahead of the 2026 midterm elections. Prediction markets, which allow users to buy and sell contracts tied to real-world outcomes, have surged in popularity but remain under intense scrutiny from lawmakers and regulators. Prediction markets can be opened for any world event from election results to economic indicators to whether President Donald Trump will drink water during the State of the Union.
The candidates include Matt Klein, a candidate in the Democratic primary for Minnesota’s 2nd Congressional District; Ezekiel Enriquez, who competed in the Republican primary for Texas’ 21st Congressional District; and Mark Moran, a former Democrat running as an independent candidate in Virginia’s U.S. Senate primary.
The three cases involved what Kalshi has described as “political insider trading,” violating exchange rules approved by the Commodity Futures Trading Commission, which regulates how platforms like Kalshi operate and are designed to prevent insider trading and conflicts of interest in event-based markets.
Kalshi said the candidates violated its rules by trading on markets in which they had direct influence. Under Kalshi’s policies, individuals who can affect the outcome of an event, such as candidates in their own races, are prohibited from participating in related contracts.
Five-year suspensions and financial penalties were imposed on all three individuals, according to regulatory documents. Klein and Enriquez accepted responsibility through settlements, resulting in reduced sanctions. Disciplinary action was taken against Moran, who acknowledged placing a wager on his own candidacy in what he described as an attempt to draw attention to perceived flaws in the system.
“Finally, one of the moments I’ve been waiting for. YES, I did bet ~$100 on myself on Kalshi because I wanted to get caught…,” Moran said in a lengthy post on X.
“I traded $100 on myself, knowing this would happen (also knowing that I wouldn’t be vying for the democratic nomination) and the attention it would create to highlight how this company is destroying young men and as Senator I will go after Kalshi,” he said.
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Klein was fined $539.85, Enriquez received a $784.20 penalty and Moran faces the largest fine at $6,229.30.
“Just like in traditional financial markets, bad actors will try to cheat. Regulated exchanges must constantly evolve and adapt their systems to address insider threats,” Bobby DeNault, the head of enforcement and legal counsel at Kalshi, said in a press release. “These three cases are an example of how developing proactive engineering solutions can help identify illicit trading activity.”
Kalshi said the suspensions underscore its commitment to maintaining fair markets. The company had already moved in recent months to tighten restrictions, including plans to preemptively block politicians and athletes from trading on their own campaigns or sporting events. Those measures came amid mounting bipartisan concern in Washington that prediction markets could enable insider trading or manipulation if left unchecked.
The controversy surrounding the three candidates isn’t the first wave of enforcement actions. Earlier this year, Kalshi penalized a California gubernatorial candidate and a social media influencer for similar violations.
Regulators are also paying closer attention. The CFTC has increased its scrutiny of insider trading cases, while states and federal lawmakers consider new restrictions on the industry. Congress is also considering legislation that could impose new limits on prediction markets or restrict participation by certain groups, including elected officials and government employees.
Ebony Davis is a breaking news reporter for MS NOW based in Washington, D.C. She previously worked at CNN as a campaign reporter covering elections and politics.