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.
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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.
Pew Research: Prediction Market Volume Doubled May-July, Sports Now Largest Category
A Pew Research Center analysis published September 23 found that combined monthly trading volume on Kalshi and Polymarket more than doubled from May to July 2026 — rising from $26 billion in May to $53 billion in July — driven primarily by sports contracts. Sports is now the largest trading category on both platforms. During the FIFA World Cup in June and July, Kalshi's monthly sports volume reached $58 billion. Over the same period, Americans wagered roughly $40 billion at licensed sportsbooks — suggesting prediction market sports volume has approached or exceeded licensed sports betting in dollar terms.
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