The U.S. Commodity Futures Trading Commission (CFTC) announced on Wednesday that it possesses the authority to regulate illegal trading practices within predictions markets. This statement follows an announcement from Kalshi, a leading firm in the sector, that it had identified and reported two instances of potential insider trading to the agency.
The CFTC affirmed its “full authority” to oversee misconduct related to event market contracts, referencing Kalshi’s disclosure of flagging and freezing traders’ accounts involved in the suspected insider trading incidents. Companies registered with the CFTC, like Kalshi, are generally tasked with monitoring their markets for irregularities and reporting any potential misconduct to the regulatory body. Kalshi operates a regulated exchange allowing users to trade on the outcome of future events.
Growing apprehension surrounds insider trading within these emerging markets, with a senior Justice Department official recently highlighting them as a potential area for enforcement. State gaming regulators have also expressed interest in policing these markets, which increasingly compete with established casinos and traditional betting platforms.
The CFTC recently stated in a court filing that it maintains exclusive jurisdiction over such markets, escalating its dispute with state regulators. Neither the CFTC nor Kalshi immediately responded to requests for further clarification on the matter.
