An effort to ban government officials from making bets on nonpublic government business using prediction markets has picked up an endorsement from the chief executive of a major exchange.
- Kalshi's CEO endorsed a bill that would ban government officials with access to material nonpublic information from trading prediction market contracts tied to policies, actions, or elections.
- Tarek Mansour argued that recent insider trading controversies stem from unregulated offshore platforms, not CFTC-regulated U.S. exchanges such as Kalshi, which already enforce strict insider trading rules.
- The debate comes as prediction markets grow in visibility and volume, face regulatory and public scrutiny, and spark disagreement over whether insider participation undermines fairness or improves forecasting accuracy.
Kalshi CEO Tarek Mansour said in a LinkedIn post on Wednesday that his company is “supportive” of Democratic Rep. Ritchie Torres’ bill that the executive says aims “to affirm the ban on insider trading on prediction markets.”
“Why? Because we already implement it,” Mansour wrote. “However, it's important to emphasize that this American bill only applies to regulated, American companies and not to unregulated, non-American companies, which is where the alleged issues are occurring.”
Torres’ recently announced bill would make it illegal for federal politicians, appointees, and executive agency employees to buy, sell, or exchange prediction market contracts tied to government policies and actions, as well as a "political outcome," if they can also access "material nonpublic information" tied to that transaction.
That legislation comes amid recent controversies involving prediction markets and betting on actions by the U.S. government, namely the strike that was launched on Venezuela.
One user of Polymarket, a technically offshore prediction market that is working toward a full relaunch in the regulated U.S. market, made more than $400,000 off bets tied to the capture of Venezuela’s president, Nicolas Maduro.
BREAKING: Venezuela projected to cave & give the U.S. oil this month.
— Polymarket (@Polymarket) January 7, 2026
> 70% chance.https://t.co/DmYitsyu6p
Mansour, whose company is regulated by the federal Commodity Futures Trading Commission (CFTC), took pains Wednesday to blame recent scandals on platforms operating outside that oversight.
“In prediction markets, recent alleged cases of insider trading are about unregulated, offshore platforms,” Mansour wrote. “Criticizing Nasdaq for something a foreign FX broker does is meaningless: if anything, it helps the foreign player.”
“Prediction markets, like any industry, are not a monolith: there are important distinctions that matter,” the Kalshi CEO added.
Mansour’s concerns about “conflating” CFTC-regulated companies like Kalshi with others comes as prediction markets continue to add customers and as newcomers continue to enter the space.
Those newcomers include DraftKings and FanDuel, two of the biggest providers of online sports betting in the U.S. One of the benefits of prediction markets is that they are federally regulated and are therefore available across the U.S. rather than just in states where sports betting has been legalized.
BREAKING: Ritchie Torres moves to ban political betting by government officials. pic.twitter.com/kR9mukiYPh
— Majority Democrats (@MajorityDems) January 6, 2026
The buying and selling of sports-related event contracts is what’s driving the lion’s share of trading volume for prediction markets at the moment, with investment bank Citizens projecting Wednesday that they account for 80% to 90% of activity. And while Citizens believes prediction markets can generate $10 billion of fee revenue at maturity, their note to clients said this would be “largely driven by non-sports” contracts, such as trading on elections or economics.
Activity at CFTC-regulated prediction markets is still relatively small compared to the business that state-regulated sportsbooks are garnering. Citizens currently sees prediction markets only stealing single-digit market share from sportsbooks, saying, “One bad Monday Night Football game could have the same negative result on EBITDA as the total impact the prediction market space is currently having on the sector.”
“We estimate ~5% of legal sports betting handle is going into prediction markets, or ~$8bn of annualized handle based on our assumptions,” Citizens analyst Jordan Bender wrote.
Even so, prediction markets are still getting a lot of press for themselves, and not all of it is good. The job the CFTC is doing in regulating them is being watched closely, as are its rules for insider trading.
Mansour said Wednesday that Kalshi’s insider trading rules are “adapted” from the rules used by the New York Stock Exchange and the NASDAQ: “If you have material non-public information on a market, you cannot trade it and if you do, you are committing a financial crime.”
“This applies to government employees, policymakers, executives, or anyone who holds information that is legally not meant to be public,” he wrote.
Yet the issue of insider trading via prediction markets isn’t as black and white as one might think, especially with those exchanges purporting to be a source of reliable information on future events. If you want a truly accurate forecast of what’s going to happen, who would know better than insiders?
Coinbase CEO Brian Armstrong, for example, has suggested there could be benefits in allowing insider trading. Another CFTC-regulated entity, PredictIt, does not explicitly forbid insider trading on its platform, which is technically “experimental” and has tighter trading limits.
Yet, that thinking may not cut it with the public or policymakers, who may already be fed up with betting scandals of any kind.
Prediction markets have their fair share of critics already, too, particularly over their offering of sports event contracts that resemble sports betting. The legality of those contracts is being challenged by state regulators and Native American gaming tribes in court, with that litigation ongoing.
Indian Gaming Association Chairman David Bean on Wednesday pointed to the Venezuela bets as an example of “how out of control” prediction markets are.
“We have to make sure this is on our plate, that this is our main course, or main focus, for the immediate future and beyond,” Bean said during the IGA’s “New Normal” webcast. “Because there's always a threat (to Indian gaming), and this is probably the largest threat in the last 10 years, the last decade. So we have to take it seriously.”
