In Washington, there is plenty of information that can move a market. A government official may know what a president is preparing to announce, whether a particular policy is about to change, or which officials will attend a major event. As prediction markets increasingly list contracts tied to political decisions and government activity, that information can become directly tradable.
The issue is already emerging on Kalshi, which has become one of the industry’s largest platforms. The company has spent years building surveillance systems designed to identify suspicious trading, and Kalshi tells Fortune it has begun aggressively referring suspected misconduct to federal authorities.
“Being federally regulated means that Kalshi bans market manipulation, insider trading, has limits on the types of markets it lists… and publicly reports all trades to the CFTC daily,” Laura Frank, a Kalshi spokesperson, told Fortune. “We have also spent years building custom prediction market trade surveillance and enforcement systems that are similar to those used in the stock market.”
Kalshi’s terms of service and exchange rules prohibit market manipulation and insider trading. Users must complete identity verification before they can trade, and Kalshi says its systems monitor activity for potential violations.
Earlier this year, those systems flagged trades by former Congressman George Santos connected to markets related to the State of the Union address. According to Kalshi, the company was able to investigate and refer the matter to the Commodity Futures Trading Commission, providing the evidence to authorities. Kalshi is also pursuing its own enforcement action against Santos for violating the exchange’s rules. If monetary penalties are recovered, the company told Fortune it will work to reimburse affected traders.
Federal authorities have also examined the trading activity of Gabriel Perez, a former White House teleprompter operator. Officials have investigated whether Perez used advanced knowledge of Trump’s prepared remarks to trade on Kalshi markets tied to particular words or topics that would appear in presidential speeches.
Columbia Law professor Joshua Mitts and University of Haifa professor of law Moran Ofir wrote in a study that bets on prediction markets achieved a nearly 70% win rate, “well in excess of chance,” estimating that the traders earned $143 million in profit.
While prediction markets have staunchly opposed allowing insider trading to occur on their platforms, Robin Hanson—professor at George Mason University and prediction market pioneer—argues insider trading is necessary. He previously told Fortune that “you want them trading,”referring to insiders, because “the purpose of the market is to inform decisions.”
Amid the debate about insider information, the Trump family is increasingly getting into the prediction market business.
President Donald Trump’s media company, Trump Media & Technology Group, is developing TruthPredict, a prediction market that would allow users to trade contracts tied to major events and milestones. At the same time, the company launched Truth API, a premium service that gives Wall Street rapid, machine-readable access to posts on Truth Social—including Trump’s own—potentially allowing traders to react to market-moving information seconds before it reaches the general public.
The combination is creating an unusual new financial ecosystem around the presidency. Trump’s public statements can move markets, investors can pay for faster access to those statements, and a Trump-backed company is building a platform to let users wager on political and economic outcomes. And Trump’s family is already deeply connected to the prediction market industry.
Donald Trump Jr. is a paid strategic advisor to Kalshi, while his venture capital firm 1789 Capital invested in rival prediction market Polymarket. Trump Jr. also joined Polymarket’s advisory board last year.
That means the president’s eldest son has relationships with both of the industry’s biggest prediction market companies while his father is developing a competing platform of his own. There is no public evidence that Trump Jr. has used privileged government information to trade on either platform.
Donald Trump Jr.’s team and Trump Media & Technology Group did not immediately respond to a request for comment.
