As prediction markets continue to expand across the United States, experts are raising concerns that regulators may struggle to police insider trading during the upcoming midterm elections. Platforms such as Kalshi and Polymarket have experienced rapid growth in trading activity, with combined monthly volumes reaching approximately $24 billion in April. Recent incidents, including Kalshi suspending three congressional candidates for betting on their own races and an investigation involving former Congressman George Santos, have intensified scrutiny over the industry’s safeguards.
The challenge is expected to grow significantly as voters head to the polls this year, with more than 6,500 federal and state legislative seats up for election. Legal experts warn that election-related prediction markets create unique opportunities for insiders—including campaign staff, pollsters, donors, and political associates—to profit from nonpublic information. Researchers also note that betting markets are becoming increasingly granular, allowing wagers on specific election variables such as voter turnout, margins of victory, and candidate withdrawals, thereby increasing the potential for information asymmetry.
In response, prediction market operators and regulators say they are strengthening oversight measures. Kalshi has introduced restrictions preventing politicians and campaign workers from trading on election outcomes, while Polymarket has expanded monitoring efforts and referred numerous suspicious accounts to law enforcement. However, some former regulators argue that limited staffing at the U.S. Commodity Futures Trading Commission (CFTC) could hinder enforcement efforts as the rapidly growing sector faces its biggest test during the 2026 midterm election cycle.
