CFTC Monitors Prediction Markets for Election Manipulation

The scrutiny follows a period of rapid growth for platforms like Kalshi and Polymarket, which collectively recorded over $500 million in notional volume during the current cycle. While data from Dune indicates that Kalshi maintains an 84% share of the midterm market, regulators are less concerned with volume than with the potential for bad actors to influence outcomes. The commission has already secured settlements against individuals such as former White House staffer Gabriel Perez and ex-Representative George Santos, both of whom were hit with financial penalties and three-year trading bans for leveraging inside information or deceptive social media activity to profit from personal-conduct contracts.

To curb these risks, the CFTC issued guidance in September demanding that exchanges implement rigorous, product-specific safeguards for contracts linked to a person’s words or actions. Legal experts note that while this does not function as an outright ban on such markets, it forces operators to prove their listings are not susceptible to manipulation under federal core principles. Beyond individual enforcement, the commission continues to battle for broader regulatory authority in court, challenging judicial interpretations that would limit its jurisdiction over state-level financial activity.