CNN: insider-trading risk becomes the midterm-market storyline
The expansion of midterm prediction markets is sharpening questions about who can trade on information before it becomes public. An analysis by the nonpartisan Anti-Corruption Data Collective, first obtained by CNN, found an average of 44 granular markets per race beyond the election result itself. These contracts have generated more than $20 million in trading volume, according to CNN.
Kalshi and Polymarket both offer markets covering every Senate, House and governor’s race this year. Their additional contracts concern candidate withdrawals, endorsements, campaign locations, debate arrangements, House redistricting and words spoken at political events. CNN cited questions about Vice President JD Vance’s Friday campaigning in Ohio, whether Texas Senate candidates would debate by this Thursday, and further endorsements from former President Barack Obama during his endorsement activity this week. Such events differ from election results because some participants may already know—or help determine—what will happen.
Expansion brings an information problem
Michael Hornsby, co-director of the nonprofit Anti-Corruption Data Collective, told CNN that these markets can reward access held by candidates, campaign personnel and their associates. The regulatory backdrop has become more favorable to election trading: a federal appeals court rejected the Biden administration’s attempt to prohibit election-outcome markets in October 2024, while the Trump administration is completing federal regulations that would support their continued expansion. CNN disclosed that it partners with Kalshi and uses its data, but bars editorial employees from prediction-market trading and prohibits using market data when one person can determine the outcome.
The risks have already produced enforcement action. According to CNN, President Donald Trump’s White House teleprompter operator was caught trading on inside information in Kalshi contracts concerning words in Trump speeches this summer, settling a federal civil investigation with a $65,000 fine. Kalshi has also suspended at least six 2026 candidates this year for trading on their own races, contrary to its rules. Both platforms say they prohibit insider trading.
Maine withdrawal contracts draw scrutiny
The watchdog’s report identified potentially suspicious trading around whether Graham Platner would leave the Maine Senate contest. Platner secured the Democratic nomination in June; a few weeks later, an ex-girlfriend publicly accused him of rape, which he denied. His party support deteriorated, and he withdrew within days. Researchers identified dozens of potentially connected trades backing the low-probability withdrawal outcome, made the night before and immediately before the allegation became public, according to CNN.
Those trades do not establish insider trading and may have been unrelated. A Democratic operative told CNN that talk of a damaging forthcoming story had circulated at least one week beforehand and had spread in Maine and DC. CNN noted that campaign employees, donors, opposition researchers from both parties, reporters, and the accuser’s relatives and friends could potentially have learned of the allegation before publication. That leaves open whether any trader had confidential information, heard a rumor or acted independently.
Platforms point to screening and investigations
Kalshi’s head of enforcement, Bobby DeNault, told CNN that narrowly defined information can sometimes make suspected insider trading easier to establish. During a Tuesday call with reporters, the company’s top lobbyist, John Bivona, said Kalshi screens customers and blocks participation where they could affect an outcome, including candidates, campaign staffers, party officials, vendors, pollsters and election workers. He said its standards exceed federal insider-trading requirements and that every trade is checked for unusual timing and coordination.
Polymarket told CNN it has hired a former FBI official to run investigations, regularly sends cases to the Justice Department for potential prosecution and operates surveillance with protections specific to political contracts. It argues that its markets broaden access to information otherwise concentrated among political insiders, lobbyists and donors. Federal law, meanwhile, criminalizes trading on nonpublic information when a confidentiality obligation applies, such as with trade secrets or government intelligence; liability can also extend to someone trading on a tip from a person bound by that obligation, according to CNN.
What it means for prediction markets
- Contract design changes the information risk. Endorsements, withdrawals and planned remarks can be known in advance by a small group, unlike an unresolved election outcome.
- Unusual trades are evidence to examine, not proof. The Platner findings flag timing and possible connections but do not establish that traders used inside information.
- Platform restrictions and federal law are distinct. Kalshi’s candidate suspensions concern its own rules; criminal insider-trading questions turn on additional legal requirements.
- Enforcement is becoming part of the midterm-market story. Screening, surveillance and investigative referrals are central to how platforms say they are managing the growth of granular political contracts.