A government oversight organization has raised concerns that the Commodity Futures Trading Commission (CFTC) is allowing prediction markets to operate without proper regulation, likening the situation to the 'Wild West'.
While President Trump addressed the nation on Thursday evening, Kalshi continued to facilitate contracts related to the words he might use during his speech. This occurred despite the suspension of an aide who allegedly exploited his access to make trades on similar markets.
ABC News reported that Gabriel Perez, the aide in question, profited over $100,000 from trades linked to Trump's speeches. Following this incident, he was placed on unpaid leave and is reportedly negotiating a settlement with the CFTC.
This incident highlights ongoing concerns about insider trading in prediction markets, prompting scrutiny from several congressional members regarding whether operators are doing enough to curb such practices.
A July 2025 report from the White House indicated that Perez earned $175,000 while serving as a deputy assistant and technical advisor to President Trump.
In response to the insider trading allegations, Robert J. Denault, Kalshi’s enforcement head, stated on X that the company swiftly flagged and investigated Perez’s activities, subsequently referring the case to the CFTC. Denault emphasized that Kalshi cooperates with regulators and provides all necessary evidence.
Kalshi's platform employs pattern recognition technology to monitor trades, looking for irregularities in win rates and timing. Accounts flagged for suspicious activity are frozen, and the legal team decides on further actions after compliance investigations. Confirmed violations can lead to penalties, including fines and suspensions.
Although the timeline of Kalshi's actions remains unclear, ABC News noted that investigators found Perez had purchased contracts related to multiple Trump speeches between December and March.
The CFTC is responsible for overseeing prediction markets like Kalshi, which are allowed to self-certify events without prior approval. However, critics argue that the CFTC's lax regulatory stance has enabled rampant insider trading.
Craig Holman, a lobbyist for the watchdog group Public Citizen, expressed concerns that political trading has allowed a few individuals to amass significant wealth, suggesting that members of the Trump Administration may have exploited these opportunities. He urged the CFTC to take its regulatory responsibilities seriously.
Kalshi, which launched its prediction market five years ago, saw growth in 2024 after a successful lawsuit against the federal government to offer contracts on elections. The company later expanded into sports betting following Trump's inauguration in January 2025 and appointed Donald Trump Jr. as a strategic advisor.