In 2026, Kalshi has identified over 50 traders, while Polymarket has flagged more than 90. However, the Commodity Futures Trading Commission (CFTC) has only initiated action against three individuals so far.
Prediction market platforms are increasingly flagging potential cases of insider trading, putting pressure on a federal regulator that is already functioning with its smallest workforce in two decades.
According to a report by The New York Times, Kalshi referred 32 potential insider trading cases to the CFTC in the three months leading up to June. Currently, there are about 20 ongoing investigations that are exclusively based on Kalshi's findings. Additionally, there are around a dozen other prediction market platforms operating within the United States.
Despite the significant number of flagged cases, the CFTC has only pursued civil charges against three traders in the prediction market sector.
One of the contributing factors to this limited enforcement is the CFTC's reduced staffing levels, which are at their lowest in at least 20 years. Cuts initiated during the Trump administration have significantly impacted the agency's workforce, leaving an enforcement division of approximately 100 personnel to oversee a vast multitrillion-dollar commodities market.
This staffing issue is particularly evident in Chicago, where the CFTC's enforcement division has gone from about 20 trial attorneys to nearly none after the last remaining trial lawyer resigned in February.
Most of the departures were voluntary, with many employees accepting early retirement offers. In fiscal 2024, the agency recorded 58 enforcement actions and achieved a remarkable $17.1 billion in monetary relief. However, in the year following the administration change, only 11 enforcement actions were taken, yielding less than $1 billion in relief, with less than $10 million attributed to actions by the current administration.
The staffing situation has also attracted the attention of Congress. Senator Elizabeth Warren requested an investigation by the Government Accountability Office (GAO) in July to assess the impact of CFTC's workforce reductions on enforcement activities. Warren noted a 25% decline in staffing since January 2025, while the agency's responsibilities are expected to grow with the rise of prediction markets and digital assets.
Warren expressed concerns about the potential negative effects of staffing cuts on the CFTC's ability to fulfill its legal obligations, urging a thorough review by the GAO.
Leadership at the CFTC remains sparse, with Chair Michael Selig being the only active member of the five-person commission. He has consistently assured that the agency will take action against those engaging in illegal trading based on confidential information.
Former enforcement attorney David Slovick has raised doubts about whether the current staffing levels are sufficient for effective market oversight.
Moreover, existing regulations pose additional challenges for even a fully staffed agency. The current framework for monitoring insider trading has been developed over decades and primarily addresses stocks and commodities. The emergence of prediction markets has expanded this landscape, necessitating regulators to oversee behaviors that go beyond the mere misappropriation of corporate confidential information.
Some actions may also fall outside the bounds of existing laws. For instance, former New York Congressman George Santos was fined $35,000 after profiting $17,000 on Kalshi by betting on his attendance at the State of the Union address. The CFTC charged him with market manipulation instead of insider trading, alleging that he...