The U.S. Commodity Futures Trading Commission (CFTC) has issued a clear enforcement advisory, asserting its "full authority" to pursue insider trading and market manipulation in prediction markets. This move follows two specific insider trading cases investigated and disciplined by the CFTC-registered prediction market exchange, KalshiEX.
The advisory clarifies that misconduct involving event contracts on federally regulated exchanges falls under the Commodity Exchange Act, specifically Section 6(c)(1) and Rule 180.1, which are the agency's core anti-fraud and anti-manipulation provisions. Mike Selig of the CFTC's enforcement division warned that such violations will not go unchecked.
The two cases that prompted this action offer a rare public look into insider trading in prediction markets. The first, from May 2025, involved Kyle Langford, a candidate in the 2026 California gubernatorial race. Langford traded on contracts tied to his own candidacy and promoted the trades on social media. Kalshi's compliance team contacted him the same day, and he acknowledged violating exchange rules that prohibit trading where one has influence over the outcome. He received a five-year suspension and a $2,246.36 penalty.
The second case, from August-September 2025, involved Artem Kaptur, who was affiliated with a YouTube channel connected to "MrBeast" contracts. Kalshi concluded Kaptur likely traded using material non-public information about upcoming video content before its public release. He was suspended for two years and ordered to pay $20,397.58.
This enforcement stance arrives amid a widening jurisdictional dispute with state gaming authorities. Nevada's Gaming Control Board has sued to block Kalshi from offering sports event contracts to residents, arguing they constitute gambling under state law. The CFTC has filed an amicus brief asserting its exclusive jurisdiction over such event-based derivatives, tracing its oversight back to 1992.
The agency's message is unambiguous: prediction markets operating as registered exchanges are federally regulated derivatives venues, not state-regulated sportsbooks. The immediate future may see the CFTC pursue direct enforcement actions against traders and scrutinize exchange-level compliance controls, while the broader jurisdictional battle is likely to be decided in federal courts.
