Kalshi launches ‘whistleblower’ function to oust insider traders as lawmakers circle

Kalshi is turning to its growing community to help the prediction market flag insider trading.

The $22 billion company issued several key steps on Tuesday to better monitor and block users who breach Kalshi’s terms and conditions.

In a post, Kalshi shared a new “report insider trading” button that appears under relevant markets.

To be sure, the whistleblowing functionality is just one component of a larger push from Kalshi to better police its platform.

The company said it had launched tools to preemptively block political candidates from betting on the outcome of their campaigns. Likewise, athletes and referees will be blocked from betting on event outcomes tied to the leagues they play in or arbitrate.

“No screening system is perfect, and bad actors will always try to cheat,” Kalshi CEO Tarek Mansour said on Tuesday. “We added a whistleblower functionality in our market page to make it easier for traders to flag potential violations.”

The new tools come amid mounting pressure from lawmakers in Washington.

Prediction market bills

On Monday, Democratic Senator Adam Schiff introduced his second bill on prediction markets.

The Prediction Markets Are Gambling Act would prohibit prediction markets from listing event contracts for sports betting-related markets. Republican Senator John Curtis also co-sponsored the bill.

“Sports prediction contracts are sports bets — just with a different name,” said Schiff. “And yet, these contracts are currently offered in all 50 states in clear violation of state and federal law.”

The first bill Senator Schiff introduced was the DEATH BETS Act on March 10, co-sponsored by California representative Mike Levin, which seeks to explicitly ban event contracts related to war, terrorism, assassination, or an individual’s death.

The bill emerged shortly after markets on Kalshi and Polymarket closed markets related to the outcome of military strikes on Iran on February 28.

Whether that bill will prove effective is up for debate.

“The same can be said of the opportunity to buy stocks, futures, options, and other products on oil or other securities whose price is correlated to war,” Harry Crane, a professor of statistics at Rutgers University, told DL News.

In total, lawmakers have brought six different bills to rein in prediction markets this year.

The Commissioner of the Commodity Futures Trading Commission, Michael Selig, has already issued his full-throated support of prediction markets as well as hammered home that their oversight falls exclusively within the CFTC’s jurisdiction.

“We’re in the very early stages of this industry,” Crane said. “Stakeholders have taken steps to ensure market integrity already, and those measures will only get more robust as the industry matures.”

Liam Kelly is DL News’ Berlin-based DeFi correspondent. Have a tip? Get in touch at [email protected].