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Kalshi reported an employee of YouTube star MrBeast to federal authorities for allegedly using inside information to place well-timed bets on its platform. It’s the first time Kalshi has done so — a recognition that, even in the wild west of prediction markets, insider trading is bad for business.
“If people don’t trust [our markets], they’re not going to use them,” Robert DeNault, Kalshi’s head of enforcement, said in an interview. “And if we can’t get them to use them, we don’t get pricing accuracy.”
A growing number of bets that seemed too on the nose — on the capture of Nicolás Maduro, the winner of the Nobel Peace Prize, the Super Bowl halftime show, Google’s 2025 Year in Search rankings, and that proof of aliens exists, to name a few — have put Kalshi and rival Polymarket on the defensive.
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Complicating prediction markets’ enforcement efforts, and any case that regulators will now undertake, is that insider trading law is squishy, and less about fairness than about misappropriation of information. The strongest legal case here may belong to Beast Industries itself, which owned the information (related to MrBeast’s upcoming video content) that informed the employee’s wagers. Beast Industries’ CEO told CNBC Thursday it suspended the employee as it investigates whether he violated a policy it put in place a few months ago on employee use of prediction markets.
Kalshi’s DeNault said the vast majority of trades flagged through its internal alert system are cleared after investigation. Remember the big wager on Iran strikes, which the internet was convinced was a Pentagon staffer? “That’s just a person who had a lot of confidence in a trade and was wrong,” DeNault said.