CFTC Enforcement Division Issues Insider Trading Advisory for Prediction Markets, United States, February 2026

On February 25, 2026, the CFTC's Division of Enforcement issued Press Release No. 9185-26, a formal advisory addressing prohibited trading practices on prediction markets regulated under the Commodity Exchange Act (CEA). The advisory followed public disclosure of two enforcement cases involving insider trading and misuse of nonpublic information on KalshiEX LLC, a Designated Contract Market (DCM). The advisory is effective immediately; it does not amend existing regulations but clarifies how the Division will apply existing statutory provisions to event-contract trading.

The Division identified three categories of prohibited conduct. First, misappropriation of confidential information in breach of a pre-existing duty of trust — insider trading — under CEA Section 6(c)(1) and Regulation 180.1(a)(1) and (3). Second, pre-arranged, noncompetitive trading and wash sales under CEA Section 4c(a)(1) and (2)(A) and Regulation 1.38(a). Third, disruptive trading practices under CEA Section 4c(a)(5). In the first disclosed case, Kalshi imposed a $2,246.36 penalty (including $246.36 disgorgement) and a five-year suspension on a political candidate who traded on his own candidacy. In the second case, Kalshi imposed $20,397.58 (including $5,397.58 disgorgement) and a two-year suspension on a YouTube channel editor who traded on advance knowledge of unpublished video content.

Prediction market participants — traders, market makers, and platform employees with material nonpublic information — must treat their activity as fully subject to the same anti-fraud and anti-manipulation obligations that apply to traditional commodity futures traders. DCMs bear an independent duty under CEA Section 5(d) to maintain audit trails, conduct surveillance, and enforce trading rules. The Division stated it will coordinate with DCMs on referral of violations for its own investigation, meaning exchange-level enforcement does not foreclose separate CFTC action.

The advisory does not create safe harbors for participants who self-report or cooperate with exchange investigations. The underlying statutory prohibitions have been in force since the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Participants who engaged in conduct before this advisory was issued remain exposed to enforcement action by the Division.

Prokopiev Law Group advises prediction market operators, exchange participants, and compliance teams on CFTC enforcement matters and DCM regulatory obligations, and maintains a dedicated partner network for derivatives and fintech regulatory work. We welcome inquiries from event-contract platforms, market participants, and technology providers. Our practice covers CFTC compliance, prediction market licensing, anti-manipulation policy design, insider trading defense, DCM rule drafting, and enforcement response.

Source: CFTC Press Release No. 9185-26, "CFTC Enforcement Division Issues Prediction Markets Advisory," February 25, 2026, https://www.cftc.gov/PressRoom/PressReleases/9185-26. Confirmed March 26, 2026.

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