Prediction Markets Open New Loophole for Political Insider Trading

Political candidates and staff can now trade Kalshi prediction market contracts on legislation they influence—a gap in enforcement similar to the STOCK Act's weak prosecution record. Unlike equity trades, which are disclosed and carry legal risk, event contracts settle in cash with minimal oversight. The CFTC's regulatory authority closes this gap in theory, but depends on active surveillance and prosecutorial will to enforce. Prediction markets face the same lag that plagued options markets decades ago.