Federal regulators recently opened an insider trading investigation into former Rep. George Santos for allegedly betting against his own attendance at President Donald Trump’s State of the Union on the prediction market Kalshi. Santos publicly said he would be there, placed his bet, and then never showed up. He is the latest in a fast-growing list of insiders exploiting these platforms, and the cases are coming faster than the rules.
It’s not hard to see why prediction markets are surging in popularity and experiencing a huge boom. Platforms such as Polymarket and Kalshi give people a fun way to wager on real-world news, from elections to economic indicators to whether it’s going to rain next week. And as the classic line goes, if you “want to make things interesting,” put $20 on it.
But there’s a serious and growing problem here, and it is going to spill from financial pages onto front pages faster than most companies, lawmakers or public figures are prepared for. The very people best positioned to know what happens next, or to make it happen, are taking advantage of this new, frictionless way to cash in.
The headlines so far are a preview of what is coming, and the companies, agencies and campaigns most likely to find themselves in the next story have barely begun to plan for it.
The Commodity Futures Trading Commission filed its first-ever insider trading complaint involving a prediction market in April. The defendant, an active-duty U.S. soldier who was also criminally indicted by the Justice Department, allegedly used classified information about the military operation to capture Nicolás Maduro in Venezuela to pocket a $400,000 windfall on Polymarket. A soldier betting on a mission he helped plan turns a rigged payout into a national security risk.
When the U.S. and Israel struck Iran in February, prediction-market traders wagered over half a billion dollars on the timing of the strikes and whether Supreme Leader Ali Khamenei would be ousted by a set date. Khamenei was killed on Feb. 28, and a handful of accounts that had bought in shortly before the strikes walked away with more than a million dollars in profit combined.
The episode saw critics branding the platforms “assassination markets,” as many expressed outrage at the idea of profiting off political violence. A system that pays out when a named person dies by a deadline rewards anyone positioned to make that death happen on schedule. The backlash from lawmakers has been fierce and bipartisan, and new legislation aimed at banning these “death bets” was quickly introduced.
A similar reckoning is taking shape inside corporate America, where these platforms increasingly let insiders turn confidential information into cash. Polymarket announced in May that it will host markets on the valuations of major private companies, while Kalshi already offers contracts on when firms such as SpaceX and OpenAI will go public. The category is brand-new, growing fast and tailor-made for abuse. But the risk reaches any employee with access to information the public does not have.
Meanwhile, federal prosecutors charged a Google software engineer who allegedly used internal search data to bet on Polymarket that a particular singer would top the company’s most-searched list for 2025, a result the market had priced as nearly impossible. He knew otherwise, collected $1.2 million and now faces charges of commodities fraud, wire fraud and money laundering.
He will not be the last. Any employee, board member or adviser with early sight of a coming IPO, funding round, executive change or other material information at a well-known company now has a frictionless place to convert what they know into money. With suspicious activity already being flagged across these platforms, more cases are coming, and when they surface, the damage will not stop at the individual. It will land on the organization whose information was traded.
The same exposure runs straight through public office, where the possibilities for corruption are rife. As the news with Santos demonstrates, it is remarkably easy for a lawmaker or staffer to turn the access that comes with the job into a wager that pays off in days, whether the edge is advance sight of legislation, a pending regulatory decision or a brewing geopolitical move. In May, House Oversight Committee Chairman James Comer launched a congressional probe into insider trading on Polymarket and Kalshi, calling the current landscape “the Wild West.”
Reputation is the single most valuable asset any company, politician or public figure possesses, and it is one of the first things that prediction-market scandals come for. Organizations whose employees touch confidential information, campaigns whose staffers handle privileged communications and agencies whose people see decisions before the public does should be writing prediction-market policies into their codes of conduct and mapping out crisis response plans now.
We’ve seen this pattern before with social media, crypto and ridesharing. A new technology is widely adopted, the law lags, the early cases set the public’s impression of the whole industry and the leaders who waited to be told what to do end up on the wrong side of the news.
Lawmakers and regulators have their own work ahead of them, and the bills on the table are a reasonable starting point. But the leaders exposed to this risk cannot wait on Washington’s timeline. Legislation moves slowly. Technology and reputation do not.