Coalition for Prediction Markets Distances Itself From Suspected Insider Trading on Polymarket
A trade group that includes Kalshi, but not Polymarket, ran a full-page ad in the Washington Post as concerns about insider trading grow.
The Coalition for Prediction Markets took out a full-page ad in the Washington Post on Wednesday to counter accusations that the platforms encourage insider trading — while taking a veiled shot at Polymarket.
There have been numerous suspicious trades on prediction markets recently. Most notably, a suspected insider profited $409,882 on Polymarket by betting that Venezuelan President Nicolás Maduro would be removed from power just hours before he was captured by US forces.
Kalshi, Coinbase, Crypto.com, Robinhood, and Underdog are all members of the trade group. Polymarket is not.
The ad is meant to draw “a clear contrast with offshore platforms where concerning scandals such as the Maduro trade have occurred,” a CPM spokesperson told Business Insider.
“CFTC Regulated Prediction Markets Already Ban Insider Trading,” the ad shouts, followed by a checklist comparing US-based and offshore platforms.
A Seven-Figure Campaign
The ad is part of a seven-figure marketing campaign by the Coalition for Prediction Markets, as the companies push back against a wave of criticism around a perceived lack of oversight.
The group touts trustworthiness and transparency as prediction markets are under increasing fire for being anything but.
The Maduro incident is one of several suspected of insider trading. Another Polymarket trader is believed to have had inside information about Google data after he profited around $1 million betting on “Year in Search” outcomes.
While Kalshi has confirmed it bans insider trading, Polymarket has yet to make a similar public statement and does not have rules expressly prohibiting it.
Beyond insider trading, prediction markets offer potentially manipulable markets. In October, Coinbase CEO Brian Armstrong closed his company’s Q3 earnings call by deliberately mentioning words he acknowledged people were trading on.
“Bitcoin, Ethereum, blockchain, staking, and Web3,” Armstrong said, “just having some fun.”
The coalition now appears to be taking these types of concerns head-on.
The newspaper ad notes the regulated sector carefully vets customers and operates under the oversight of the CFTC.
Congress’ Involvement
Bills are already moving through Congress that would make it illegal to engage in insider trading on prediction sites. Representative Ritchie Torres introduced the measure the day after the Maduro betting scandal emerged.
The CPM hired two former congressmen to help navigate the political waters – Democrat Sean Patrick Maloney as CEO and President and Republican Patrick McHenry as Senior Advisor.
State authorities are not relenting, as they believe prediction markets are operating as unregulated sportsbooks within their borders.
Platforms are investing more heavily in government relations. Kalshi underlined this push on Jan. 26 by announcing the opening of a Washington, D.C., office.
Social Media Offensive
The Coalition for Prediction Markets’ X (formerly Twitter) page makes for interesting reading. Over the past week, it pushed back against the American Gaming Association’s claim that prediction markets hurt state tax revenues:
It also responded to a Financial Times article stating that the coalition wants federal authorities to “police unregulated activity” that gives legitimate operators “a bad name.”
On Jan. 21, the coalition posted a video featuring Maloney explaining that coalition members all require KYC checks so they know “exactly who makes each trade” on their platforms:
The coalition is positioning prediction markets as a legitimate financial market, distancing the sector from offshore operators amid insider trading scandals.
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