The Gambling Wire: Kalshi Faces Crypto Volume Scrutiny as Prediction Markets Hit $7.64B Weekend
As prediction markets continue to report record activity, fresh questions are emerging about how headline trading volume is generated and counted.
Scrutiny of Kalshi’s crypto-perpetual trading intensified after a quantitative analyst flagged $539 million in 24-hour Ethereum volume against just $3.1 million in open interest. Meanwhile, Missouri’s attorney general followed through on plans to target prediction markets, a Senate committee prepared for another discussion on the sector and California tribes continued work toward a potential sports betting ballot measure.
The Big Story: Kalshi Faces Allegations of Inflated Crypto Volume
Kalshi is facing allegations that some of its reported trading volume may be artificially inflated after a quantitative analyst raised questions over activity in the exchange’s recently launched cryptocurrency perpetual futures.
Beni, co-founder of Stealth Neolab, highlighted on X about $539 million in 24-hour Ethereum perpetual trading volume despite just $3.1 million in open interest – the value of positions that remained outstanding. That put 24-hour trading volume at roughly 174 times open interest.
He also identified a recurring trade size of about $5,500, which he said accounted for 48% to 58% of ETH perpetual volume across four separate days. Beni wrote, “Kalshi fakes their crypto volume and I can prove it.”
He also pointed to a CFTC-filed Kalshi incentive program that offers reduced fees and rebates to eligible market participants. Beni argued that those incentives could make it cheaper to generate artificial trading activity. Kalshi’s program, however, specifically excludes transactions involving suspected self-matching, wash trading and other abusive practices from receiving rebates.
Kalshi crypto lead IcoBeast disputed the allegations. He said one chart Beni cited measured prediction-market activity rather than perpetual-futures volume. IcoBeast also rejected the suggestion that Kalshi handpicks firms eligible to become Self-Clearing Members.
Separately, TickerTracker found another unusual trading pattern while analyzing 221 million trades across 4,562 Kalshi prediction markets. In a market on whether Zohran Mamdani will become the 2028 Democratic presidential nominee, an automated system repeatedly buying at 0.2 cents and selling at 0.1 cents accounted for 67% of September volume through Sept. 20.
TickerTracker said the public data alone cannot establish wash trading because it does not reveal who ultimately owns both sides of the transactions or why the trades were made.
Prediction Markets Generate $7.64B Weekend Volume
The allegations come as prediction markets generated record weekend volume on Sept. 19-20. Eight exchanges tracked by TickerTracker generated $7.64 billion in notional volume, up 20% from $6.34 billion the previous weekend, the NFL’s opening weekend.
Kalshi accounted for $5.83 billion, while Polymarket U.S. generated just over $1.03 billion. Parlays represented $4.49 billion, or 58.8% of total activity. Football accounted for $1.45 billion.
The figures represent notional volume rather than the amount of cash changing hands. Prediction-market contracts are generally counted at their $1 face value regardless of the price paid, meaning low-priced contracts can generate substantially more reported volume than the capital committed.
The Daily Wire
Missouri Issues C&Ds to Six Prediction-Market Operators
Missouri Attorney General Catherine Hanaway has followed through on plans to challenge prediction markets, issuing cease-and-desist letters to six operators.
Hanaway sent the orders to Kalshi, Polymarket, Crypto.com, Novig, Underdog and Robinhood. The attorney general’s office argues that the contracts constitute unlicensed sports wagering under Missouri law. The office says companies offering the products must obtain licenses from the Missouri Gaming Commission.
The action follows comments from Hanaway last week that her office was preparing enforcement against prediction-market operators. She told local media that her office was open to a settlement. The cease-and-desist letters will likely drag Missouri into the expanding legal battles over prediction markets, which span more than two dozen states.
Underdog Launches Prediction-Market Data Platform
Underdog has launched a public data portal that provides aggregated information on prediction-market trading across its platform.
The site covers trades routed through multiple designated contract markets, including Underdog’s own UDX exchange, while excluding the company’s fantasy sports activity.
Users can view notional volume and transaction data over time, download data and access CFTC-format daily market and trade reports for UDX. Underdog defines notional volume as the number of contracts traded multiplied by the $1 face value of each contract.
The data shows that Underdog’s weekend volume was $182 million. That ranks it fourth behind Kalshi, Polymarket and Crypto.com and slightly ahead of Novig.
Senate Banking Republicans Hold Prediction-Market Roundtable
The Senate Banking Committee will hold a Republican-only prediction-market roundtable this week.
Punchbowl News reported that the discussion will focus on securities-based prediction markets and that representatives from Kalshi will participate. A formal public agenda and complete participant list have not been released.
The meeting marks one of the Banking Committee’s first moves into the sector. Broader oversight of commodity event contracts falls under the Senate Agriculture Committee, which has jurisdiction over the Commodity Futures Trading Commission.
The House Financial Services Committee held a Republican-only prediction-market roundtable in June with representatives from Kalshi, Polymarket, Robinhood and the American Gaming Association.
California Tribes Seek Commercial Input for 2028 Sports Betting Push
California tribes have reached out to commercial sports betting companies for “input from prospective Vendors and Partners” as they work toward a potential 2028 sports betting ballot initiative.
The California Nations Indian Gaming Association issued a Request for Information in June seeking input from prospective vendors and partners, according to documents obtained by InGame.
Industry submissions were due July 1. CNIGA reviewed responses in July and August, and according to the schedule, should now be meeting with selected respondents. There’s no information on which operators or suppliers CNIGA reached out to.
The last time sports betting appeared before California voters was in 2022, when they rejected two separate measures. Proposition 27, backed by commercial operators and designed to legalize online and mobile wagering, was rejected by 82.3% of voters. Proposition 26, backed by tribes and focused primarily on in-person sports wagering at tribal casinos and racetracks, also failed, with 67% voting against it.
Polymarket Pushes for Financial-Market Treatment in Europe
Polymarket is lobbying European and U.K. regulators to treat prediction markets as financial products rather than gambling, according to the Financial Times.
The company has held discussions with the European Commission, European Securities and Markets Authority (ESMA) and the U.K. Financial Conduct Authority (FCA). Polymarket argues that its contracts should be treated like derivatives and that it should be regulated as a financial services firm under the EU’s Markets in Financial Instruments Directive.
The push faces resistance from regulators. Gambling authorities in the U.K., France, Germany and Italy have said prediction markets would require local gambling licenses. Meanwhile, ESMA recently warned that the sector was “rife with insider trading.”
The FCA has said that prediction markets tied to financial or certain climate events fall under its jurisdiction, while political or sports markets would fall under the Gambling Commission.
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