Activist Group Claims Kalshi's Election Market Is Vulnerable to Manipulation
Better Markets challenges Kalshi's trading operations by referencing claims of manipulation on a competing platform.
In its ongoing legal battle to provide event contracts for U.S. elections, Kalshi has consistently asserted its status as a regulated exchange, contrasting it with its significantly larger, crypto-based competitor, Polymarket.
However, Better Markets, a nonprofit advocating for stricter financial oversight, has pointed to Polymarket's operations as a reason to halt Kalshi's trading in political bets.
In a 39-page amicus brief submitted on Wednesday, supporting the Commodity Futures Trading Commission (CFTC) in its appeal of a recent adverse ruling against Kalshi, Better Markets highlighted recent allegations regarding several high-value betting accounts associated with Donald Trump's electoral prospects on Polymarket. These accounts are reported to be controlled by a single French individual.
Better Markets reiterated theories suggesting that this extraordinary betting behavior could distort market perceptions and potentially interfere with election outcomes. The group warned that such practices could result in deceptive pricing in contracts, adversely impacting retail investors who place their own wagers.
"If these betting activities signify any form of election or market manipulation, they could detach contract pricing from actual electoral fundamentals, creating volatility that will undoubtedly harm many retail investors who have made their own bets," Better Markets cautioned, urging the U.S. Court of Appeals to reconsider a lower court's ruling that permitted Kalshi to provide election market options.
Despite these concerns, market expert Filip Pidot believes that the activities of the French trader appear to be motivated purely by profit rather than any electoral intention. "If the goal was to manipulate prices, the approach taken would be quite different," Pidot remarked.
According to reports, while Polymarket has realized substantial trading volumes in political betting—over $2.1 billion this year—Kalshi had been sidelined until recently when an appeals court lifted the administrative restrictions on the company's election contracts.
