Activist Group Says Kalshi’s Election Market Should Be Shut Due to 'Manipulative' Whales

In its long-running legal fight to offer event contracts on U.S. elections, Kalshi regularly emphasized it is a regulated exchange, in contrast to its much-larger, crypto-based, offshore rival Polymarket.

That hasn't stopped Better Markets, an activist group that advocates for stricter financial regulations, from citing activity on Polymarket as one reason to stop Kalshi from letting traders make political bets.

In a 39-page friend-of-the-court brief filed Wednesday supporting the Commodity Futures Trading Commission's appeal of a case the regulator lost to Kalshi, Better Markets noted recent reports about a handful of Polymarket accounts that have made bets worth tens of millions on Donald Trump winning the presidency. (Polymarket confirmed to the New York Times this week that these accounts are all controlled by the same French national.)

Better Markets repeated theories, floated in Wall Street Journal and Newsweek articles, that the Polymarket whale could be manipulating the market or trying to create a false impression of momentum for Trump, in order to influence the election's outcome or give him a pretext for challenging the results if he loses.

"If the trading amounts to any one of these species of election or market manipulation, then it is also likely to artificially skew the pricing of contracts in a way that is divorced from election 'fundamentals,' thus creating volatility that will undoubtedly harm many smaller retail investors who have placed their own bets," Better Markets said, urging the U.S. Court of Appeals to overturn a lower court's decision that freed Kalshi to offer election markets.

"Allowing election gambling contracts to trade threatens to undermine election integrity, harm countless investors, and burden the CFTC with an inappropriate duty to police elections," the group said, reiterating common arguments against political prediction markets.

However, Filip Pidot, a prediction market veteran and board member of the Coalition for Political Forecasting, said there is "virtually no chance" the French trader is placing these bets for electoral purposes.

"I think the motives are clearly profit-driven," Pidot, who has been closely tracking the whales' activities on his blog, The Super Model, told CoinDesk. "If the goal was to move the price, you'd do the opposite" as the French national.

"Instead of having several accounts trading strategically with limit orders, you'd just keep plowing money in blindly and let yourself get filled at worse and worse prices, since that would be optimal if your goal was to artificially inflate the price," he said.

Polymarket told the Times the trader was “taking a directional position based on personal views of the election" and it found no evidence of attempted manipulation.

While Polymarket has seen billions in volume this year from political betting, Kalshi had to sit on the sidelines until this month, when the appeals court lifted an administrative stay pausing the company's election contracts.

Thursday afternoon in New York, both platforms showed Trump ahead, with a 62.5% probability of winning on Polymarket ($2.1 billion in volume) and 59% on Kalshi ($60 million). So did PredictIt (58%, about $10 million) and Manifold Markets (58%, play money).